In the emerging world of e-books, many consumers assume it is only logical that publishers are saving vast amounts by not having to print or distribute paper books, leaving room to pass along those savings to their customers.
Publishers largely agree, which is why in negotiations with Apple, five of the six largest publishers of trade books have said they would price most digital editions of new fiction and nonfiction books from $12.99 to $14.99 on the forthcoming iPad tablet — significantly lower than the average $26 price for a hardcover book.
But publishers also say consumers exaggerate the savings and have developed unrealistic expectations about how low the prices of e-books can go. Yes, they say, printing costs may vanish, but a raft of expenses that apply to all books, like overhead, marketing and royalties, are still in effect.
All of which raises the question: Just how much does it actually cost to produce a printed book versus a digital one?
[...] Now let’s look at an e-book. Under the agreements with Apple, the publishers will set the consumer price and the retailer will act as an agent, earning a 30 percent commission on each sale. So on a $12.99 e-book, the publisher takes in $9.09. Out of that gross revenue, the publisher pays about 50 cents to convert the text to a digital file, typeset it in digital form and copy-edit it. Marketing is about 78 cents.
The author’s royalty — a subject of fierce debate between literary agents and publishing executives — is calculated among some of the large trade publishers as 25 percent of the gross revenue, while others are calculating it off the consumer price. So on a $12.99 e-book, the royalty could be anywhere from $2.27 to $3.25.
All that leaves the publisher with something ranging from $4.56 to $5.54, before paying overhead costs or writing off unearned advances.
– New York Times
Interesting and useful article, well worth checking out. Written from a consumer-information perspective, but still useful for self-publishers and indies who often forget that books need paid copy-editors, proofreaders, designers, websites, launch events, (and in the case of print-editions, review copies, envelopes and couriers and shipping and and and...)
