I have been alerted to some inconsistent and unfair e-book pricing policies by Amazon in certain countries.
If you read e-books, and live outside the US, this information could drastically affect how much you pay. If you are a writer, and are selling internationally (and you should be, this is a global $80bn business), this is harming your sales right now.
When you go to Amazon.com and search for my e-book, you will see a price of $0.99, $1.16 or $3.44, depending on which country you live in. Whichever price you pay, I still get $0.35. Aside from 15 percent in sales taxes, Amazon keep the rest.
Let me explain.
Official Kindle Countries
While Amazon has many local stores in countries around the world, there are only three official Kindle countries – USA, UK, and Germany.
The UK site is for those in the UK only; customers in other locations cannot purchase e-books from there. I set the price, I get 35% of that price, and that’s what customers pay. Sales tax (VAT) is included in the price. It’s currently the minimum, 69p.
The German site allows customers in Switzerland, Austria, Luxembourg, and Liechtenstein to purchase e-books, as well as Germans. Again, I set the price, receive 35%, and that’s what customers pay. Sales tax (VAT) is included in the price. It’s currently the minimum, 0.99 Euro.
The US site caters for the rest of the world (although my friend in Singapore is not allowed purchase my e-book for some reason), and users from Ireland to Australia, and Sweden to Spain, must go to the US site to purchase e-books.
Language/Territory Restrictions
The system of restricting which customers can purchase which books on which site is a product of the way publishers carve up rights, usually done by country or language. For example, if you sell the UK rights of a book to a London publisher, you still retain the rights for the rest of the world.
If you sell world Spanish-language rights to a publisher in Madrid, this precludes you from producing a Spanish-language version in any country (but you are free to sell your English version to Spaniards).
Because of this, Amazon must restrict certain titles depending on your location. They can’t sell a US trade published version of a writer’s book to someone in the UK because a different publisher may hold the rights in that territory.
However, none of this really applies to indie writers, as we tend to own all global rights to the work. There are some exceptions where writers only sold UK rights to publishers and then self-published in the US, and vice versa, but this holds true for most indie writers.
US, Canada, Australia & New Zealand
Amazon doesn’t apply sales tax in these countries (for now, there is some dispute over this). If you are in one of these four countries, you will see $0.99 e-books at that price.
Europe & VAT
In the EU, VAT (sales tax) is applied at the lower rate for print books, and the higher rate for e-books, and the rate varies from country to country. In Ireland, for example, there is no VAT on print books, but 21% on e-books. In Spain there is 4% on print books and 18% on e-books.
For tax reasons, Amazon operates out of Luxembourg. The higher rate is only 15% there, and this is what Amazon applies to all e-books sales from European customers using the US site.
Therefore, if you are in Ireland or Sweden, all these $0.99 books should cost you $1.16 (not sure where they get the extra $0.02 from, but it’s always there).
However, the strange thing is, they only seem to apply the VAT on certain books even though they say they apply it to all.
For example, when I view my book on Amazon US – when I am in Sweden or Ireland – I see a price of $1.16, as it should be. Same for this book by Declan Conner, and this book by Bob Mayer.
But, when I view this book by Amanda Hocking, this book by John Locke, or this other book by Bob Mayer, I see a price of $0.99.
Why is Amazon applying VAT to some books and not others?
Amazon Whispernet Surcharge
Some countries have to pay even more. In certain countries Amazon levies a $2 Whispernet Surcharge on all e-book transactions before the VAT is added. This means that a 99 cent e-book costs $3.44. Big difference.
Here are the unlucky countries I have discovered so far (and I am sure there are more):
Spain, France, Hungary, Poland, Finland, Portugal, Italy, South Africa and The Netherlands.
If you don’t think this is a big deal, consider this: there’s 300 million people living in those ten countries, and large numbers of them enjoy reading books in English.
However, Amazon is pricing them, and writers who sell to them, out of the market.
At first I thought this surcharge was something that only affected Kindle owners, that it was a surcharge for downloading books wirelessly because they bought their Kindle in the UK or the US and are using it in another country.
Amazon might have had some justification for that.
However, this is not the case. It affects purchasers of e-books in those countries, whether they own a Kindle or not.
Indie Writers
This is clearly an issue which affects all writers (and publishers), but it affects indie writers disproportionately. One of the key advantages that indie writers have is the ability to be flexible on price.
We can sell books for $0.99 or $2.99 and survive. And while trade publishers can do that for select titles for a limited time, they can’t do it with their entire list; they simply have too many overheads.
Adding $2 to the price of a $12.99 e-book will have some effect on sales, for sure, but adding it to a $0.99 or $2.99 book, and then adding 15% VAT, just kills sales.
