Why E-Books Cost Money to Publish

By • Feb 9th, 2009 • Category: 26th Story, Web/Tech

Whenever we post a blog about e-books, people comment that they should cost just a few dollars, or even be free — so I asked Bob to please explain the publisher’s costs:

There seems to be a common refrain in many discussions of e-books, the idea that publishers should charge next to nothing for e-books because it doesn’t cost publishers much to produce them.  This reflects a lack of understanding of a publisher’s costs.  The cost of manufacturing a book is only the final cost in an extensive process.  Whether a book is printed on paper and bound or formatted for download as an e-book, publishers still have all the costs leading up to that stage.  We still pay for the author advance, the editing, the copyediting, the proofreading, the cover and interior design, the illustrations, the sales kit, the marketing efforts, the publicity, and the staff that needs to coordinate all of the details that make books possible in these stages.  The costs are primarily in these previous stages; the difference between physical and electronic production is minimal.  In fact, the paper/printing/binding of most books costs about $2.00…so if we were to follow the actual costs in establishing pricing, a $26.00 “physical” book would translate to a $24.00 e-book…and while I agree that e-books should be priced at a greater discount to hardcovers than $2.00, we need to move the conversation beyond the idea that e-books “don’t cost publishers anything to make.” — Bob

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  • zzzz

    publishers are still being greedy pricing them that high, they need to move into the digital age. It’s the exact same thing record companies did when people stopped buying so many cds because they were grossly overpriced and they could easily pirate music. Pretty soon we will see a lot of pirated books on the internet. Get with the fucking times…

  • Rick

    > And here’s why e-book readers should care: The choice of novels to download will only be as good as the writers
    > and publishers make them to be. If you want a three dollar book, we’re going to put in the effort that equals that
    > three dollars. You’ll get what you pay for. (Beverley BevenFlorez)

    I understand where you’re coming from and sympathize. But it sounds like you’re assuming you’re only going to make one sale. I assume that even with a printed book you’re counting on selling at least 1000 copies. If the price is cut in half, and your share correspondingly cut to $1.50, but you sell 2000 copies, your income will be the same. And what if your share is cut to a quarter of that but sales go up tenfold?

    No guarantee that this is going to happen, but likewise no guarantee that it won’t.

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  • http://joeflood.com/ Joe Flood

    I've been reading a lot about e-books and the Nook, both as an avid reader and aspiring author. I also work on web sites for a living so the slow print publishing world seems really outdated to me.

    The fact that the publishing industry takes such a big chunk of price of a book really seems like an argument against it. If so much of the cost of a book pays for execs and marketing campaigns, then why have a publishing industry at all? The model seems very similar to the music, film and newspaper industries – all middlemen and gatekeepers that are being rendered irrelevant by the internet.

    Without such high costs, books would be cheaper for readers and writers would make more money. For example, see this blog post by J.A. Konrath detailing what he makes off self-published e-books http://jakonrath.blogspot.com/2009/10/kindle-nu…

  • Jason Lye

    Hi, My favourite author is Robert rankin and his latest book (necrophenia) costs £7.99 in paperback…. to buy it as an ebook however I would have to pay £14.67! Are there any extra costs to produce ebooks or are the publishers just being plain greedy in this case?

  • Steven Pham

    I totally understand all the costs prior to actual printing of the book. You mentioned that it is only $2 extra to print. What about shipping and inventory costs associated with the hardback books? Does $2 include all of the extra costs? Seems like ebook should be discounted more than just $2!

  • Mike

    I for one didn't think about how much of the cost is in the pre-production for a lack of better term. my frustration is not the lack of significant discounts it is in the relative lack of offerings. Why aren't more book published in ebook format as well as in physical format?

