Here’s a quick explanation, in advance of the Summer Sale, which starts on July 6th, of why our online lesson prices are going up.
In a word, taxes.
In an acronym, VAT, which would be IVA in Italian (l’imposta sul valore aggiunto, so Value-Added Tax.)
British companies, amongst which we are pleased and proud to include ourselves, are able to avoid this twenty percent levy on their sales only up to a certain limit.
Once that threshold is reached, with a sickening lurch and screams of terror, the gravy train changes track violently after which a sixth of the price of everything sold, for example, our online lessons, goes straight to the state.
Unfortunately we reached that junction a while back, while I was busy worrying about something else and didn’t notice. So there’s now likely to be a large bill to pay, tens of thousands. Oh well, it’s only money, right? We have our health, at least, as my mother would say.
But given the state of the world these days, what with the corona virus and all that, the Chancellor of the Exchequer, The Rt Hon Rishi Sunak (who seems to have been spraying cash around, recently), could probably do with our contribution towards balancing the books.
Anyway, for years we’ve charged £20 for a half-hour lesson, which is arguably a little steep, but intentionally so. It’s much more convenient for our teachers if students buy a ‘pack’ of lesson credits, currently £90 for five half-hour lessons or £150 for ten half-hour lessons.
Splash out on ten, and you’d have been paying £15 per lesson, which is way less than what you’d pay an auto mechanic or a plumber, you must admit. Remember though, £2.50 of that fifteen quid is Rishi’s.
That £150 price-point still left us with a reasonable margin, after we paid the teachers and Lucia who manages them, to cover the various secondary costs and to reinvest in new projects. Except…
We run four sale promotions each year (the Summer Sale begins on July 6th) and that invariably means a 20% discount on everything in our shop. Most people, not all, but ninety percent at least, buy their online lessons in the sales.
And so pay 20% less, just £12 per half hour lesson. Way to go! I was only happy that we were able to offer such great value to most of our students.
But now there’s the taxman’s two pounds to take out of that. And the cost of the teacher, who has to eat, and Lucia, ditto, and the commission to the payment processor, and the cost of the websites and the mailing system, and the accountant, and so on.
In fact, the only person that doesn’t get paid is me, but that’s OK because I do it for love.
Nevertheless, to keep the whole ship running, now with the IVA/VAT included, we would be on very shaky ground if the bulk our revenue continued to come from online lessons which are 1.) vatable 2.) discounted for quantity, and 3.) discounted again by 20% in the sales.
No can do, sorry. The numbers don’t add up.
So, the plan is this:
1 x 30-minute lesson will remain at £20, and people will no doubt still not buy it, even though they would be contributing £3.33 to the British budget deficit by doing so.
5 x 30-minute lessons will increase in price from £90 to £95 (the undiscounted price, remember – 20% less in the sale, so just £76, of which nearly £13 is Rishi’s). Not many people buy the 5-lesson pack, but some do, and £76 rather than the previous £72 doesn’t seem like an outrageous leap, right?
10 x 30-minute lessons, unfortunately, are going to have to go up by the amount of VAT we will now be paying on them, so considerably. HOWEVER…
Most people are still going to be buying at a 20% discount, remember? E poi, we’ve decided to do the necessary in two steps, an increase from 01/07/20 and another at the time of the January Sale.
From soon, then, the ten lesson pack currently costing £150 (£120 in the sale) will cost 10% more, so £165 (£132 with the 20% discount code).
Later, at the end of the year, there will follow a further increase of the same amount, so from £165 to £180 (£144 during promotions) so £18 or £14.40 per lesson – a jump from the £12 which people have been paying, but as the man said, “in this world nothing can be said to be certain, except death and taxes.”
But wait, there’s some good news! No really, despite this being a cruel world, there is!
Until April 30th 2020, ebooks were subject to VAT too. Which means we have to pay a sixth of the price of all the ebooks we’ve sold since the beginning of time… that’s NOT the good news.
But then that darling Rishi exempted electronic books! From May 1st this year, ebooks get the same treatment as ‘real’ books, that is so say, no VAT is charged on them. Giustamente.
Which means I won’t have to manually modify the prices of the hundreds of ebooks in our catalog.
‘Easy readers’ will still cost £7.99, hurrah!
And £5.99 in the first week they’re published, double hurrah!
And £3.99 when we do a half-price ‘Book of the Week’ offer, three cheers!
Which is cool, because messing with those .99’s would have been a nightmare. I like those prices, there’s a symmetry about them which would have been hard to reproduce with VAT included.
Così. Here’s a round up.
The ten-lesson pack is going to cost more, but most people will still pay less than the price shown in the shop because they will use a discount code.
Ebook prices will stay the same, unless and until Rishi changes his mind again.
And everything will be cheaper if you buy it during one of the approximately quarterly promotions, the next of which begins on July 6th.
(If you’re ever not sure when to buy to get the best price, why not write and ask me?)
A lunedì, allora.
Yesterday’s bulletin of ‘easy’ Italian news was a good one. And it was read by a different person than usual, as Tom went to the beach with his mates. Click here to read/listen to it, if you haven’t already done so.
Many thanks, by the way, to the various people who’ve donated this month to help out with the cost of producing the thrice-weekly bulletins. See who they are here. (We’re pretty sure there’s no VAT on donations…)
Watch out for our new ‘easy reader’ ebook on Monday!
The next in our Italian literature series (and the final one, for a while at least) is Manzoni’s famous ‘I promessi sposi’, as force-fed to generations of Italian schoolchildren.