If you’re looking to monetize your passion for authorship, buying an Amazon KDP business can be a fantastic way to do so. As the world looks past traditional publishing houses and towards independent publishers, you can steer your ship with your own literary empire. Rather than having to start from scratch, purchasing your KDP venture outright can allow you to hit the ground running in an ever-profitable enterprise.
In this guide, we’ll discuss the best way to go about doing so. Purchasing any business comes with its own questions that this guide will aim to answer. By the time you’ve finished reading, you should feel more confident in your decision to purchase an Amazon KDP enterprise.
What is Amazon KDP?
Amazon KDP is an abbreviation for Amazon Kindle-to-Direct Publishing – a service that allows you to quickly and easily publish your own literature easily on the Kindle store. KDP is an absolute game-changer allowing authors to sell their work to millions of readers without needing a publishing house.
With the rise of mobile devices, we’ve seen ebooks explode in popularity as consumers digitize their reading experience. Amazon KDP dominates the industry, controlling no less than 80% of the ebook market. This industry continues to grow, making it all the easier to understand why buying a KDP business can be a fantastic opportunity.
How Does Amazon KDP Work?
If someone wants to publish their ebook with Amazon, all they need to do is upload their book files to KDP. Authors also can have their books printed on demand whenever a purchase is made. These printing costs are then subtracted from the total royalties allotted to the author.
After an ebook is published, everyone can purchase it on the Kindle platform. The KDP business you are buying will likely already have several titles available that are actively being sold and receiving royalties.
Fees and Royalties
It’s free to publish on the Kindle store. However, there are other voluntary fees involved, such as marketing, artwork, editing, and even ghost authorship services. In terms of compensation, there are two options available to publishers – 35% and 70% royalty rates (for physical paperback books, you’ll receive 60%).
The 70% royalty rate applies to all books sold in the Available Sales Territories (view the complete list here). For all other locations, you’ll receive 35% in royalties. Finally, there’s a low rate for digital delivery based on the size of your ebook.
What To Consider When Buying an Amazon KDP Business
When purchasing any business, you want to ensure you’re buying into a genuinely profitable venture. While buying a business can be the start of an amazing journey, you have to be careful not to buy into a sinking ship – or just to not be scammed outright. When analyzing a KDP business, there are a few key metrics to consider, which we’ll discuss below.
Industry/Niche
Now, when thinking about publishing to a specific audience, our most significant concern will be how big that audience is – and whether they spend money on ebooks. Let’s look at an example from a KDP business for sale on the Flippa marketplace:
Generally speaking, every KDP business is going to target a specific niche. This will allow them to establish their authority in that domain and create a positive reputation. With that in mind, you must pick an industry you’re knowledgeable about. Even if you outsource most of your writing, it’ll be up to you to ensure the quality and integrity of the books you’re publishing.
This seller’s business is in the parenting niche. Our intuition tells us that parenting is an excellent niche since we see parenting books promoted everywhere. The research backs it up, too: millennial moms spend $231.6 dollars on parenting books annually. So, in this case, we know that we’d be buying into a profitable industry – if we chose to seal the deal.
Customer Demographics
When researching any niche, we’ll be especially concerned with the exact audience interested in the subject. For example, if you’re selling children’s books, your biggest audience will be children and the parents buying them. In the case of our model, the target audience is readers male and female.
While the seller isn’t particular about the demographics of their readership, an audience can be incredibly specific depending on the niche. For example, history books will sell to history fans, and cooking books will sell to practitioners of the culinary arts.
You get the picture! Demographic information will be directly relevant to your marketing and growth efforts. Therefore, before purchasing a KDP business, you must ensure it caters to a demographic with solid revenue potential.
Business Model
While every KDP business will revolve around selling books, the actual approach will vary. Do they write the books themselves, or do they outsource them? Do they rely on paid traffic, or do they have a more organic model? It’s these kinds of questions that you’ll need to answer to know what you’re getting into.
Content Creation
For KDP accounts created to make a profit, it’s most likely that the business will outsource all or most of the writing labor. Outsourcing is done because it allows the business owner to multiply their output orders of magnitude greater than what it would be if done solo. So it will be a necessary expense, though more than made up for with a properly-run KDP account.
In all likelihood, the freelancers the previous owner was working with will pass on to you. This is the case with our example candidate, who outsourced most of the writing process:
Just know that no freelancer will last forever, and you’ll need to understand how to vet and acquire component writers.
