Another royalty question

[MadjackGG]

I'm a Zazzler based in New Zealand. My default royalty rate is set to 12.5%. However looking at my royalty history report, I see that many sales that are not flagged as having VAT or other sales taxes deducted, are calculated at anywhere between 8-10%  

For example;

And this is before another 5% tax is taken under the NZ-US tax agreement in each monthly pay-out.

In the above sale, 12.5% on the royalty subtotal should list as $1.85, not $1.49.
Is Zazzle deducting some other tax that's not obvious?

[WHS_Designs · Accepted solution]

@MadjackGG I believe that the 3rd party referral carveout takes 20% ($0.365) from the royalty of $1.85, hence $1.49.

[MadjackGG]

That would explain the discrepancy (and perhaps there should be an extra note about it in the royalty report footnotes).

But crikey, at least half my sales are 3rd party referrals, so I guess I'm paying for those.

[WHS_Designs]

@MadjackGG 

3rd party referrals make up quite a bit of my sales, too (can't remember the exact %, but it's quite high).

note that some of those 3rd party referrals are genuine affiliates and other 3rd party referrals are Zazzle. when you get your sales notification emails, if it's a 3rd party referred sale, check out the string of characters under the Royalty amount. if it looks like a very long long line of gobbledygook, then it's probably a genuine affiliate.

[MadjackGG]

---

other 3rd party referrals are Zazzle
Does this mean that if Zazzle markets a product of mine and it results in a sale, I get hit with a 20% fee?

Just looking into this further, it appears that if I make a self referred sale, I get the extra referral revenue but the sale still attracts the 20% referral fee, even though it presumably came through my own social media efforts.

Just looking at what's going on with royalty payments here, it seems my margins are being chiseled away by numerous taxes and hidden referral fees.

I'm tempted therefore to increase my default royalty rate to 14.5% in order to have margins approaching an actual rate of 12.5%, but I'm afraid I'll be downgraded in the Zazzle algorithm for doing so and lose my store's Z-ranking of 8.

[WHS_Designs]

@MadjackGG yes, unfortunately your royalty gets 20% carved out of it when Zazzle is the 3rd party referrer, too.

Wow, my store hasn't hit a zRank of 8 in more than a year. Nevertheless, I wouldn't worry too much about zRank affecting marketplace position or sales too much, if at all. That's been my experience, anyway.

[MadjackGG]

I'm going to up my default royalty to 14.5% to try and offset these referral fees.

Hopefully it won't cause Zazzle to draw back from promoting my products.

[MadjackGG]

Whelp, I upped my default royalty rate to 14.5% and bingo! 
My main store's zRank went down by one.

Sigh.

[PAZP]

WOW, that didn't take long. 

[WHS_Designs]

Yes, that happened to my store's zRank too, but just when I upped the royalty for one line of products years ago to over 15%. Wouldn't be too worried about it -- at 7, my store is still pulling in sales regularly.

Not sure why upping your royalty to 14.5% dings you on your zRank though -- 15% is when the 5% processing fee kicks in.

And to address an earlier observation of yours, yes, even when you successfully self refer your products, there's a carveout applied against your royalty (for using Zazzle's system to do so). Your referral earning remains intact (15%, if you're not in the PP 2.0 program, or 35%, if you have been invited and are enrolled in it).

[MadjackGG]

Just got a 3rd party sale, no ref details given so will assume it was referred through Zazzle.

The sale was for a charm bracelet, subtotal $36.60NZD.
Sounds like a good sale, right? 12.5% royalty on that would have been ~$4.50, which is ok. 

Instead after 20% is deducted from the sale price for NZ VAT (which incidentally is set at 15% in NZ), and the referral fee is deducted from the calculated royalties, the actual return is only $2.93, which works out to about an 8% royalty rate. And this is before a further 5% will be deducted as part of the NZ/USD tax agreement.

It seems to me that unless I bump up my royalty rate to offset these fees, many of my sales in New Zealand (which is a major niche of mine), will be chiseled away to pennies.

[WHS_Designs]

@MadjackGG I'm afraid you're right. Upping your royalty appears to be your only option.

[MadjackGG]

Good news is my main store has gone back to z Rank 8. So...yay.