Sunday, January 25, 2015

Blame it on the Vat

By now, I'm sure most readers in the UK/EU have noticed recent changes in book prices due to the VAT tax. I'll be honest, I haven't read up on this tax and I don't know exactly what purpose it serves or when it started. What I do know is that certain changes to the law require this tax to be added to digital products like phone apps and e-books.

In order to compensate for this tax hike, retailers like Amazon have raised the retail prices on their digital products. For example, my books that were $0.99 in the U.S. and and £0.79 in the U.K. are now also £0.99 in the U.K., or thereabouts. I'm pretty sure this price adjustment applies to the entire European Union, but I don't know how drastic the change is in each country's currency. Ironically, this increase in price is very close to offsetting the difference of the U.K.'s stronger dollar vs. the U.S. , but that's a whole different conversation.

At any rate, this leaves content creators like myself in a difficult situation. For some, it might be possible to lower prices on certain distribution channels, but Amazon's pricing terms require authors to set a minimum price of of $0.99 U.S. and most of us can't avoid that. The only way to go lower is to go permanently free. Many authors -including myself- put the first book in a series free as a loss leader, but obviously we hope to make that up in sales of sequels.

Which brings me around to the point of this post. Since the new VAT pricing went into effect at the beginning of the year, I have observed a drop in UK sales of approximately 20%. I'm not complaining; it could have been a lot worse. Hopefully, as UK readers get used to the new order of things, they'll go back to shopping as usual. In the meanwhile, I want to make sure my readers understand the reason my prices have changed, and the situation I'm in. This is not a cash grab -at least not on my part. I'm making the same per-book profit as before. I'm sure a lot of other content creators are in the exact same situation. For now, all we can do is keep our heads down, ride the storm out, and hope this tax won't have too many ripple effects.

Also, in totally unrelated news: I am ordering proof copies of several new books. This means that the major revisions and edits are done. I'm down to the last few steps before these books go live. One of those will be the new Iron Horse sequel! More on that later, so stay tuned.