  • Nikmal

    Bob,
    I agree that everyone should get their cut and the like. The MAIN problem I have with your reasoning is the hardcover pricing for an ebook. Your costs do not translate well to the softcover price point. Hard cover books vs soft cover books: Soft covers cost considerably less then a hard cover, both are printed on paper. The Author gets the same cut, the publisher gets the same cut as well as the brick and mortar and printing company get their same cuts. but in smaller portions. the main difference is that the soft covers sell considerably MORE then the hard covers in the long run. So there is more profit with the soft covers in the long run. In the short run there is potentially more profit because of the higher price point but in the long run it is not cost effective. What would be the reason to make the Ebook reflect the hard cover book price and NOT the soft cover book price. It is ludicrous not to do so in the first place when the increased sales would more then make up for the so called loss in lowering the price point on ebooks. Just like they do with the soft covers. The price will be what the market will bear… this is a statement that is stupid in my opinion. If someone feels ok with 25.00 for an electronic ebook vs a hard cover needs to reevaluate their budgets. hard cover is something substantial, collectible and in some areas if it is a first print becomes valuable later on. An electronic file does not have this longevity. If an Ebook was the same cost discounted for NOT being paperback then that would be MORE then reasonable and the sales would increase considerably and make the ebook a more viable product vs the hard cover price point for an ebook, which is ludicrous!

  • Nikmal

    Beverly,
    Your last statement is CRAP!!! If the author writes a book and sells it and it is good, good enough to make the NYT or even just as a great book like the hobbit or harry potter, even if it does not make the list. If they are good enough.. then their sales will reflect that and they WILL make a profit on the so called 3 dollar book!! Might want to do some research on marketing before you make a statement like that.

  • Nikmal

    The publishers are greedy and in this case want their cut for marketing the book as well as editing and the like. They think that the Ebook should cost more because it is essentially in their minds a hard cover book and NOT a soft cover book, like the price point should be.

  • Nikmal

    Bob,
    I agree that everyone should get their cut and the like. The MAIN problem I have with your reasoning is the hardcover pricing for an ebook. Your costs do not translate well to the softcover price point. Hard cover books vs soft cover books: Soft covers cost considerably less then a hard cover, both are printed on paper. The Author gets the same cut, the publisher gets the same cut as well as the brick and mortar and printing company get their same cuts. but in smaller portions. the main difference is that the soft covers sell considerably MORE then the hard covers in the long run. So there is more profit with the soft covers in the long run. In the short run there is potentially more profit because of the higher price point but in the long run it is not cost effective.

    What would be the reason to make the Ebook reflect the hard cover book price and NOT the soft cover book price. It is ludicrous not to do so in the first place when the increased sales would more then make up for the so called loss in lowering the price point on ebooks. Just like they do with the soft covers. The price will be what the market will bear… this is a statement that is stupid in my opinion. If someone feels ok with 25.00 for an electronic ebook vs a hard cover needs to reevaluate their budgets. hard cover is something substantial, collectible and in some areas if it is a first print becomes valuable later on. An electronic file does not have this longevity. If an Ebook was the same cost discounted for NOT being paperback then that would be MORE then reasonable and the sales would increase considerably and make the ebook a more viable product vs the hard cover price point for an ebook, which is ludicrous!

  • Nikmal

    Beverly,
    Your last statement is CRAP!!! If the author writes a book and sells it and it is good, good enough to make the NYT or even just as a great book like the hobbit or harry potter, even if it does not make the list. If they are good enough.. then their sales will reflect that and they WILL make a profit on the so called 3 dollar book!! Might want to do some research on marketing before you make a statement like that.

  • Nikmal

    The publishers are greedy and in this case want their cut for marketing the book as well as editing and the like. They think that the Ebook should cost more because it is essentially in their minds a hard cover book and NOT a soft cover book, like the price point should be.

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  • Seth

    There seems to be something fundamental missing in this discussion. If you take the price of a book and break it down to say X% production, Y% publishing costs, that totally depends on how many you sell. The publishing costs ($100,000 used an example) are a one-time cost, they do not repeat with every book.

