One Size Does Not Fit All – Books Prices in the EU

So.

There’s this whole VAT thing with the EU, where blah blah blah. Pricing difficulties blah blah blah. Rock and a Hard Place.

Short Version

I’m very sorry to say that at Nook, I have set all my books to US only. For now, it won’t be possible to buy Nook versions of my books outside the US. I hate that. Hate. It. But Nook has made it impossible to correctly account for VAT and the laws in certain countries that require book prices to be the same everywhere in that country.

Amazon aggressively prices-matches Nook, including Nook in the UK. I know this because a few weeks ago it took Amazon UK all of 3 hours to price match a Nook UK price change to .99 while Amazon US did not match for a couple of days.

Nook Press does three things that make it impossible to comply with the laws.

1. They require US-based authors to provide a price that does NOT include VAT.
2. They allow only one price for the entire EU
3. You can choose US-only OR all three: US + UK + EU.

This means I cannot be in Nook UK, because that option also puts me in the EU.
This means it is not possible to comply with Fixed Price Laws.
It also means that I can’t be at Nook at all with books where my traditional publisher has only North American rights, but that’s been true forever. I’m just complaining is all.

As an aside, it is also impossible to comply with Nook’s expectation that my Nook prices will not be higher than the prices I set at other vendors.

If I keep my books on sale at Nook with the current state of affairs at Nook Press I would be unable to match my prices across the EU vendors AND I would have different prices at Nook.de, Amazon.de, iBooks de, etc when the law requires them to be the same. The same would be true of France. I would get a nasty-gram from Amazon informing me of the price discrepancies and, since I would be unable to address them, Amazon could either price match or remove my book from sale.

The problem of different German prices (or French etc) is not a price matching issue. This is a regulatory issue, and Amazon is the one who will hear from the German authorities about not complying with German law. Amazon might have to take my book off sale in order to continue doing business in Germany.

(I would expect Nook to be hearing from France and Germany about this when/if those authorities notice that Nook prices are out of compliance, which they will be.)

This is not a risk I wish to take. Since my Nook sales are something like 99% US, I suppose my decision affects only a few readers. (Please contact me if you are one of those readers.)

The Longer Explanation

Three of the major vendors for self-publishing authors, Amazon, iBooks, and Google, make it possible to behave like a normal business and set prices in the various EU countries that account for VAT and also price books to end in .99. I can decide whether I will round down to a .99 price or round up to one. They also allow authors to make sure their prices are the same across vendors where there are fixed price laws for books.

Kobo, for those who are interested, expects US users to provide an EU price that INCLUDES VAT. They also only have one price for the EU, but because it includes VAT, you can, effectively, provide the same VAT-inclusive price everywhere and remain in compliance with German and French laws, assuming you (alas) set the German and French prices to the same VAT-inclusive price everywhere else. Not very fair to the French, where VAT is so much lower, but it’s that or nothing.

Because Nook does not include VAT and also only has one price for the entire EU, there is no way to guarantee the price will be the same where it needs to be.

Kind of Snide Aside

I always wondered why Nook is inflexible about how you sell in countries outside the US. I thought it was peculiar that they said “because of the volume” it could take several weeks for a book to appear on the UK or EU sites. Today, the answer finally kicked me in the shins.

The only reason volume would be an issue for populating a website is if they’re doing it mostly by hand. The beauty of a database driven website is that once you have the webpage talking to the database (waving hands and leaving out the bits about horrific SQL queries) there is little difference between putting one record on a page or 1,000,000,000 records. And even if we’re talking about terrible query performance, the time to render even a million records is minutes and in no possible case is it weeks. The only thing that takes weeks in this scenario is the person you’re paying to put the records into excel. Or worse, the person who is entering the data by hand into the servers located in the EU.

Even Longer Explanation

Basically, if you’re selling books, the laws about how to comply with the taxing and pricing authorities in the European Union just got a lot more complicated. For those who are thinking they’ll just wait for the EU tax authorities to come knocking, I will say that you have misunderstood what could happen. If you are selling your books to the EU via Amazon and the like, you are selling to the EU because those vendors have a presence in the EU. If your book at these vendors is priced such that you jeopardize their compliance with EU laws, they will likely have to remove your book from those countries. So, no, Germany will not collect a euro of VAT from you. But your books are likely to be yanked from all the German vendors so, yes, no VAT paid to Germany, but no one in Germany is buying your books.

