Quote:
Originally Posted by Worldwalker
There was a good article (I think it was in Slate) linked from here a while back which broke down the cost of various stages of the publishing process, and showed how much net profit the publisher cleared from a hardcover novel selling for the typical price of $26. If I recall correctly, it came out to 90 cents, and the author's royalties (at a fairly high 15%) came to $3.90. What happened to the rest? Well, out of the $13 wholesale price, the other $8.20 was eaten by overhead, printing costs, warehousing, distribution, and returns -- especially returns.
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The article was flawed--if it were accurate, *no* publisher would ever print directly to paperback.
Since there is, in fact, a rather active business in paperback books, many of which (in genre presses, at least) have never seen hardcover, the cost of production must be a lot lower than the online articles are willing to admit.
Publishers have a vested interest in keeping people from comparing ebooks to paperbacks; they want them compared to hardcovers. Even if they have to admit that 30% of the cost of a hardcover doesn't apply to ebooks (no print, inventory, distribution & returns costs), they're ahead. If customers start seriously asking, "why isn't this priced a bit less than a paperback?" they're sunk.
The first mainstream, non-genre publisher that takes on Baen's business model is going to *rake* in money while everyone else flounders and screeches about "piracy."
Harlequin's doing well with ebooks--and all they're doing that's anything like Baen is pricing. They sell DRM'd books; they don't keep their back catalog active; they aren't known for good interactive customer service. But the price is $5 per book, so people can skip having a latte at lunch to buy one.