At a high level, it works out where you still earn more than 70% royalties (the best you get on Amazon Kindle), regardless of PayPal fees.

We send royalties once a month, and you can specify a minimum royalty amount before you get paid. For more info about royalty holds, see:

http://help.leanpub.com/en/articles/381162-leanpub-looks-interesting-but-why-is-there-a-45-day-royalty-hold

So, say you set the royalty threshold to $80 USD. Then, when you have $100 USD of sales, you will have earned $80 USD in royalties.

We eat the PayPal transfer costs to send you the $80, so you will get $80 USD. Then, if your PayPal account is in GBP or EUR, you will pay the conversion fee into GBP or EUR.

It's not a "fee" per se, just a terrible exchange rate, kind of like what you would get when converting USD to GBP or EUR at a booth in an airport (well, not *quite* that bad!).

So, for the purpose of simple math, you can assume that your $80 USD would probably turn into the GBP or EUR equivalent of $75 USD.

So, this works out to about 75% royalties. Again, this is better Amazon (or Apple).

For more info about exchange rates, see:

http://help.leanpub.com/en/articles/2293519-can-you-pay-me-my-royalties-in-euro-using-transferwise-the-exchange-rate-is-better-than-paypal-s-and-we-re-talking-thousands-of-usd-here

To sum up:

  1. You can set a threshold to any amount over our minimum threshold of $20 USD. If your royalties are under the threshold, we carry the royalties forward to the next payment, which happens in the first couple days of the next month.
  2. To earn $80 in royalties, you need $100 in sales, of which we take 20% (i.e. $20 on $100) to cover our costs and earn some profit.
  3. The $80 in royalties gets sent to you via PayPal. We pay the fee to send that payment (which is around 1% of the amount we send).
  4. Our 20% covers the PayPal fees on the purchase (roughly 3% plus 30 cents), plus the PayPal fees to send the royalties (around 1%), plus any PayPal fees on refunds (we subtract the refund from the royalties the author will earn, but we eat the 30 cent charge that PayPal charges us), plus any chargebacks which happen occasionally (which can cost $15 USD). We also collect and remit VAT, and we suffer currency conversions on that as well (from USD to CAD to EUR). So, in terms of our profitability, it's fine, but it's certainly not as good as 17% of the total marketplace sales.
  5. The $80 in royalties converts into GBP or EUR at the PayPal rate. I think the cost should be about 3%, but I like to overestimate their fees when talking with authors, in case it's worse in some countries, or fluctuated more on some days. So, $80 USD should turn into the GBP or EUR equivalent (if you check the rate on Google) of $75 USD.

By the way, in terms of VAT: we registered to collect and remit VAT under the VAT MOSS program when it launched many years ago. So, as far as authors are concerned, they are just getting royalties, and they don't have to think about VAT when getting royalties from us any more than they would when getting royalties from, say, Amazon. The VAT hassle is our problem.

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