Slight Aside

If you are selling books from your website and you sell to residents of the EU without remitting the appropriate VAT to their country of residence, then you will have some exposure there. Probably you could get away with it, but that does not make it ethical to do so. I have no idea what the IRS might say during an audit when you have income from the EU and can’t prove you don’t have to pay State tax on it, perhaps, or maybe, (total speculation here) the IRS would say something like, Hmm. The US has a treaty with Germany in which we agree not to screw each other over taxes. I dunno. I think I don’t want to find out.

Back to the Even Longer Explanation

VAT varies across countries in the EU. Further, in some EU countries, books must be the same price at all places in that country. Thus, if you are selling a book in Germany, that book must be the same price everywhere it’s on sale in Germany. For DIY authors, that means if a book is Euro 2.99 at Amazon.de, it must also be 2.99 at the German iBooks, the German Google, the German Nook, the German Kobo, etc. The same is true in France: same price in France across all French venues.

In the EU, the price shown to purchasers includes VAT.

Now, in Germany, VAT is 19%. Thus, if a book is priced at Euro 2.99 in Germany, after the sale is made .48 goes to the German government, leaving the remainder of 2.51 to be split between the vendor and author. As an author, I care about the part of that 2.99 that does not include VAT because that’s the amount used to calculate my royalty.

In France, VAT is 5.5%. Thus, for a book priced at Euro 2.99, in France, after the sale is made .16 goes to the French government leaving the remainder of 2.83 to be split between the vendor and author.

At Nook, where I am providing ONE VAT exclusive price for the entire EU, that price must have the appropriate VAT added to it, and that VAT rate varies. Suppose I say, OK, my book is $2.99 (American). Google-fu says that’s Euro 2.48. A quick test at Nook gave Euro 2.47. Using 2.47:

Add 19% VAT for Germany and the price is 2.94
Add 5.5 VAT for France and the price is 2.61

Those are stupid prices to show consumers, but they are also prices I cannot guarantee will match the VAT inclusive prices I must give at EVERY OTHER VENDOR.

iBooks rounds up or down to .99 prices. I will NEVER be able to match Nook to Apple. Not ever except by total serendipity.

At Kobo, I give a single VAT INCLUSIVE price. So… which one do I pick at Kobo? iBooks Germany 2.99 or Nook Germany 2.94?

I could change the Nook EU price to 2.51 to give me a Nook Germany price of 2.99 and match Apple, Kobo, Amazon, and Google to that.

But then the French price at Nook becomes 2.65, which at Apple will be rounded up to 2.99 and …. boom. Not in compliance with French law. This is true as long as I have books on sale at Nook EU.

And that is why I no longer have books on sale at Nook EU. This is complicated enough as it is. Heck, I’m not even confident yet that I have managed to price everything as required, because I will tell you, iBooks did some crazy ass shit with prices that scares me, and Amazon’s VAT adjustment resulted in two of my US prices being raised. That’s not supposed to happen. But I know it did because a couple months ago I used Amazon’s pricing tool to reset some prices, which I logged so I could keep track, and also conformed at other vendors where Amazon recommended a price decrease (because I didn’t want to gouge others) and today, two of those Amazon books were back to the higher US price and therefore MORE than the price at other vendors.

::sigh::

Share

Tags: ,

18 Responses to “One Size Does Not Fit All – Books Prices in the EU”

  1. […] Nook, with their seemingly sensible VAT-exclusive pricing. I was happy with that, until I read this blog post. Apparently some EU countries have fixed pricing laws than mean you can’t offer the same book […]

  2. […] « One Size Does Not Fit All – Books Prices in the EU […]

  3. Diana says:

    Great article. I didn’t even think about how Nook prices would trigger Amazon’s price match nightmare. Nook press doesn’t seem to have the same business sense as Amazon. No wonder their sales are down.

  4. […] Click to read Carolyn Jewel’s article […]

  5. […] If you come across someone thinking this is just a knee-jerk response along the lines of ‘no taxation without representation’, here’s a blogpost from Carolyn Jewel explaining how it is IMPOSSIBLE for her to continue selli… […]

  6. Thanks for posting all this, Carolyn. I still don’t pretend to understand it all, but I’m happy to be pointed in the right direction.

  7. German User says:

    As a German, living in Germany, I can buy and download ebooks at Barnes & Noble US without too much trouble. You need a VPN with an US-IP-Adress. You would also need it for the free ebooks they offer, or you cannot be sure you can download them.

    A VPN is also useful for security and other things, it costs extra, but if you buy a lot of books at Barnes & Nobles, it is well worth it for that reason alone (they could easily check my country through other means, so I could lose access any time, but the VPN also has other uses).

