I write these occasional blog articles because I know there are folk out there who are interested in the ins and outs, frustrations and yes, joys, of being an indie writer.
So, this article is more about sharing dilemmas than decisions, options and vexations!
Okay, this is about the business side of things – in the United Kingdom the Government has brought forward the abolition of this tax – charged at an effective rate of 17.6% (even though the headline rate is 20%) on e-books and general electronic publications, thereby levelling up the playing field with the printed word, from 1st December to 1st May, 2020.
Now, the last time I looked, I was earning approximately 49% of all my royalties in the United Kingdom, so this is a big deal for me – one I had been trying to get my head around well in advance of December this year.
I had thoughts of doing a big marketing campaign – but of course, that was up in the air because of the COVID-19 blight upon all our lands. Actually, I had been going to do all sorts of marketing stuff around now but well, all our plans are somewhat perturbed at the moment…
Never mind, to return to the VAT conundrum.
Amazon want us all to automatically reduce our sale prices. Oh, if only life was that simple.
When I first started publishing on Amazon KDP VAT was 3%, then a few years ago it jumped up to 20% – other than Amazon insisting that I charged at least £0.99 for a book, I did not put up my prices at that time, nor since, of any of my books available at that time and ever since have been sucking up the full tax hit within my pricing plans.
The other consideration is that I earn half my total royalties from Amazon prime ‘page reads’, not the sale of individual books, and that has never been subject to VAT in the United Kingdom (because HM Treasury has never understood the on-line industry).
To cut to the chase: I still have not decided what to do with the prices of my e-books in the United Kingdom. I suspect a lot of other authors are in a similar quandary.
Amazon’s pricing structure – that is, on e-books up to £1.77 one can only earn 35% royalty, and 70% on e-books above that price threshold, tends to disincentivise authors to price ‘low’. For example, an e-book sold at the minimum allowed price, £0.77 earns the author £0.27, an e-book with a sale price of £1.76, £0.62, whereas, a book sold at £1.77 would earn me £1.24. Thus, anything priced below £1.77 is a ‘lost leader’, a marketing sale.
I suppose what I am saying is that the local (in the United Kingdom) VAT thing is a significant input to the price one charges for a given e-book; but just one part of the equation.
Emotionally, it bugs me that I’ve been subject to a 20% hit on every sale for years while the old-world ink and paper establishment publishing industry has been operating VAT-free.
On the other hand, I did not think the tax was going to be lifted until December and right now, every little bit helps particularly as my hopes to take some time off from writing to do a sustained marketing splurge have been completely screwed by COVID (yes, I know I have nothing to really complain about – I have not lost anybody close thus far, thank goodness – despite the blundering of the bunch of clowns in charge over here!)
So, the long and the short of it is that I have not made up my mind what to do about the sudden absence of VAT in the UK; practically everywhere else, USA-apart, a similar tax is still levied on my books, more than 20% by some countries.
The funny thing is, when back in 2012 I decided that it was now or never to be a full-time (near as dammit then and eventually a couple of years later was) indie writer, little did I realise that it was going to be just like running any other business.
Or that I’d need spreadsheets to project manage stuff, or actually have to develop pricing policies, partner with at any one time half-a-dozen or more audio book narrators, be worrying about keeping various country’s tax interviews up to date, have over sixty books in virtual and real print, half of them out as audiobooks and another thirty-plus in production for Audible release in the next couple of years, and working seven days a week, stupid hours to hold it all together.
But I still do not know what to do about the VAT thing!
I think about it, do the math, see how it works royalty-wise, how long I leave current prices in place to recoup all that I lost down the years. Argh…. Too complicated, and I still haven’t produced any draft today for the forthcoming October Timeline book (which is about half done now), or listened to the latest audio book chapters, read the letter the taxman has just sent me – honestly I don’t know why they bother, it is not as if I am rich or anything – and I’ve been meaning to catch up on Season 3 of Westworld and Killing Eve for weeks now!
Why is nothing simple?
Maybe, I’ll think a while longer on the beastly question of what to do about the VAT question another day…