Are Amazon Ripping Off International Customers?

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.

David Gaughran

Born in Ireland, he now lives in a little fishing village in Portugal, although this hasn’t increased the time spent outside. He writes novels under another name, has helped thousands of authors build a readership with his books, blogs, workshops, and courses, and has created marketing campaigns for some of the biggest self-publishers on the planet. Friend to all dogs.