The principal areas of new cost generated by an export operation are:
- Costs of additional staff or freelancers devoted to export activity
- Commissions payable to sales agents in respect of sales made in their territories. These lie mostly in the 10% to 12.5% of turnover range, and should be budgeted at the conservative (i.e. higher) end if there is any doubt
- Travel, accommodation and entertaining costs for territory visits and book fair attendance
- Additional copies of printed catalogues and sales materials
- Book fair stand costs: it is possible to attend a book fair as a non-exhibitor, especially in the early stages of engagement with the international world of books. But having a base where people can locate you and where you can have a small exhibit of your titles (as well as storing your other materials and effects) is of great value. (See the remarks on making the best use of book fairs in our chapter on Selling). A small stand is sufficient to ensure a presence, and for many smaller publishers over the seven decades since the instigation of the Frankfurt fair it has proved a window on the world and a lifeline for their business. The UK Publishers Association has developed a high level of expertise over a long period in organising collective stands at book fairs, in particular the two main international events at Frankfurt in the autumn and London in the spring.
- Exchange loss: this important subject is one that may need close attention from time to time, as it can turn a profitable sale into an unprofitable one. Various of the world’s international publishing groups have an internal principle, that the currency of invoicing should be that of the selling company. This protects the seller from the loss of revenue and therefore of profit which a movement in exchange rates could affect; while the purchaser is open to such risk.
This is a good principle to apply, but it may arise from time to time, particularly with co-editions and special one-off sales, that a buyer needs to be, or insists on being, invoiced in their currency. This shifts to the seller any risk that results from adverse exchange rate movement. One remedy for this effect is to purchase the relevant foreign currency in advance, known as ‘buying forward’, at an agreed rate. Your UK distributor or your bank will be able to advise on this option.
Another consequence of a significant exchange rate movement when invoicing in the seller’s currency, may be that a customer finds themselves in a position of not being able to pay. In this situation it may be prudent, for the sake of a long-term business relationship, to negotiate an adjustment that ‘shares the pain’ created by the exchange rate shift.