An Amazon KDP business is built off of the Kindle Direct Publishing program offered by Amazon. Books can be written and published as an ebook to the Kindle platform where authors make anywhere from 35% to 70% royalties on the price they set for each sold.
Initially, this was seen by many fiction writers as a great way to remove the gatekeepers from publishing who rushed to build readerships and take advantage. KDP also created huge opportunities for non-fiction guides that entire online businesses could be built around.
As one of the largest and most recognizable brands in the world, the ability to publish and sell directly to Amazon customers created huge opportunities.
Is Amazon KDP Still Profitable?
Kindle Direct Publishing (KDP) can still be very profitable. The competition is much higher than it has ever been but so is the demand.
Recent estimates are hard to come by, but Statista estimates as reported by Toner Buzz suggest there are 950 million e-readers in the world and that number is expected to surpass 1 billion in the next couple of years.
These numbers might even be low as there are options for downloading Kindle software directly to a desktop computer or tablet where they can be used to access a person’s Kindle purchases.
Because of these numbers, Amazon KDP can still be a very profitable place for both individual publishers and well-built KDP businesses.
How Much Can You Make With Amazon KDP?
This is going to vary based on business, the niche, the number of books published. This number will also continue to go up over time as more new readers continue to buy those books.
A Publisher’s Weekly report from 2020 reported $1.1 billion in total royalties paid out to authors and over 1,000 individuals with royalties of over $100,000.
“Over $100,000” is a pretty big range as it puts the KDP business that has made millions in the same category as a fiction author who has made $100,001, but it shows that the ceiling is still very high for KDP and continuing to grow.
Where To Buy An Amazon KDP Business?
There aren’t as many Amazon KDP businesses put up for sale, especially in comparison to affiliate websites or Amazon FBA businesses. The main question will come down to whether to go through a broker or approach an owner for a private sale.
Private Sale vs Broker
The advantage of working with a broker is working on purchasing an Amazon KDP business for sale that the owner is actively looking to sell instead of having to cold pitch private owners who might not even respond.
There might be some degree of due diligence already done based on the marketplace, and support for the sale itself.
The negatives of a broker? The commission and fees that the seller buys often get passed to the buyer in the form of a high purchase price.
Going the private sale route opens up more possibilities but requires a lot more legwork, negotiation, and experience to know how to protect both parties throughout the process.
Best Marketplaces For Buying Amazon KDP Businesses?
Although they’re not as common as other options, three marketplaces consistently bring the most options for finding an Amazon KDP business for sale.
Empire Flippers is one of the biggest vetted marketplaces in the world for online businesses and a great spot to find a profitable Amazon KDP business.
Usually featuring a dozen to a couple dozen KDP businesses available, this is one of the first spots I go to when looking for a profitable KDP business to purchase and improve.
Flippa is the biggest open marketplace for online businesses and often has multiple listings for KDP businesses of all sizes.
The variety in business size is larger here, in part because it’s an open marketplace. That sometimes brings more opportunity, but it also means vetting out the duds is even more important.
There are multiple KDP listings here on average, and if you’re looking for a potential diamond in the rough to improve and flip you’re more likely to find it here.
FE International is one of the old guard websites that has focused on providing a high-quality marketplace for buying and selling online businesses for well over a decade.
This is a place to look for established, high-earning KDP businesses put up for sale.
Buying vs Building An Amazon KDP Business
There are pros and cons to both methods of getting your own KDP business. We’ll take a deeper look at the benefits of both methods.
Benefits of Building From Zero
Every business type has its specific challenges. Building from zero forces you to learn the niche-specific skills, knowledge, and talent you need to thrive in the Kindle Publishing space.
This not only allows you to keep growing the business, but to better train VAs, writers, or other professionals you need to outsource parts of the process. This experience also teaches you what to look for if you work on acquiring another KDP business in the future.
Benefits of Purchasing an Existing Business
The first benefit of purchasing an existing KDP business is the time savings. Building an Amazon KDP business from scratch involves a lot of time, effort, and skill. Purchasing one can save years of work and effort.
There’s also the immediate cash flow. An existing business should have existing cash flow while that’s not an option starting from scratch.
Due Diligence When Buying an Amazon KDP Business
Due diligence is a crucial part of buying an Amazon KDP business. Especially depending on how the KDP business is set up.
Prior Amazon Account Warnings
This is a major red flag. Get enough warnings and Amazon may just ban that KDP account for life. In some cases when an egregious trademark or copyright violation takes place the account can be banned without warning.
So if there are prior account warnings, it’s important to keep a careful eye on those red flags.
How much traffic to these books is organic? Are they found via Amazon search or Google searches or is all the traffic coming from paid ads?
Was the seller clear on gross profits vs. net profits?
The ad spend numbers can tell you a lot about how well the KDP business setup was done and if there’s room to improve via ad spend or not.
SOPs & Team of Existing Writers
Are there Standard Operating Procedures in place, or has the business just been winging it based on the owner’s whims? What about the team of existing writers? Do they come with the business or not?