    • Yes, there are lots of ways to get around IP-based territorial restrictions. You don’t even necessarily need a VPN, though it’s a good idea to have one. You could use TOR to access sites anonymously. And there are apps and browser plugins that spoof IPs.

  8. My head hurts. I’m not sure I fully understand. If I’m not fiddling with the list price on Amazon to have nice rounded numbers, then won’t it still work for me to be on Nook? Right now, for my US$4.99 list price, Amazon says my VAT exclusive price is E4.06, and if I put that in Nook, they’ll add the same VAT as Amazon does and it will match. I’m not sure what’s going on with Apple, as on D2D it allows me to end my numbers with anything and so now I’m trying to find my book on the Apple UK site to see if they rounded it, but it’s not showing up there? Weird. However, this does bring up a problem with XinXii since it does have a set number of choices and so they just won’t match. Since I haven’t sold a single copy through them, I’m pulling mine from there.

    • No, it can’t work at Nook. At every other vendor, you can make your book the same VAT inclusive price in the EU because they allow you to enter a Euros price WITH VAT such that your book can be 6.99 Euros EVERYWHERE and you won’t run afoul of requirements that the price been the same in certain countries. For US based authors, Nook requires a single VAT exclusive price and therefore the price to consumer will be different for Nook for countries with different VAT. You could only normalize one price across All vendors. One of my posts sets out why that is. I’ve been avoiding making it even more visual but I think I have to, but not in a comment. πŸ˜‰

      • I’m even more confused. Isn’t it within a single country that the price has to be the same? So for instance, in Italy, Amazon automatically raised my price to 4.22 Euros (VAT inclusive) but they show that the vat exclusive price is 4.02. As long as I plug in 4.02 on Nook, they will add the same VAT amount in Italy to 4.02 to get 4.22, correct? so they’d match then within Italy and I wouldn’t run afoul of the law that says it has to price match. But in Germany, my VAT inclusive price is 4.83, so presumably Nook would tack on the correct VAT amt to 4.02 in Germany to get 4.83.

        • The problem is you can only give Nook one and only one VAT exclusive price.

          If you plug in 4.02 at Nook differing amounts will be added to 4.02 depending on VAT.

          Kobo allows one and only one VAT inclusive price. So, in your example, what VAT inclusive price will you give Kobo to such that your French and Spanish prices match Nook’s different prices? You cannot make that happen.

          Thus, in France your Nook VAT inclusive price will be: 4.02 plus 5.5%=4.27. You cannot set a price of 4.27 at Apple. Apple will round that up to 4.99 and you will have two different prices in France, 4.27 and 4.99. What will you do for Kobo in France? You can match either 4.27 or 4.99 but not both.

          If you decided you would set your Nook price such that it would also be 4.99, your Nook VAT exclusive price would be 4.73 + 5.5%=$4.99 and you will match France and tell Kobo your EU price is 4.99.

          This means that in Spain, which also has fixed price laws Nook will calculate your price using that single VAT exclusive price: 4.73 + 21% = 5.72 and, again, at Apple, you cannot set your price to 5.72. Thus, Nook Spain will be 5.72 and Apple Spain will be 5.99. And Kobo will be 4.99

          Even if we only have to worry about Spain and France, they have different VAT amounts so you cannot make both their prices end in n.99 to match what Apple will do and Kobo can be made to match only one of those prices.

          There is no end to this problem.

          The only solution, if one chooses to worry about this, is to remove your books from sale at Nook UK and EU, and price everything so that all vendors match your Kobo EU price. That at least, is possible. You have the same price everywhere, but you match in the countries where it’s required.

          • Ugh, see I told you I was missing a piece of the puzzle. For some reason I only zeroed in on the problem between Nook and Amazon and I couldn’t see how that was a problem. I didn’t factor in Kobo and I guess completely missed your point about it in the original article in the middle of my confusion fog (I wasn’t doing a Kobo vs Nook, but a Nook vs Amazon in my head). Seems the problem actually lies with Kobo not letting us set it individually, since they’ve opted to make us set a VAT inclusive price. My Nook sales seem to be exclusively US, but man, I’m so mad at Kobo. I set it to the highest VAT inclusive price Amazon had (4.83), thinking that that wouldn’t put me in conflict with Amazon’s price matching bots, but now that means I could be in conflict with some countries that have price matching. I really wanted to avoid fiddling with the prices at Amazon, I guess I have no choice now. Will pull out of Nook, but can’t pull out of D2D or Kobo as the former is how I get into Apple and the latter is where I see some international sales (Google as well). Thank for helping to clarify!

