OK, I just found this information out myself after trying to format my interior file for my book. I was receiving an error after submitting to the Preview Submission on Kindle. My error was that my images were too low resolution and only 220 DPI. I know for a fact that they were 300dpi when I inserted them! So..after attending a webinar today by Kindle Direct Publishing, I found that there is a setting on Word where you can select that your images are not compressed and that is what was happening with my images. If you are receiving errors when trying to submit your images to Kindle please look at your settings in your Word. Go to File>Options>Advanced>Image Size and Quality. Click on “Do not compress images in file”
Once you check that box you hit OK and then your images should be saved as the resolution you originally have them saved as.
If you are creating your manuscript for a print book with Amazon, the images should be 300 dpi resolution. If you book is only going to be for an ebook, it wont need to be that high, however, I always choose to use 300 dpi even if it is to be an ebook only. You just never know if later on down the road you may want to have it in print too. You wouldn’t want to have to have the image recreated at a higher resolution and then have to replace the lower resolution image. What an ordeal that would be!