At the start of this year I had hoped would putting out by now my next book; due to various changes in personal circumstances that basically isn’t going to happen. The amount of time I got to commit to all thing writing related took a hit and I decided to concentrate what little I got on the writing part of writing as opposed to the business part of writing, however with the benefit of hindsight that might have been for the best. As followers of this blog are no doubt aware I live in Dublin, Ireland, which is part of the Eurozone. What you might be less aware of, is that over half my book sales to date have been through Amazon.UK, which is priced and pays me in sterling. At the moment that’s not such a good thing.
On the 23rd of June of this year Britain voted to leave the European Union, since then the Pound exchange rate against the Euro has done this:
And in October it has got especially exciting:
The source for these can be found HERE
At time of writing (morning of 12th October 2016) one pound sterling is worth one euro and eleven cents – less exchange costs. So let us crunch some very basic numbers.
My first book – The Nameless War – is currently for sale on Amazon.UK for £2.90 for the ebook version, so the breakdown is as follows:
£2.90 selling price, 30% of which goes to Amazon, leaving £2.03. Multiply this by 1.42 (£ to € rate on 19th Nov 2015) equals €2.88.
Do the same calculation again at today’s rate and:
£2.90 selling price, 30% of which goes to Amazon, leaving £2.03. Multiply this by today’s rate of 1.11 equals €2.25.
This is a drop of €0.63 or nearly 22%.
Now obviously this is a little bit artificial, it doesn’t include various fees, like bank fees and I don’t get to chose which day Amazon send payment for the month, so the arrival of funds in my account will probably not coincide with the absolute peak or trough of exchange movements. Also to complicate matters Amazon pays two months in arrears, I won’t see the money from a book sale today until the tail end of December but this example nonetheless gives a sense of the issue.
At the moment I personally can take a relatively calm view of this. My last book was published two years ago and while I am still getting sales in the UK, they are at a fairly low level so the reduction in the value of those sales is fairly modest. That however is for books that were released two and five years ago. In my experience the bulk of a new book’s sales are made in the first couple months, with an accompanying knock on to my other books. This means that payment comes in a few large lumps, rather than spread evenly over the course of the year. So while the reduction on say ten sales is only €6.3, on a thousand it is more than €600, which becomes harder to swallow. So if after months or years of writing those big paydays coincide with a slump in the source currencies value, then you are left to take the hit.
So what can I do?
The answer isn’t quite nothing but where I’m standing, the options are limited and all carry at least some downsides.
1. Sit on any planned new releases.
This is probably the simplest option. Keep your powder dry, wait out the fluctuation until at the very least things have stabilized. The downside of this is that your work isn’t earning if it is stuck in your desk draw. If you are with a publisher, contractually it might not even possible. If you are writing a series readers will not wait forever, they’ll either forget about you or get irritated, either way hard earned goodwill starts to drain away and with it your potential sales.
2. Peg the book’s price against a currency that is stable relative to your own.
This one is tricky and very dependent on the system you’re using. With Amazon self publishing it is possible to peg the price of book in other regions against the US$. Now Sterling is currently on the slide against the US$ so the very obvious downside of this is that the book’s price is going to start rising. In all likelihood some of the writers I would be competing with for sales are based in the UK, their price could remain static while mine rose. Their prices in other areas could fall or remain as is and they would receive more per sale when it got converted to their home currency – the upside of currency fluctuation. Either way the risk would be that you could be priced out.
3. Park the foreign currency.
While this one is even trickier. That means parking the foreign currency within that territory or in a foreign denominated account. Depending on regulations or cost this might be unworkable, either way this is delaying the inevitable, at some point you have to change it into the currency of the country you are in, especially if your writing income is you main income.
There are also other financial instruments for mitigating against foreign currency movements, but I don’t know enough about these to speak about and I suspect that many may not be suitable for relatively small amounts. The other thing I don’t claim knowledge or is what things were like back in the days before electronic self publishing, the answer probably depended on the contract between writer and publisher. Also in the old days books were not generally subject to global release. In the age of Amazon, a book can be available to anywhere on planet Earth with an internet connection and with that availability comes exposure to currency movements. If you are based inside the country where you make you main sales, then it is less of an issue but it is something that the modern writer needs to be aware or and ready for.
So any thoughts, comments or observations?
CORRECTION: A commenter points out I have failed to account for vat – value added tax – so my back of the envelope calculations in fact lean towards optimistic. Thank you and I will make the correction when I can – currently attending Octocon in Dublin.