Books written by Ray Sullivan

Saturday, 8 October 2011

How to Self Publish eBooks - Part Two

Pricing is probably as personal a deal as anything in self publishing.  Let's be honest here, unless an author has a strongand truly justified reason to believe he/she can demand a mainstream price for their books, it's unlikely they will make a lot of sales if they charge mainstream rates. 

Indie authors have essentially two choices - give their work away for free or charge a notional amount.  My view is that if your work is only good enough to give away, then it probably isn't good enough to publish, full stop.  There is a role for giving books away as a marketing tool, and I'll be visiting that in a future blog entry. If they decide to charge, then the amount they will receive in royalties from Amazon and Smashwords depends on a number of variables.  Lets take Amazon first.

Like Smashwords, Amazon only deals in US Dollars when setting a book price, with a lower bound of 99 cents.  You can specify this amount, or any amount above this, and in principle that is used worldwide for sales.  I have to assume a little here regarding the US, Canada and probably many other countries, but I believe that in those countries the price presented to the consumer is the price set, with local taxes, if applicable, being applied at the point of purchase as an additional cost.  However many European countries, such as the United Kingdom, have a tax called Value Added Tax which has to be included in the price set before consumers.  Amazon choose to set the book price in these countries at the price set by the Author to include VAT, so for example a $1 book would include the VAT in that $1 price tag in the UK, so the real price is less than $1 for royalty purposes.  (Currently VAT is set at 20% in the UK, so the $1 book price now is $0.80 ish).  They could have adopted an alternative model of adding VAT to the author price before pitching, but they didn't.

This has caused some irritation with Brits working in Europe who cannot access the site for buying books.  Apparently they are directed to the site, which then applies the local tax (VAT) onto the book, so they end up paying 120% of the book price compared with the UK site!

The next thing Amazon do with your book, for international sales, is convert the price to the local currency (for UK and Europe - Pounds Sterling and Euros), using an exchange rate that seems to be reviewed monthly.

Now, depending on how much you pitched your book at, you will receive royalties based on that price.  For books priced between $0.99 and $2.99 you will get 35% of the sales price, pre VAT where applicable, and $3 and above you can get 70% of the sale price.

Over at Smashwords it is a little more complicated, but only because they offer more opportunities.  For starters, you can choose to price your books at $0.00, or anything from $0.99 upwards - your choice but note $0.01 - $0.89 aren't available options!  Although books can be purchased directly from Smashwords, they also act as a portal to booksellers including Barnes and Noble, Sony and Apple, among others.  Any books sold through Smashwords automatically attract 82% royalties, that is you get 82 cents for every dollar your book costs.  Any books sold through their premium catalogue, such as Sony or Apple, receive a fair bit less, about 60% of the list price (which is nearly double what Amazon pay for lower priced books!)  Because Smashwords and their affiliates tend to sell from the US they have to fudge the VAT element so you may find that reported sales result in lower than expected payments - don't blame the booksellers, blame the politicians levying the taxes!

Oh, and two more complications.  First, Apple set their prices in the US in increments on .99 cents ($0.99, $1.99, $2.99 etc).  In Europe, where they sell in Pounds Sterling and Euros (at least while the Euro survives) they use .49 and .99 increments (£0.49, £0.99, £1.49 etc), and will drive your book down to the nearest lower price point.  Second, when Amazon become aware of Apple undercutting them in any given region, they price match, regardless of what you agreed with them!

So what do we learn from this?  Well, setting a price is easy, however what it means in terms of royalties is variable, but calculable.  Set your price and accept that some things, mainly taxes but also individual company preferences, are out of your control. As I said in part 1, make your books available in as many outlets as possible. If they sell, expect to receive differing amounts of recompense, but don't assume that the price you set is anything like the royalty you receive.

There's another part of pricing that I haven't discussed here - when do you get paid?  I'll tackle that subject in a later blog.  But for now we've discussed formatting your book and setting a price - but we're not ready to publish yet.  I'll discuss the finishing touches in Monday's blog.  Sunday, of course, is Da Dan Brown Code Chapter Three!

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