Don’t Buy a KDP Business Until You Watch This Video!
Updated on August 22, 2025
Transcript
Kindle Direct Publishing businesses are some of the most overlooked acquisitions in the entire marketplace. You're essentially buying a mini publishing house running on Amazon's platform, complete with content, production systems, marketing funnels, and sometimes entire fictional author personas that generate six or seven figures annually. So, if you are looking to buy a KDP business and become this nouveau publisher, well, you're in luck because in this video, we are going to breeze through everything you need to know when it comes to doing due diligence on Kindle publishing businesses.
First things first: financials. What I recommend, while the spreadsheets are very, very useful—and we will use them—is to go straight into the KDP dashboard and look at the Amazon royalty reports. This is a fantastic way to verify, yes indeed, they are making the revenue that they are talking about. You see all their sales by their ASIN, which is a specific personalized number that Amazon gives as a unique identifier for each one of the books or book products, book bundles, anything that they're selling through Kindle Direct Publishing.
Now, when you're looking at a KDP business, what you're going to see is that there's probably a few superstar books that are crushing it and might even be carrying the entire operation. Maybe they have 50 titles published, but three of those books are generating 70% of the revenue. You need to understand why those books, if there are superstar books, and just in general, any of their books, are making money. What about these books? Is the success repeatable?
KDP businesses can be incredibly seasonal depending on what kind of books they are selling. So when it comes to seasonality, what I mean is, let's say you're looking at a KDP business that is selling a bunch of romance novels. Well, romance novels tend to spike around or right before—and sometimes a little bit after—Valentine's Day. Self-help books tend to explode in January, you know, "New Year, New Me" type of thing. Cookbooks tend to go crazy before holidays when everyone is preparing food. As long as you have enough timeline to look at, you can compare year over year.
The next thing we want to look at is the actual production cost. We want to look at things like costs with cover designs, which can range from $50 for a basic Fiverr cover to covers that cost $500 and up. Then we want to move into how these books are actually being made. Most of the time with KDP businesses, they're using some kind of ghostwriter, or maybe a team of ghostwriters. Ghostwriting rates vary widely depending on what is being written.
After the book is actually done, how do you put it into Kindle in a readable, consumable way? Formatting services can cost between $50 to $200 per book, depending on the complexity of the book. If you're doing audiobooks—which, if the business you're looking at is not doing, is a great opportunity—usually this will be done through the Kindle program known as ACX. ACX can add significant cost because you're actually paying a voice actor, and that can range anywhere from $500 to well over $5,000, depending on the length and complexity of the book.
Here's a key question you want to consider: as you're going through all these costs, which are mostly contractors doing a variety of different tasks for you, is the business paying these ghostwriters and other contractors per project, or is it more of a retainer, like a traditional employee that's working for them? The reason why I ask that is because retainer models usually mean better quality control for you, because you're working with the same person over and over again. They get used to your process. It also means faster production, because again, they're used to the process. If you have the contractors on retainer, usually this will also equate to lower costs for you. Freelancers want steady work—they don't want to constantly hunt for new clients—so if you can provide a steady stream of work, often you can get a discount in terms of what you are going to be paying these contractors.
Now we want to look at marketing. KDP marketing is completely different in a lot of ways versus other marketing because you're playing Amazon's game with Amazon's rules, and you have to follow all that. You want to check their Amazon ads dashboard, specifically their ACOS, which is known as advertising cost of sales, and this will be your primary long-term expense outside of content creation. Even if you never publish another book, you will most likely still be paying for ads to drive new eyeballs to your books so they can become your customers.
Professional operations tend to target hundreds of thousands of keywords—maybe not per book, but across their whole portfolio. This constant testing and optimizing is how they're able to make money off of what are pretty low-ticket products. Most Kindle books are going to be sold between $2 and maybe $10, though I think you lose out a bit on your royalties if you go above $9.99 or something like that. Most of those books are going to be priced in that range, which means you have a pretty low margin to make those ads cost effective.
Let's say they're selling romance novels. You look at their keywords. If they're targeting really broad keywords like "romance novel," they're probably leaving a lot of money on the table because "romance novel" is an incredibly competitive keyword and they probably have a terrible ACOS. No wonder it's not working! This can actually be a good thing from a buyer's perspective. When you take over the business, you can kill that ad, save all that money, and repurpose it towards lower-cost keywords that are nowhere near as competitive. They might not get as much traffic either, but the traffic you do get will probably convert better. So, this can be a good thing if you're looking at a KDP business with high ACOS, especially if you understand the Amazon ads game.
Next thing when it comes to marketing is reviews. Just like Amazon FBA, Kindle is all about reviews too. It is the lifeblood of success. You want to check the review velocity and the quality. If they're getting a good amount of velocity, that's helpful because it's showing Amazon, "Oh, this book has momentum." If they're quality reviews, say 4 stars and up, this is also really, really good. A book with five-star reviews all from the same month, though, is suspicious. If the velocity is too fast, that should set off some red flags that there might be something shady happening. Amazon cracks down hard on fake reviews and can take down entire accounts, so when you're doing your due diligence on KDP, that's very, very important.