Understanding how much infrastructure there is, and what does and doesn’t come with the sale, is crucial to making an educated decision on whether to buy or not.
Book Sales After Promotions Run Out
Promotional trials can shoot up the book sales numbers, but what happens after those promotions are over with?
This doesn’t mean a KDP business built on email lists or short promotional bursts isn’t worth it, but you need to know this information before deciding how much you’re willing to spend on a business that works that way.
Existing Marketing Channels
There’s a thin line between great branding and a business built on the power of one persona. If that person leaves after selling the business, that’s a problem!
Look at existing marketing channels that come with the KDP business and how they are set up and get an idea of how existing marketing works.
What social media channels exist? Are these tied to the KDP business specifically or are they tied to another entity the business owner has?
Social media often plays a big part in many successful Amazon KDP businesses, so understanding the social media sites used, and those ignored, matters a lot.
Is there an email list that comes with the business? Has an email list with a different business the owner runs been used? Is there no email list at all?
The answers to these questions can drastically change how much that KDP business for sale is worth to you.
Is the KDP business taking advantage of Amazon ads? If most of a business is based on ads on Amazon itself this isn’t necessarily a red flag, but you will want to double check the net profit numbers.
If no Amazon ads are being used, that could be a big opportunity to increase revenues and net profits.
Amazon KDP Growth Strategies
No one should buy a business without a plan. Growing an Amazon KDP business you purchased means embracing these growth strategies to move those sales and revenue numbers in the right direction.
Hiring More Writers
Hiring more writers means being able to produce more content more quickly. If the writers are good, this is a great way to improve the number of books being published on Kindle. As long as the quality remains, this is a strong scaling/growth strategy for a Kindle-based business.
Hiring Content Managers
Keeping quality high is important. Content managers to review book covers, edit manuscripts from the writers, and manage the labor-intensive parts of the Kindle ebook production is another way to avoid bottlenecks and grow the business.
Building Out Social Media Presence
It’s amazing how many Amazon KDP businesses don’t have a major social media presence. Or a very limited presence.
Facebook, Instagram, Pinterest, Reddit, and TikTok all have potential for various niches and fields.
Understanding how each one works, the advertising options on each, and growing a presence on all appropriate social media sites where it makes sense.
Build a Website Brand
Building a strong brand that is recognizable outside of a narrow niche is always a strong move to improve the business. Take the brand that exists with the Amazon KDP business and build out a website.
This not only builds the brand but also gives more ways to drive traffic and pick up customers.
How To Value an Amazon KDP Business
One of the more difficult steps is finding a standard valuation on an Amazon KDP business. There isn’t a standard formula the way there is for niche sites, so it’s a bit more nebulous.
There are some general guidelines that can at least give an idea of where to start when negotiating price.
Formula for Valuations
There isn’t a general special formula for valuation for a KDP business, so falling back to this one is a safe rule of thumb:
Total Revenue (TR) minus expenses (Ex) to get Net Profits (NP).
Add together all the Net Profits from the past year, and divide by 12 to get the average monthly income (L12M). Then multiply that times the agreed upon multiple (between 34x and 44x) for the final sales price.
It takes a little bit of math, but the step-by-step process is fairly easy to follow to get that target sales price that you consider “reasonable.”
Figure out a Valuation Multiple
The multiple can vary quite a bit. Looking at data from Empire Flippers on current KDP businesses tend to sell between 34x to 44x monthly revenue range. Most fall in the slightly narrower 36x to 40x range.
This at least gives you an idea of the common valuation multiple ranges that are reasonable for successful KDP businesses.
Growth, Potential, and Stability
Considerations like potential, growth, and stability of income all come into play when deciding on a purchase price. In the ideal situation you have a growing KDP business that is stable and still has potential for massive growth.
Usually you can’t get all three at a decent price, but it’s important to look at the KDP business through each of these lenses to get the full picture.
Some buyers value stability over everything else, especially if this is a passive income acquisition. Others want to see growth and potential.
This step needs to be a major part of the due diligence process.
End Goal – Flip or Passive Income?
Keep the end goal in mind before purchasing a business. What you’re looking for changes if you want to improve and flip a KDP business versus keeping it for the passive monthly income.
If the goal is passive income the focus should be on:
- Income stability
- Established SOPs and training in place
- Diversified traffic/income sources within the business
If the goal is an eventual flip the focus should be on:
- Growth potential
- Strong current growth
- Obvious easy wins to boost traffic, sales, and revenues
Knowing the end goal helps you to further focus on the specific KDP businesses that will best align with your long-term goals.
Amazon KDP doesn’t get mentioned as much as many other online business types, but it is an incredibly profitable model that can produce some serious long-term income.
- Having the end goal in mind (flipping vs passive income) is important
- Due diligence is crucial before purchasing an Amazon KDP business
- Don’t ignore social media or building a website brand as growth strategies
- Have a plan for growth if you’re scaling to flip it later
- Since valuation terms aren’t as standard, negotiate the terms of sale for a better deal
If you follow the information in this article you will be prepared to find the Amazon KDP business for sale that meets your long-term business needs.