    After you have sold a certain number of books, your publishing costs are recovered, and the portion of the sale that goes to the publisher is pure profit. For physical books, there are still ongoing costs to be recovered with each book (pulping, printing, binding, transportation, storage, etc.). With e-books, none of those ongoing costs exist (or are so small as to be inconsequential).

    As a result, your sales on e-books convert to paying royalties and making profit, whereas that never happens in the paper book lifecycle.

    Perhaps to avoid killing the Hardcover market, e-book prices should reflect a discount off of hard cover until the soft cover is out, then should reduce accordingly to reflect a discount off of soft cover. Early adopters are likely to be willing to pay a premium (as is the case with so many other things).

  • hopeful

    hi im 14 years old and this may sound weird but im trying to write a book its extremely hard and it takes alot of time but i think if i really put everything i got into this book i can really make somthing of it im doing alot of research and maybe one day you all will see my book on the shelves

  • hopeful

    hello im 14 years old and this may sound weird but im writing a book i know you probably think i dont know what im getting myself into but ive been doing so much research and i know that it takes alot of hard work and effort and im prepared to put everything i got into this book and maybe one day my book will be on the shelves

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  • http://kennethmarkhoover.com/ Kennth Mark Hoover

    And yet if they priced the ebooks much lower one thinks they would sell more, thereby making up the difference they lost in the sale of a hardcover.

    Look. Readers don't give a shit about “amortizing.” They view it as this: I'm paying the same price for wood pulp as I am for electrons…except I can loan the wood pulp to my friends and help turn them on to new writers. But I have to keep the electrons to myself on my expensive proprietary software.

    And, no, they're not going for it and they're not going to. You have to make them believe they are getting some deeper value for their money. Like it or not, reality or not, they believe the are getting a bigger bang for their buck with wood pulp than they are with electrons.

  • http://kennethmarkhoover.com/ Kennth Mark Hoover

    Exactly.

  • http://kennethmarkhoover.com/ Kennth Mark Hoover

    No one is arguing it costs money to publish e-books. And, well, if they are they're delusional. What readers are arguing about is why are they paying so much for an ebook that has already been edited, formatted, etc., when compared to a wood pulp novel they can't even loan it to friends even though it's just a bunch of electrons?

    Seriously, publishers had better get it together. Readers simply aren't going for this at all. Nor shoudl they.

  • http://www.erniezelinski.com/Bio-and-Contact.html Ernie Zelinski

    As an author, I expect to be adequately compensated for my creative efforts in writing a book.

    Fact is, most authors don't make much money from their writing and have to work at a “real job” to earn a living. Luckily, I have been able to earn a decent income in the last few years, in part because I independently publish 3 of my books.

    I also believe that a publisher should be adequately compensated for bringing a book to market, whether it is a hardcover, a paperback, or an e-book.

    The problem in today's North American society is that the majority of people have a sense of entitlement to getting e-books for free (along with a lot of other stuff that they don't want to work for or pay for). This is another variation of the world-owes-me-a-living syndrome that Robert Ringer talked about in his bestselling book Looking Out for Number.”

    Interestingly, people who have this sense of entitlement or suffer from the world-owes-me-a-living syndrome never create anything valuable for society themselves. That is why they have to settle for being imprisoned in corporations working for a paycheck.

    I know that I have created something valuable for society because my books have sold over 625,000 copies worldwide. Results don't lie, in other words.

    I have 3 books that have sold over 100,000 copies. Keep in mind that over 95 percent of books sell less than 5,000 copies in their lifetime.

    But I refuse to let have these international bestsellers come out in e-book format if I don't get adequate compensation.

    Sure, a lot of authors will settle for peanuts if they don't think that can get anything more, but I won't.

    As an independent publisher, I have not rushed to get my books sold in e-book form.

    Perhaps I will eventually release a few e-books for sale but only if I am adequately cwompensated and assured that these e-books will not be acquired for free by the people who suffer from the orld-owes-me-a-living syndrome.

    In the same vein, I fully support the stand that Macmillan Publishing took against Amazon in not allowing Amazon to sell its books for less that $9.95 or whatever the price was.