Most of the time, it does cost extra, but you can get services that you can pay for. In fact, if you go to the Opportunity Podcast on empireflippers.com and scroll through the episodes, you'll eventually find one where I talk to an Amazon review expert who does a lot of this detective work to make sure that reviews are legitimate. So, you could hire someone like that. If you do run into an experience with a suspicious amount of reviews, whether positive or negative, you can also hire them to see what's going on there, and they work with Amazon to make sure that your account doesn't get taken down. There are safety mechanisms here that you can use to make sure you're protected as the buyer.
The next thing you want to look at is bestseller badges. In the world of KDP, bestseller badges are a bit shady, depending on the book and what the badge is for. You want to verify, first of all, is this a real badge or are they just saying they have it? The big thing you want to actually look for with bestseller badges is, are they a bestseller in the actual genre that they're selling these books? A very common strategy with Kindle is, let's say I was writing a thriller book: I might put it into the thriller genre category, but I'll also go find two or three extremely obscure categories that I know no one is basically publishing in, and I'll get tons of sales because my book is a thriller instead of something like "Victorian Fashion from the 1700s." So I get a bestseller badge for a completely random genre that isn't really super related to my book. You just want to make sure that they are a bestseller in their actual genre and that you're not paying a premium for them gaming some obscure, unrelated niche.
When it comes to Kindle Direct Publishing in general, one of your critical points of failure is that you're on Amazon, and Amazon is basically the core platform to this business model. So, what you want to see if you're buying a KDP business is do they have any email lists? Email marketing is a secret weapon. You want to check their list size, you want to check their engagement rates. Part of your due diligence here when you're looking at the email marketing is talking to the seller: "Hey, how are you getting your email subscribers?" Amazon doesn't necessarily forbid it, but they don't love sharing their customer data. Even though the person is buying your books, Amazon views that person as their customer, because they're using Amazon’s platform.
If there's no email list, ask: Is it possible to build one, and why haven't they? If it is possible, you want to dig into that.
Speaking of platform risk, it's not uncommon for a digital business to have a platform risk. Your goal is always, how do I minimize that platform risk? With KDP, it's a bit tricky because the whole business is on Amazon. What is true today is not true tomorrow, but what was true the day before is now true again the next day. That type of stuff happens on Amazon and can be a real headache. You want to check if they have any books suppressed in their accounts or if any of their accounts are suspended. Any shadow banning happening or anything like that: you want to look at their KDP account health metrics. Things like content complaints, copyright strikes, quality issues are all leading indicators of problems.
But I think if you want to go really big with a KDP-style business—which is really a publishing business—you might be starting on Kindle, but as a publishing company you can technically sell anywhere. You don't have to sell just on Amazon. You might buy a KDP business and set up your own direct-to-consumer store with, say, Shopify, or use tools like BookFunnel and start selling these products directly. Instead of getting 70% royalties from Amazon, you get 100%, minus your payment processor fee, which will be negligible. Basically, you will probably lose money when you first start doing it, but it is a worthwhile experiment to keep at, because it can really blow up once you get something working with it.
All right, so the bottom line of buying a KDP business is that these can be incredible acquisitions. They have fantastic margins, they have real scalability if you understand the process of how to do this. But remember, you're buying the content production system—that's the meat of the true asset in a lot of ways—because that is the system you use to create new revenue-producing assets. You need to make sure when you acquire this business you do not betray the reader's trust. A lot of times, the name that the books are being published under will have several writers underneath it, and that author name will have SOPs to make sure to be writing in that voice and crafting the kind of stories that the author brand has created, that the readers have come to expect, and that is where the asset value comes in.
Indie authors, basically for the last few decades, have been saying they call it "the magic bakery." You can grow not just through direct-to-consumer sales like selling on Shopify, but you can use what writers call the magic bakery, which is the hodgepodge of intellectual property rights and how you can cut and slice the books you're producing.
I'll give you some examples. You can translate your books from, say, English to German—not Germany—to sell in Germany; you can do it in Italian, you can do it in Spanish, basically all the languages. You can put your book on the UK marketplace if it's not there already, and you can also sell on competing platforms. In fact, there are tools that will publish you on, I think, a little bit over ten different book-buying platforms that people use. You can also even license rights. These are things you can do as you get more advanced with the assets you're building with KDP, to really break out of the normal mold that a lot of KDP people find themselves trapped in, where they're just thinking, "I just sell on Kindle." There are many, many paths you can take a business like this with these successful SOPs. They can go far beyond Kindle if you know what you're doing and if that is your goal, of course.
Anyways, that's the video on Kindle. Hopefully this little due diligence video helped you out. And if you are looking to buy a publishing company, you can go to empireflippers.com marketplace, sign up for a free account—you can use the link in the description—and you can go and start acquiring your dream publishing house.