Audiobooks
Many KDP businesses will choose to have their titles recreated in audiobook format, which will allow them to tap into a market experiencing incredible growth.
As the chart indicates, audiobooks have exploded in popularity in recent years – a trend set to continue for the foreseeable future. Buying a KDP business would allow you to cash in on this growing trend and enjoy the significant growth thereof.
Audience Acquisition
As with all other products, there has to be a method of generating leads and creating customers. Will your KDP business rely on paid traffic, organic traffic, or a combination thereof? If your business uses ads, it’s another business expense you have to account for.
The firm you’re purchasing may also have a blog, which will generate expenses in hosting, software, security services, and more. Of course, any of these expenses will return dividends if executed properly.
For any methods of audience acquisition that a seller’s business doesn’t utilize, those will be potential avenues to expand the business after your purchase. As hinted above, starting a blog can be a fantastic way to generate organic traffic that fuels purchases.
Distribution Channels
When we discuss distribution channels, we’re talking about the platforms that the business will sell its ebooks on. So even though “KDP” is in the name, many firms will sell on multiple platforms.
Such is the case in our above example, which sold on Amazon, Audible, IngramSpark, and more. Intuitively, we understand that having broader distribution channels means casting a wider net and making more sales.
KDP Select
That said, some publishers may choose to enroll in KDP Select, which requires them to commit to publishing exclusively on the Kindle bookstore. These firms trade the wider net of broad distribution for the benefits offered by Amazon Select.
These benefits include higher royalties, exclusive promotional tools, automatic enrollment in Kindle Unlimited, and more. It should be noted that enrollees in KDP Select may still distribute physical books however they choose.
Financials
When purchasing any business, you must have a thorough grasp of their financial situation. To verify we’ll turn a profit, we’ll have to ensure the integrity of the publisher’s accounting.
Revenue
For our example business, we can see that they’re receiving a consistent revenue ranging from a low of $929 to a high of $2,904. Given that the company is only 22 months old, there’s a good chance we can continue to grow it and make back its $24,000 price tag.
While metrics such as median revenue and net profit are important, you’ll need to go in-depth into their finances to know exactly what you’re getting into. Believe it or not, people actually lie on the Internet.
To avoid making a grave business-buying mistake, you’ll have to make sure everything the seller advertises is true. Fortunately, Flippa offers a due diligence service you can leverage to verify any business’ integrity.
Securing Copyrights
It’s critical that you completely secure the copyrights of any content your prospective business may be selling. Although copyright transfer is typically a necessary clause in any KDP acquisition, it’s still up to you to ensure that all property – intellectual and otherwise – is transferred entirely to you during the acquisition process.
Time Commitment
Any business you acquire will require a certain amount of time to maintain and grow. Your KDP acquisition is no exception, and you’ll have to factor it in if you want to make a profit after the purchase.
That said, a KDP business tends to be relatively passive and will generally require a minimal amount of time. Here’s what our example publisher noted about the time needed for their business:
Once the seller grew their business into a profitable venture, it was generally smooth sailing from there. Once they hand it off for you, there will be only a minimal amount of time required to keep the business running. Of course, if you wish, you may want to invest more time to grow the account’s revenue – that’s the beauty of a passive KDP business.
Why Not Just Start From Scratch?
Having learned all the ins and outs of an Amazon KDP business, you’re probably wondering why you shouldn’t just start one from scratch. It’s an excellent question, given that the price tag for a KDP business can run well into the six figures.
The main benefit of buying one outright is that you’re acquiring a business that’s already successful. When you start one yourself, you may very well achieve profitability. However, there’s always a real risk that the company will fail, and all the time and money involved will be wasted.
When you buy a KDP business, you know exactly how much the purchase will cost you, allowing you to plan out exactly how long it may take to achieve profitability. However, if you start your own company, you can only have a rough idea of the costs involved with no guarantee of ever seeing that money again.
When you purchase a KDP account that you know for sure is turning a profit, you buy security – it’s that simple.
Conclusion
While purchasing a KDP business can be a fantastic venture, it’s essential that you fully understand what you’re getting into. From the business model to the financial situation, you must understand every facet of the company to succeed.
The good news is that Flippa is incredibly eager to help you out. From everything to acquisition to valuation, they have an incredible set of tools to help you achieve your dreams. I’ve been incredibly impressed with both the quantity and quality of the resources they offer.
If you choose to purchase a KDP business, good luck! You’ll be buying into a fantastic industry experiencing a consistent growth for you to cash in on.
