Here’s another chapter from Indie Author Confidential Vol. 10. Get it at https://www.authorlevelup.com/confidential
REEVALUATING CURRENCY EXCHANGE RATES
The euro is heavy on my mind. Recent reports have shown the value of the currency being 1:1 with the US dollar.
This means that collectively, a book sale in a euro country is worth less than it was two years ago if you’re an American like me. I historically benefited when Europeans bought my books because of strong currency exchange rates.
I'm going to meander for the next few paragraphs, but there is a point at the end.
I’ve talked many times about how I created Excel macros that slice and dice my sales reports into a nice database that I can run reports from.
One component of these Excel macros is currency conversions. Every retailer except Amazon does currency conversions for you, and you don’t even have to think about it when you look at their sales reports.
Amazon is a pain in this regard because its detailed sales reports don’t tell you what you actually got paid in your home currency when you sell books in foreign stores. For example, if I sell a €4.99 book in Germany, the report will tell me that I made approximately €3.45, not what I made in dollars. To get the dollar amount, I need to look at a separate monthly payment report that includes a German exchange rate factor. Then I must multiply the commission by that factor to get the actual amount I got paid. And even then, because of rounding, it’ll never be 100. But it will be close.
Also, Amazon’s bank uses different exchange rates than any other bank I’ve tracked, so you can’t do this math with publicly available exchange rates. If you do, your numbers will be way, way off.
Amazon could solve this problem once and forever by simply including the exchange rates on the detailed royalty report and then do the math for you. But alas…I have to do it with an Excel macro instead.
If you don’t account for exchange rates on Amazon, then you will never have accurate sales figures. There is one very prominent sales tracker on the market that, last I tested, did NOT do this math. It doesn’t even convert the currencies. It’s headshakingly bad. But I digress.
Anyway, my Amazon sales report macro does this math by estimating the past 6-year average of the Amazon bank’s exchange rate between 2014 and 2020 for every month I got paid during that period, and then it applies that factor to my foreign royalty amount to get an accurate conversion and estimate of what I made in any given month. Because exchange rates fluctuate over time, you’re better to use an average. In my tests, my currency conversions got me to within 90 to 95 percent of what I actually made, and my numbers were just as accurate if not more than Book Report, a prominent sales tracker on the market right now.
Anyway, maybe you don’t care about that. Maybe you never thought about it. But I do because I want my database of sales to always be accurate and up-to-date. I know to the penny of what I made for every book in every country in every format, and I can get those numbers in just a few minutes. Very, very powerful, and unlike some people who use sales trackers with browser extensions, my data is private.
With the falling euro exchange rates, I think it’s time for me to go in and redo the math on my euro factors. They’re current through 2020. For Germany, the Netherlands, Italy, and Spain, the average exchange rate was about 1.12. This means that a €4.99 book at a 70 percent royalty would net me about $3.86 (3.45 x 1.12). In France, the historical exchange rate has been a little better at 1.68, which would net a $5.79 royalty.
With current exchange rates, if it’s true that the euro and dollar are close to 1:1, then that means that the same sale would now be $3.45 (everywhere but France), which is objectively worse in all euro countries. But again, I need to review Amazon’s exchange rates to see just how bad it is.
Honestly, I probably need to do this exercise for all my currencies again by adding the last 24 months into my current average. It would strengthen my factors from 60 months to 84 months and therefore lead to better and more accurate conversions when I slice and dice my reports into my database.
I think the wrong thing to do right now is to raise my euro prices. I’ll probably wait until the war in Ukraine ends, assuming it ends soon. Otherwise, if you raise your prices and the exchange rates rally, you'll shoot yourself in the foot. Plus, people raising their prices is what leads to more inflation. That’s ultimately bad for readers.
This is the kind of stuff I sit around and think about when I have spare time and am procrastinating on a novel…