    It's too bad that more publishers and writers are not willing to take the same stand and say, “It you are not going to pay adequately for the e-book, then we don't make it available as an e-book.”

    Ernie J. Zelinski
    Author of “How to Retire Happy, Wild, and Free”
    (Over 110,000 copies sold and published in 9 languages)
    and “The Joy of Not Working”
    (Over 225,000 copies sold and published in 17 languages)

    http://www.thejoyofnotworking.com
    http://www.how-to-retire-happy.com
    http://www.retirement-cafe.com/Retirement-Plann…
    http://www.UnrealJob.com

  • Chris

    Utter bullshit.

    I know this post is old, but it bears commenting since it's comes up in Google.

    We're talking about a second (and new) revenue stream added in to an existing product. The costs you mention are already factored into the price of the printed book. To justify your assumption that consumers are so ignorant as demonstrated with your post, authors would receive two advances, the work would be edited twice, and so on. No, publishers just assume consumer ignorance as you do. There are minimal additional expenses and large profit potential from ebooks.

    You've taken what is merely a new and incredibly cheap distribution mechanism and tried to obfuscate that with your ignorant post.

  • Gia

    I for one will not buy an ebook that cost more than 9.99. I own a nook and an Ipad and enjoying reading on both ereaders. If I can't physically hold the book in my hand, and lend it to family and friends, then I cant justify paying that much for it. Perhaps publishers will start to understand this when more people stop paying such crazy prices for ebooks.

  • Stephen M. St. Onge

    This is what's known as “lying by telling the truth.” The costs of a $26.00 hardback are not $2.00 for printing, and $24.00 for getting ready to print. They are more like $2.00 for printing, and $4.00 — $6.00 dollars for everything else. The publisher will get maybe $13.00 of each hardback sold, and typically prints four to ten that are remaindered for each copy sold retail.

    Right now, today, Baen Books releases an e-book of every new volume they print, hardcover or paperback, and they make money on the e-books AND the paper books. And the royalties Baen pays to authors for e-books are significant (typically, Baen pays $0.50 on a paperback, $1.50 on an e-book, and $2.50 on a hardback). Even more importantly, Baen does NOT count the e-book royalties against the author's advance. Every cent is additional cash paid out to the author, even if the paper books don't earn back the author's advance.

    And Baen manages to do all that on a price of $6.00 per e-book, and, I repeat, do it at a profit.

  • alexisfaith

    There are millions of ebooks being bought and sold on the internet, and I believe there’s a really lucrative business for ebooks. But for individuals like us, we don’t have our own publishers or even a good platform that allows us to create our own interactive ebooks. A family friend recommended a cool ebook software to me recently and we haven’t been able to resist a day without creating ebooks with this software called Koobits. This Koobits software is easy to use and has a well-defined user interface. I have created ebooks, digital brochure, photomontages, digital scrapbooks with this cool software. You guys can try it out at http://www.koobits.com

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  • Bob

    This is, of course, publisher bullshit. There are many more costs associated with a printed book, shipping, merchandising, returns, to name a few

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  • http://pulse.yahoo.com/_LREZOC5OYEUN5E77AOU43L2IFY Melkinny Tally

    Hi.
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  • Marshahubler

    Thanks for the tips about e-books. It makes perfect sense that the book needs all the editing and production costs that paper books demand. Great blog.
    Marsha Hubler, author Keystone Stables Series, both paper and e-books. :)
    http://www.horsefactsbymarshahubler.w...

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    Interesting idea there. They never seem to do that.

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  • Commentmaigrirrtvco

    Super information it is actually. I have been waiting for this tips.

  • http://kindlepublishingmadeeasy.com make money kindle books

    Yes, I also think that lots of times that why eBook cost money
    to publish. But, do not have any quality answer yet.

     

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  • http://www.ebookexpert.com.au/ Kindle Australia

    I extremely agree with you jon.it would be a big banefit for e book readers ……….

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