Question about Currency Exchange in Contract

  • Hi everyone,

    I've received a contract for my first-ever book cover (yay!), so I wanted to come to you guys with something I was unsure about in the contract. For context, they are a small publishing company based in the UK and I'm in the US.

    When they sent me the initial brief, it included their budget in GBP. They've now sent me the contract and the compensation is in USD, but the number is less than I expected based on their budget. The current exchange rate (according to Google) is 1.38, but it appears they used an exchange rate closer to 1.14. Is this possibly an error in the contract? Or did I misinterpret budget and compensation to be the same thing?

    ...or do I just not understand how exchange rates work 😅?

    Is there a best method for addressing this? I'm very excited about this project and want to establish a good relationship with them. Since I'm still new to this, I'm unsure about how to approach some of these things, especially when it comes to talking about money.

    Thank you!

  • @miranda-hoover congrats! I think others will chime in with more knowledge about this, but I would say that everything is fair game when you negotiate. Since they have a budget and would like to stick to it and you would like to know what you will get once it's converted, perhaps you can offer something like a small cut on the current exchange rate as a fixed rate within the contract? Then both parties don't have to worry about the variability, while neither will be too put out if the exchange rate suddenly favors one more than the other.

    I would look at the exchange rate over time (at least the span of time the contract covers) to see what I would be comfortable offering to put in the contract, something between 1.14 and a little lower than the current. This is the kind of research and offer that shows you are looking out for them as well.

  • @carolinebautista Thanks! And thank you for your reply!

    The exchange rate isn't actually mentioned in the contract--sorry, I was a bit unclear about that. The contract has compensation in USD, so that will be a fixed value once it's signed. I'm more wondering if there is a chance they made the conversion with an outdated exchange rate, or if there is something I am mistaken about.

  • @miranda-hoover I misunderstoodd, but here's my thinking: if the USD amount is fixed and not based on the current exchange rate, they are essentially including a fixed exchange rate, and there is nothing wrong with a counter offer as long as it's clearly not of mutual interest ( choosing the highest possible). If they do things differently, hopefully they will let you know.

    One thing I try to get away from with negotiating is this idea that there is secret knowledge i'm not privy to and if something ever happens where I need to negotiate a contract for illustration, it will be especially hard because I will want it to happen. Feeling like I know nothing about contracts or how certain people are doing things makes me feel like I have nothing to offer because i'm too inexperienced and then I am completely discouraged from negotiating altogether, and this is a problem if I haven't even tried.

    A hidden fixed rate is an extremely important question, and it's possible (in my opinion) that it wouldn't be something they hide, but something they don't include because it makes it simpler not to. So, in other words, to their advantage even though it's a fair offer, which I would assume every contract from a good publisher to be. Hopefully that doesn't make me cynical becuase I do not htink there's anything wrong with that. It's simply to motivate myself to negotiate to my advantage to practice being my own best advocate.

  • @miranda-hoover It's probably to do with the buy/sell spread on currency exchange according to their bank. Basically, what they buy at and what they sell at are two different prices.

    Another option is to get paid into your paypal account and ask them to cover the difference when you exchange the money into $. I did that for a podcast I was doing for a US company. I told them what it cost in the exchange and they topped me up. I was doing it dollars into pounds.

  • @miranda-hoover banks can dodgy with international exchange rates. Plus there's often fees to pay to change from one currency into another.

  • @carolinebautista & @sigross thanks for your reply! Oh, I didn’t think to consider how banks in the process; that’s a good point. I don’t believe they are intending to hide anything, I just wanted to make sure I wasn’t missing anything obvious 😅

    Thank you again! I feel much better now about bringing it up with them and at least learning why the value is different from what I expected. I need to have more confidence about negotiating (at least until I'm able to find myself an agent that can do all this for me 🤔...)

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