E-book Pricing: Wired Explains

Craig Morgan Teicher -- August 20th, 2010

If you’re a Wired subscriber, the new issue should be arriving on your doorstep right about…now.  Though it doesn’t seem to be posted online yet, and the iPad version always comes in the middle of the month.  But, in the new September 2010 issue, Wired devotes a few column inches to answering this question: “Why do e-books cost so much.”

The answer may already be known to you if you work in publishing, but it’s instructive to learn how e-book economics are explained to the few readers out there who don’t actually work in publishing.  Here’s a little excerpt from the article (which I had to hand-type!):

Fat-cat book pushers aren’t to blame.  Not entirely.

“People vastly overestimate how much a publishers saves,” says Erik Sherman, an analyst who studies e-book economics.  Turns out, the physical aspects of book production can account for a s little as 15 percent of the cost of the title.  The rest can be divvied up among the author, editor, designer, marketers, publicists, distributors and resellers.  A lot of fingers dip into that $14.99 money pie before the house takes a slice.

A bit later, the article goes on to note that “tacking an e onto a book requires antipiracy software, digital warehousing, extra legal support, and programmers to adapt each title for Android, iPhone, Kindle, and all the other formats.  That’s on top of the regular costs of turning a manuscript into a finished product.”

Whether or not that’s news to you, the fact that e-book pricing is deemed an issue worthy of every Wired reader is further evidence that e-books are probably taking over.

7 thoughts on “E-book Pricing: Wired Explains

  1. Pingback: Ebook Pricing and Other Things You Need to Know About | Conversational Reading

  2. Kristi

    I’m sorry but I’m going to have to disagree with them. First of all, let’s subtract the marketing and publicity from the equation. Most midlist authors complain about having virtually no marketing or publicity support. Those prized resources go to bestselling authors. Programmers? Let’s get real, in less than 5 minutes I can upload my book on Smaswords in all the mentioned formats. Distribution costs? Please. No shipping, no packing, no gas, no warehouse. One button and you’re up on all the same online retail outlets as the big boys. That only leaves editorial costs and book cover design. Both of which are on salary and whose expense is shared with all the other authors. Editors don’t have time to edit anyway, they’re too busy being project managers. Am I missing something here? Or am I right?

  3. Ellen Violette

    That’s not why ebooks cost more. They cost more because:
    1. People will pay more for the convenience of getting it instantly instead of having to get into their car and drive to a store.
    2. It may not be in a bookstore so they can only get it online which makes it more valuable.
    3. Generally relevant and valuable bonuses are added to the offer to make it worth more.

  4. Inanna Arthen

    Sorry, but the protestations of the big publishers that ebooks are “more expensive than people think” is absolute, smoke-and-mirrors, blatantly disingenuous B.S. I know this because I operate a small press. I’m not an “analyst” or an author, I contract, produce and sell books. I know *exactly* what my comparative costs are for print books vs. ebooks.

    To begin with, just about all the production, editorial and promotional expenses would be exactly the same because all of that has already been done for the print editions. Ebooks simply piggy-back onto print books, with very little additional cost. “Anti-piracy software” wouldn’t be necessary if publishers weren’t killing their ebooks with DRM that customers loathe and don’t want, and as for all those putative “programmers?” Give me a break. There’s nothing to “programming” an ebook. I know this because I do it, manually, for every title.

    Big publishers are trying to exploit consumer demand for ebooks while suppressing the market as much as possible. They’re obscenely over-pricing ebook editions and are either ignorant of or ignoring the real position that ebooks hold for consumers. Ebooks are replacing the mass market paperback, not hardcovers, and there is no rationale or excuse for pricing them a penny higher than a mass market paperback is priced. Even $9.99 is too high. My company’s ebooks are listed for $6.99.

    The author’s royalty percentage is a whole other issue. But I just doubled the author royalties I pay on ebook editions precisely because the profit margin on them is so good for me. If the Big Six conglomerates can’t make as much on ebooks as I am, I have to wonder what they’re doing wrong.

    Inanna Arthen
    By Light Unseen Media

  5. Alison Tyler

    I wrote about publisher costs awhile back (93% for me 7% for you) on my blog:

    Of the $10 cover price, a publisher is lucky to receive $4.50 from a store. (I’m using a 55% discount as an example here.)

    Of the $4.50, the average author gets .70 cents, leaving the publisher with $3.80.

    Say the book cost $1.50 to print (a 15% unit cost is pretty standard). Now, the publisher has $2.30.

    Publishers who don’t own their own warehouses must pay an outside company for storage, fulfillment, shipping and other miscellaneous costs. For our little publishing company, we end up paying about 20% of sales to the warehouse—the majority of that is for storage. That’s .90 cents on a $4.50 sale, and now we’re down to $1.40.

    When we had sales reps (in better days), our reps took 10% off the sale price, knocking the profit to .95.

    From this .95 the publisher must find a way to pay for copyediting, typesetting, and cover design. (Sure, these are only one-time fees, but they must be paid for, and generally paid for upfront, before any profit is ever seen.) Now, consider this, we haven’t started talking about rent for an office, insurance for the books, accounting fees, legal fees, telephone, office supplies, advertising… and this doesn’t even allow for a salary for the publisher.

    I think publishers really *do* save a ton with e-books.

    XXX,
    Alison

  6. The Artist on the Road

    I think this is true but what most people don’t talk about is the fact that the purchased ebook can’t be loaned out to friends or resold at a used book store. Therefore, the publisher is likely to sell more ebooks than traditional books in the long run.

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