  9. It seems to me that D2D is the same way as far as setting one price and not being able to set the price in line with the different percentages for each country, like Germany, etc. Setting one Euro price is not going to work for all the countries. I haven’t changed anything in D2D. I’m totally confused. You sure deserve a pat on the back, Carolyn, for figuring this out.

    • D2D is set up like Kobo, to provide a single VAT inclusive price for the entire EU. So, you’d have to set a rate high enough to recoup the VAT that will be deducted from your royalty while also not being lower than anything you have at Amazon. And, you would have to set the countries that have fixed prices for eBooks, Germany (maybe, see in re, does the German law apply to non-German language books that are sold –also? mostly? mostly AND also?– outside Germany), France, and Spain to the same price everywhere else.

      Because of this we cannot/should not charge a lower price in France even where the vendor makes that possible (Apple, Google, Amazon) because Kobo and now D2D do NOT allow France to have a different price from any other EU country.

  10. AE Jones says:

    Carolyn –

    First of all, thank you for tackling this issue. I do not consider myself to be a ‘stupid’ person, but I have been very confused by all of this and have been trying to learn what it is, and what to do on various loops and sites which honestly have confused me more. Plus I am a relatively new author so I think some of this is a learning curve thing πŸ˜‰

    I am sorry to say that I am still confused. Not so much on the idea of what the VAT is, but on how to get it to all work right on the various sites where I am selling (which is Amazon, Kobo, Nook & Itunes). If I look at my novels which sell at $3.99 US for example – Amazon has figured the price for DE as 3.53 and FR as 3.13 (I have the box checked that I want the currency calculated off of US amount – and maybe that is a no, no too since I assume that means it will change the rates depending on currency conversion?). I know that the county prices are different because their standard VAT rates are different. But when I go to iTunes, ALL of the EU countries are loaded as E3.49.
    If I try to go in to change the prices (and you are already aware of this) it changes according to tiers E3.49, E3.99, etc. Does that mean that I have to move DE to E3.99 on BOTH Amazon and Itunes and FR on BOTH Amazon and Itunes to E3.49 so that I am in compliance with the laws? What about the other EU countries, do I have to do something similar with them?
    And then on to kobo which is just EU only…ughh…do I have to set all the EU countries at one price (on ALL three selling sites) for example E3.99 so that I can continue to not violate the laws? And of course from what I can tell, B&N I should stop selling outside the US…
    Sorry to probably ask the same thing again in a different fashion, but I have been reading about this all afternoon and have finally reached the end of my rope!
    Thanks!
    AE Jones

    • Apple shows your prices as 3.49 because they round prices so they always end in a 9.
      At Kobo, you can only set a single VAT Inclusive price for the entire EU.
      At B&N, if you are worried about compliance with EU laws, then what they have set up means you cannot comply with those EU laws.
      At Amazon, if set your prices to calculate from the US price, you won’t be able to match across vendors.

      So, to have a shot at this working:
      1. Determine the EU price, ending in a 9, you want to have. And, for this example, assume you have arrived at it like so:
      Your US price is 3.99. Highest EU VAT is 27%. You could set your price in Euros to 4.99 in order to make sure the amount your royalty is calculated at is sufficient for your bottom line. This is a personal decision. You could also decide that you’ll eat the VAT. But let’s pretend that you have decided your US $3.99 price means your EU price should be 4.99.

      2. At Kobo, unclick the calculate from US box, and set the EU price to 4.99
      3. At Amazon, you need to unclick the match US price and for the EU countries, enter the VAT-Inclusive price you want to have, which for our example, is 4.99. For the UK, you might decide to set your price to Pounds 2.99.(Up to you if you want to account for the higher value of the pound vs. the dollar.
      4. At Apple, select the EU countries, set the currency to EUR, the price tier to at least 4.99 but NO LOWER, and the price to 4.99. Select the UK, set the price to pounds, your price tier to no lower than 2.99 and your price to 2.99
      5. At Google Play, set up three price tiers, USD and World, Euro and ECZ, GBP and GB.
      Set the US to 3.99, tax NOT included.
      Set the EuroZone countries to 6.48 Tax INCLUDED — this will account for Google’s discounting and leave you with an EU price of 4.99
      Set the UK to 3.94 TAX included. — This will account for Google’s discounting and leave you with a UK price of 2.99

      Voila. Your prices should match at all the venues where Amazon allows you to set prices directly.

  11. AE Jones says:

    Thank you so much for the detailed explanation. After everything I read today trying to figure this out. Your articles and answer back have helped me. Thanks for taking the time to help all of us!
    AE