I have written to Amazon to see what their response is, but based on their responses to a couple of my readers, I don’t expect much. Until this changes, I will be directing all readers in those countries to purchase through Smashwords instead.
I might be small fry to Amazon, but if we can raise awareness of this issue, and get some of the bigger writers onboard, maybe we can do something about it.
EDIT: I have been updating the list of “surcharge” countries above as I receive information from writers and readers throughout the day. I have also heard that this charge used to apply in Ireland and Australia (and possibly Canada), but was removed by Amazon.
If you have any information to share on this issue, please leave a note in the comments or send an email to david dot gaughran at gmail dot com.
On a separate note, I would like to thank author Katrina Parker Williams for featuring my short story collection on her blog today. More about her, and her stories, later in the week.
In addition, if your book were priced at 2.99$ , you’d STILL get only 35% of that, since the 70% royalties rate works only for “Officially Kindle Coutry” customers.
Yes, that’s a pain too.
Wow! What an eye opener! I had no idea. I suppose another option could be selling through your own site. Not sure the logistics in that, but it would certainly allow customers ANYWHERE in the world to buy your book at the price you set. Unless I’m being completely naieve?
Lots of writers do it. You pay a small amount to set up the shopping cart, then a percentage of each transaction to PayPal, but you come out with a lot more money than going through any retailer. I’m going to look into it.
Another option is Smashwords. I get around 55 cents for every 99 cent ebook I sell there. Anyone worldwide can buy from it, but sometimes their system is a bit clunky with non-US addresses (looking for zip codes and whatnot).
I would be VERY interested in hearing about your experience if you start selling through your website.
I haven’t really thought about it yet because I wanted to launch these short stories on the minimum possible budget while doing it professionally.
It is certainly something I will look at in the future. All you would need is a shopping cart and a merchant account with PayPal, as far as I can tell. Then 100% royalties would be yours.* I like those numbers.
* minus cost of shopping cart and PayPal transaction fees.
I’ve noticed that some Kindle eBooks have weird charges, while, unaccountably, others don’t. $3.44 for a $0.99 book is crazy!
I’m planning to sell mine at $4.99 – that’s $0.50 per story (ten stories).
I plan a similar sale in the next month, six stories for 3.33USD or around that price tage. I’m curious what would be the price for that one in some countries? 6-7USD?
Just take your price, add $2, then add 15% to the total. So for your price of $3.33, you are looking at a price of $6.13 in the “surcharge” countries.
I think that’s a good price JB – and gives you lots of flexibility for sales and discounts if you want to.
Also note that while selling directly or through SW may be better in the short run (or if your book is already sufficienbtly known), those sells don’t have any effect on the rankings, Also Bought etc, which may delay the “brand/marketing” curve…
This is very true, and it’s why I only directed readers to Smashwords as a last resort, despite the fact that I get nearly double the royalties from a Smashwords sale.
Goodness me, this is surprising. I had no idea. Thank you for bringing it to wider attention, $3.44 for a 99 cent book is crazy!
It was surprising to me too when I got an email from a reader asking why my 99 cent book was $3.44!!!
If he hadn’t taken the trouble to contact me, I would never have known.
Yeah, I was surprised on this the most, because I wanted to buy your work, then my Amazon presented that 3.44USD price tag. It’s definitely hurting your business. I’m really curious why they’re adding more taxes to different countries, while you’re getting the same percentage for every sale.
I’m also curious what that 30% tax withholding is all about (It’s mentioned in the tax section.). Could you write a blog entry about that too?
I will do a blog about it at a later point, but only when I have gone through it myself.
Basically, Amazon (and Smashwords) are obliged to withhold 30% of your royalties until you prove your tax status.
Each country has a different tax treaty with the US, so your situation will vary. Ireland has a 0% treaty with the US, I am entitled to all of that 30% back – once I fill out all the right forms and send them to the IRS. Other countries have varying amounts – you will have to check yours.
You can’t sort this out until your stuff is actually on sale.
This is a very helpful post on the whole thing: http://www.stepbystepselfpublishing.net/how-to-get-an-itin.html
My country is exempt from U.S. taxes (Based on this document… http://www.irs.gov/pub/irs-pdf/p901.pdf). So, if I understand it correctly, I’m in the same situation and I’m entitled to all of that 30%. So, I’ll have to simply fill out the correct form,W-7 and that’s all?
Correct.
But you have to have an account with books for sale first. Follow the steps in that link. Then you are done, and you only have to do it once.
Thanks Dave! You’re very helpful!
I can add that in South Africa we are charged a ‘whispernet’ amount of $2 per book, so all my 99c books cost $2.99. When I ‘gifted’ 3 of my books to someone in the US I was also charged $2.99 per book – even though there was no ‘whispernet’ involved!
