How I Made $1.3M with Amazon KDP

Summary

In this video, Dorian shares insights on building a profitable KDP business, emphasizing the importance of understanding profitability beyond just monthly royalties. He highlights the misconception of spending heavily on advertising for organic sales and stresses the need for cost control. Dorian outlines key financial metrics to track, including royalties, production costs, and ad spend, and demonstrates how to use these in a profit and loss spreadsheet. He concludes with advice on business valuation and offers a free PNL template for viewers.

Takeaways

• 💼 The speaker, Dorian, built a profitable KDP Empire earning over $1.3 million, demonstrating the potential of KDP for authors.
• 💰 Even after accounting for advertising costs, Dorian still makes a million dollars, emphasizing the importance of considering advertising costs in profitability calculations.
• 📈 Achieving $110,000 a month in royalties is a significant goal, but it's crucial to understand that high ad spend doesn't equate to profit.
• 🚫 A common misconception among KDP authors is that losing money on advertising is necessary for eventual profit, which Dorian refutes as a false belief for the majority.
• 🔄 If an author is not making a profit after a few months, they need to reassess their strategy and control their spending.
• 📊 For a healthy KDP business in 2024, it's recommended to spend about one-third of royalties on advertising to maintain a healthy return on investment.
• 📈 Dorian advises tracking six key numbers monthly: KDP royalties, book production costs, contractors, ad spend, other marketing costs, and time spent on the business.
• 📋 The speaker uses a simplified profit and loss (P&L) spreadsheet to track and analyze the financial health of the KDP business over time.
• 📊 By tracking these numbers, one can identify trends and make informed decisions to improve profitability, such as increasing royalties and minimizing book production costs.
• 💹 The business's valuation can be determined by calculating the average monthly profit and applying a multiplier (30-40 times), which is useful for potential sales or investments.
• 🔗 Dorian offers a free P&L template for viewers to analyze their own business and mentions coaching services for those seeking to improve their KDP profits.

Q & A

What is the total amount of book sales represented by the $1.3 million figure mentioned by Dorian?

The $1.3 million represents over $3 million in book sales.

What is the significance of the $110,000 a month in royalties mentioned in the transcript?

The $110,000 a month in royalties is a fantastic goal for KDP authors to aim for, and it is achievable with effort.

Why is it a misconception to spend $110,000 a month on ads and expect to make $10,000 per month?

Spending $110,000 a month on ads would result in a net income of zero per month, as the advertising costs would consume the entire income.

What is the recommended advertising spend as a percentage of royalties for a healthy KDP business in 2024?

For a healthy KDP business in 2024, it is recommended to spend about one-third of your royalties on advertising.

What is the importance of understanding profit margin, a costs, and the ratio of organic to paid sales in KDP business?

Understanding these metrics allows KDP authors to control costs and make money instead of spending it all on advertising.

How often should a KDP author track their business numbers according to the transcript?

A KDP author should track their business numbers every month.

What are the six numbers that Dorian suggests tracking every month for a KDP business?

The six numbers to track are KDP royalties, book production costs, contractors, ad spend, other marketing costs, and the time spent on the business.

How can a KDP author calculate their estimated royalties for a month?

A KDP author can calculate their estimated royalties by going to their KDP account, clicking on reports, then royalty estimator, choosing the previous month, and looking at all books.

What is the purpose of creating a profit and loss (P&L) spreadsheet for a KDP business?

The P&L spreadsheet helps to understand the business's financial health over time by showing revenue, expenses, and net profit.

What is the typical investor valuation for a KDP business based on the transcript?

Investors typically buy a KDP business for between 30 to 40 times its average monthly profit during 12 months.

What is the value of time spent on the business and how is it calculated in the P&L spreadsheet?

The value of time spent on the business is calculated by multiplying the number of hours spent by the hourly rate of the individual's time, representing the opportunity cost.