Amazon Pricing and the New EU VAT Situation

1/03/2015 03:55:00 PM Amy Ellis 0 Comments

I haven't talked much about my self-publishing experience on here since it all got put on the back burner for university but I figured I'd make a post about the new EU changes that are happening.

I hadn't paid much attention to it until I got an email from Amazon last night while I was half-asleep and I worried that my prices had gotten pushed below the 70% royalty threshold which, considering my royalties are how I'm hanging on financially at the moment, is a pretty big deal. This is a snippet of what Amazon sent:
Minimum and Maximum List Prices: The minimum and maximum list prices for the 35% and 70% royalty plans in the EU have been updated to include VAT. Books must be priced within the new ranges. If your list price falls outside of the new range we will adjust it to meet the new minimum or maximum to ensure you remain in your chosen royalty plan. Learn more about the new minimum and maximum list prices: https://kdp.amazon.com/help?topicId=ANRML55B0BWBK
That link explains further the VAT situation for different countries:
Before January 1, 2015, to set a list price of £1.99, you had to enter £1.93 to ensure that your list price would be £1.99 once 3% VAT was applied. Now, you can simply enter £1.99, and your list price includes VAT. When we calculate royalties, we will deduct the applicable VAT. You'll be able to see your list price without VAT for the primary country of each marketplace in the pricing page. This makes it possible for you to compare the suggested customer price with the price used to calculate your royalties. When you enter list prices, you'll see the VAT rate for the primary country in each Kindle store.
If you set your EU list prices to automatically calculate from your U.S. list price, your list prices for EU Kindle stores will automatically include VAT. For example, if you set a suggested U.S. list price of $10.00, we convert that price to Euros for the German marketplace. If the exchange rate is 0.8 that day, the Amazon.de list price including VAT will be €8.00. For a sale to a German customer, we would deduct 19% VAT and calculate royalty on a VAT-exclusive list price of €6.72.
*Italy note: Due to country-specific legislation in Italy, a lower VAT rate of 4% will apply to eBooks with ISBNs purchased on the amazon.it Kindle store to customers in Italy. A higher VAT rate of 22% will apply to eBooks without ISBNs. KDP doesn’t require ISBNs for eBooks, but having an ISBN will ensure a lower VAT rate for sales of your eBook to customers in Italy.
Alas, I misread the dreaded email in my half-asleep funk. However, this information is SUPER important for self-published authors. Why? Because it affects your royalties! Duh.

It also affects the price of your books. It's a known thing that "prettier prices" such as books at 99 cents sell better than books at $1.06. So you need to re-price your books accordingly. I am in the middle of the long and grueling process of changing over all the prices for my pen names (well over 50 books to change!!). Luckily, I'm on break from university so I have the luxury of time to spend working on this.

Here is how I am currently re-pricing all of my books:

Before my standard $2.99 USD books were priced as follows for other countries:

UK: £1.99
CA: $2.99
FR: €2.99
EU: €2.99

Now my prices are as follows:

UK: £2.49
CA: $3.49
FR*: €2.99
EU: €3.49
IT (for books without an ISBN): €2.99

*France only has a VAT on ebooks of 4% of there isn't a need to change the price.

I know these prices seem steep but, again, the prices look nicer than charging £2.16 or €3.37.

Are you bothering to change your prices or are you just letting Amazon adjust your prices? Why or why not?

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