Barnes & Noble don’t allow non US writers to sell on their Nook site.
Smashwords require you to accept PayPal payments and SA only allow PayPal payments through FNB bank, which is not my bank. I would have to put R10 000 into an FNB account in order to use their PayPal facilty.
Amazon also take their 30% government tax off before we receive payments. You have to jump through so many hoops to get the money back that it would probably cost more than it is worth (unless you have Amanda Hocking’s sales)
But then I remember that I wouldn’t be making any money if it wasn’t for KDP and I don’t feel so bad.
(I am also selling print copies of one of my books through Amazon and the exchange rate and rise in postage now means that I make a loss on each book.)
It’s not easy being a writer (sigh).
Hey Jan,
Thanks for commenting. I can add South Africa to the list too. I know for a fact that Amazon used to charge this for Irish and Australian customers (and maybe Canada too), and they dropped it. I wonder if customer pressure was a factor.
And that’s absolutely crazy about getting charged when you gift someone. There is no justification for that at all.
Dave
Jan Hurst-Nicholson said:
“Barnes & Noble don’t allow non US writers to sell on their Nook site.”
Do this apply to writers outside South Africa?
Yes, only US writers can upload directly to Barnes & Noble. Everyone else has to go through Smashwords.
And only US customers can buy ebooks from BN.
To buy BN books, I have to connect through a VPN …
Hence my starting to buy from Kobo instead.
And how is the whole Kobo experience – I haven’t tried it yet.
Thanks for putting it so clearly, David. There is one small correction/addition I’d like to make: as with the VAT, the Whispernet Surcharge is NOT applied to all purchases made from a specific country, e.g. the Hocking book would be $0.99 for me (in Hungary), too.
On the whole, this Whispernet Surcharge seems like amazon’s hokus-pokus cash cow to me. And one that doesn’t even turn up on their invoices…
Sorry Stefan, I should have made that clear above. It does vary from book to book and country to country.
I will be very interested to see their response.
I’m sure you have heard this already, but I doubt you’ll get more than vague gibberish from Amazon. That was Selene Kitt’s experience when she tried to get answers from them on that round of censorship (of self-published authors only) a few months ago. They couldn’t point her at a policy that explained their criteria. Their MO seems to be to keep people confused.
The email was an edited version of this blog post, so I tried to anticipate all the canned responses that I know some readers have gotten.
Doesn’t mean I won’t get the same treatment.
This is where the self-publishing world falls down – no organisation like the Author’s Guild.
The next time agents, Amazon, Apple, and the Big 6 sit down for a pow-wow, we will be the only interested party without a seat at the table.
It’s possible that Amazon is following some kind of laws we don’t know about in setting all these different prices. Not that I’m saying that makes it fair to authors or readers, because it doesn’t.
Sort of off topic, but it’s not that non-US authors can’t upload to PubIt. It’s not easy unless you can physically go the States, but you can do it if you have a US tax number (one simple phone call, if you’re publishing as a business rather than as an individual) and a US bank account.
Hi Colette,
I’m pretty sure that’s not the case. After all, they used to charge this in Ireland and Australia, but don’t anymore.
re PubIt, the US bank account is the tricky part. How do you open one of those from abroad? Not too easy, I imagine.
Dave
Selling direct from your own site, surely would require that you charge (the right amount of) VAT/sales tax for each country that you sold into, and then keeping records to enable you to pay the VAT/sales tax to each of those countries. You’d probably need a whole accounts department to handle all that.
Hey JB,
Feel free to correct me if I’m wrong, but as far as I am aware, the way VAT works is the seller applies the rate of the country they are selling from. So if I bought an e-book from you off your site, you would apply Irish VAT, not Swedish VAT (which is where I am). Whereas, if you bought one off the website of Martin Amis, he would be obliged to charge UK VAT.
Amazon applies Luxembourg VAT (15%) on all e-books sold to EU customers because their “office” is based in Luxembourg.
All your site would have to figure out is if someone is in the EU or not. If they are in the EU, you would apply Irish VAT, if they weren’t, you would apply nothing.
I think there are basic shopping carts you can get for your site which can handle the VAT issue based on the address attached to the customer’s credit card/PayPal account.
Dave
Maybe you’re right, but surely, isn’t that why Amazon charged me $1.16 for your $0.99 book? Because of Irish (ie buyer’s country) VAT? Also, when I bought my Kindle, Amazon warned me that I would have to pay Irish VAT.
Irish VAT on e-books is 21%
Swedish VAT on e-books is 25%
I get charged $1.16 here in Sweden for a 99 cent book, so do you in Ireland – its the Lux rate of 15%.
