Money matters

I recently got an email from CreateSpace on an update to their royalty payment terms, but before going into what the changes are and what they may mean for potential CreateSpace users, let’s take a quick look at how CreateSpace pays royalties generally.

As I briefly explained in a post on another topic, during the set up process with CreateSpace you choose the list price for your book, with their site calculator then generating how much royalty you’ll get per copy after production costs and amazon’s share have been subtracted. Percentage-wise you can expect to get between 20-25% and still set the list price at a competitively low amount. Very good all around, to be sure, and far more than you’d get from a trad-pubber. (Though, as Paul rightly pointed out in a comment on his last post, a trad-pubber will also likely offer you an advance.)

Your royalty payments won’t come with each sale, however, but rather in chunks, and this is where the recent updates come in. CreateSpace will either pay you via a check sent to your home or make an electronic deposit to your bank account; where you live will greatly affect your decision on how you get paid. For the direct deposit method, you will need to have a bank account in the US, UK, Germany, France, Spain, Portugal, Belgium, or the Netherlands, and the minimum threshold is $10, £10, or €10 (it used to be 20). You can now be paid in any of those currencies as well, whereas previously you just got paid in US dollars.

The situation with checks is a bit different. If your bank account is in a country other than those listed above, you won’t be able to choose the direct deposit option. The minimum threshold for a check is now at $100, £100, or €100 (it was 20 as well), and there is also a check handling fee of $£€8 but only if you live in one of the eight countries listed above (those with the direct deposit option).

Further complicating all of this is the situation with taxes. CreateSpace will automatically deduct 30% for taxes unless you’re either living in the US or are in a country that has a tax agreement with the US (and most developed countries do). To avoid paying US taxes you will simply need to fill out a form listing your residence and send it to CreateSpace, but as part of that form you’ll need a taxpayer ID. If you’re an American citizen the ID will be your Social Security number (a registration number generated by the national pension plan, for those of you who don’t know), if you’re not an American citizen then you’ll need to get an ID number by filling out another form. Both of these forms can be provided by CreateSpace and are honestly quite easy to do, there’s only the minor hassle of actually doing them involved.

So what does all of this mean? It’s good news for those with a bank account in one of the eight countries listed and going the direct deposit method, and rather bad news for everyone else. The choice of currency for royalty payments is nice for everyone, I think, though for those waiting for checks the much higher threshold could be frustrating. Whether this will put anyone off using CreateSpace or not of course depends on a number of other circumstances, but the updated terms seem to be aimed at benefitting authors based in either North America or Europe, who are, let’s face it, probably the bulk of CreateSpace’s clients.

Next week, Paul j Rogers on a ripping new lentil recipe he saw scrawled on a wall in a public toilet in Itaewon.

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One Comment

  1. Paul j Rogers
    Posted June 2, 2012 at 9:28 am | Permalink

    Interesting stuff.

    I knew that old British bank account would be good for something. I wouldn’t know what to do with a cheque. Haven’t seen one for years. It would probably go through the wash knowing my luck. As you say, rough deal if you’re based outside those countries, especially if it has no tax deal.

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