The only bit I don’t understand is where they get the extra $0.02 from. I have asked Amazon about this as well. I’m sure that adds up with the huge amount of transactions they conduct. Reminds me of the movie “The Secret of My Success” starring a young Michael J. Fox.
I re-read your comment and, if Amazon are using Lux as their base, as you say, then maybe you are right. Either way, if you sell direct, you would still have to account for all the VAT collected and send it to the correct tax authorities.
Yes you would have a legal obligation both to collect the VAT on all eligible transactions and remit it in a timely manner to the authorities.
Are you saying zero VAT applies if an Irish firm sells something to, say, Venezuela?
Tax really isn’t my area at all, but that’s my understanding. I could be wrong.
I just checked this, and it appears to be the case – no VAT on ex-EU sales – http://www.hmrc.gov.uk/vat/managing/international/exports/goods.htm#6
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Amazon charge VAT based on the country you are living in. I’m in Ireland so they said I have to pay VAT at 21%.
If you are not a registered VAT trader, then you cannot charge VAT to anyone so if your sales are under 41,000 euro in e-books (classed as a service) or 71,000 for printed books (goods) you need not register.
Hi Ted,
That’s good to know about the threshold for sellers.
I don’t know about print books, but I know for a fact that e-books are levied at the Luxembourg rate of 15% – because I had readers check the price of my books in about 10 different counties in the EU. VAT is charged at the rate of the country of the seller. For the purposes of e-books (at least) Amazon is based in Luxembourg.
The 21% rate applied to software. I’ve not tried to order e-books from them yet.
Ah that makes sense. I believe they have a distribution center in Cork for physical orders, so that would mean they are selling “from” Ireland and thus have to apply our rate – 21%.
Ulgh. As an author, Amazon’s fees are annoying me, too, though I’m fortunately in the US and don’t have to pay ‘em.
I just discovered XinXii, and it looks promising. They’re fairly new, but they let you set gross price and say “VAT included (19%)”.
Hi Carradee, I heard about them just as I was launching my first book at the start of May. I read an interview with the CEO and she seemed really smart so I listed both books. No sales yet. In fact, you can see your page views, and the traffic each title is getting is tiny – less than one view a day, nowhere near enough to sell. Costs nothing to list though…and the payment options are superb (you can request payment anytime once you hit the minimum of 20 Euro (with some restrictions on frequency) and they pay by PayPal. Beats two-month old royalties paid by cheque on Amazon (and even slower for Smashwords) any day, now if they could just get a little more traffic…
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Gads, I’m a late-comer! You can add Thailand and the Philippines to your list. No tax, just the $2 surcharge. I also asked Amazon when my books came out months ago and they ignored me. I believe it pure theft. If Smashwords doesn’t have to charge this surcharge, why does amazon?
Hey Stuart,
Thanks for that confirmation. So can you actually buy e-books in Thailand and the Philippines? Because my friend in Singapore is blocked from purchasing my books. Japan too.
I think it’s a rip-off, plane and simple.
Dave
P.S. Amazon seem to levy the $2 Surcharge in ALL countries outside of US, Canada, UK, Ireland, Germany, Austria, Switzerland, Luxembourg, Liechenstein, Australia, and New Zealand. So, most of the world, basically.
Hi Dave,
Yes, I can buy books here in Thailand, and a friend has bought some in the Philippines. What I generally do is look for the book I want on Smashwords first because they don’t have that surcharge, otherwise I have to bite the bullet. amazon is stupid because the send people to Smashwords.
Keep up the great blogs.
Stuart
I’ve emailed Amazon about this issue several times, and they have never, ever replied. Disgraceful. I send most internationals to Smashwords. The stupid thing about it is that it holds back the e-book market all across the world, which must cost Amazon money in the long run. I don’t get it.
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Hello David,
I live in Montego Bay Jamaica and suffer the $2 surcharge on “some” books…John Locke link from your post is 0.99c the Bob Mayer is $2.99c though. I just had a to and fro with Brett Battles the author over this same issue.you might want to look at his site and I do not think he was aware of it…I am seriously thinking about making a YouTube Video about this S**t , especially as it does not seem to be a rule? I have read posted replies from Amazon with the cost being roaming charges…….but the Kindle is Wireless ?
Hi David,
The Amazon answer you quoted is bogus. This charge applies whether you own a Kindle or not. It seems strange that some books are exempt from the charge. It seems to catch all new books. I wonder if it is a glitch in the system or whether they drop the charge on a book that is selling well. Hard to know.
Dave
I hope this goes Viral… a 7min video + phone call to Amazon on this Surcharge
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