09-22-2009, 09:50 AM | #1 |
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How much cost difference is there really?
This has come up in many different posts of late, but I have not seen a realy clear answer on it, so I thought I would ask the community at large, and try to develop a clear answer.
Exactly what is the cost breakdown between hardcover vs. ebook vs. paperback (vs. trade paperback). Looking for: cost per unit breakdown Author Royalty Publisher production cost Publisher profit Bookseller cost Bookseller profit and the difference between the various publishers. I am very curious about this, as recently I wanted to pick up an ebook copy of Foundation by Mercedes Lackey. An ebook copy costs about $19.00, vs. the local Books a Million had the hardcover marked down to $6. Often, the ebook copy costs more than the paperback copy - with the exception of Baen ebooks. I want to know why the ebook costs so much more, and I want to know how much of the purchase price gets back to the author. Also, if anyone knows how to contact publishers to get this information, post it here! Mare |
09-22-2009, 09:58 AM | #2 |
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This is commercial information. No publisher is going to tell you.
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09-22-2009, 10:27 AM | #3 |
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What is known is that big publishers typically get 50% of the list price from retailers. This is for paper books and ebooks. This is why it has been widely reported that Amazon is loosing money on their $9.99 price for Kindle bestsellers. The 50% deal for ebooks is better than the 50% for paper books, because there are no physical returns (a cost that publishers bear for paper books).
The lowest rate seems to be about 35% to small publishers or independent authors. This is the standard rate for Amazon's DTP. Big publishers are afraid that Amazon wants to pay them 35% of list for ebooks too. In the romance field, an author can get a 35% royalty on ebooks but no advance money. Paper royalties are much less, but you will get an advance that could end up being larger than your royalties. See Show Me the Money! I don't think there is any other genre offering 35% to authors for ebooks, in part because direct selling to the public isn't common. I don't know what Baen books (which does sell direct) offers for example. |
09-22-2009, 10:55 AM | #4 |
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Interesting set of numbers you have there. Thank you for posting the information!
Another aspect of the ebook vs. pbook industry - what is the cost difference between physically printing and shipping out a book vs. formatting and hosting webspace with merchant accounts for an ebook? Mare Last edited by Mare of Earth; 09-22-2009 at 10:59 AM. |
09-22-2009, 11:14 AM | #5 | |
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Webspace with accounts is only part of the cost of eBooks. There are issues with multiple formats and DRM that add to the costs and then people expect errors to be fixed at no cost so this is an added overhead. Conversion software gets updated and this has to be installed and maintained. IT is not free. Other expenses are tracking the changes vs. the pbooks. Dale |
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09-22-2009, 11:15 AM | #6 | |||
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Mare here are some posts from a couple of other threads by Charles Stross (cstross) that might give some of the info you want.
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09-22-2009, 11:17 AM | #7 |
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It is estimated that an ebook only costs 12-15% less to produce than a paper book.
Keep in mind that most titles do not break even; the "blockbuster" titles earn most of the income. Costs that do not change based on the medium include: author's advance, editing, legal, marketing, promotion / PR, and management overhead. Retailers still have credit card processing, database and hosting costs. Ebooks will cut out printing costs, inventory costs and one middle-man (the distributors, like Ingram). However the retailer now has more server maintenance, higher bandwidth costs, more IT staffing, more backups etc. By the way, most books I've seen are cheaper in ebook format, especially hardcovers but trade as well -- especially when you add in shipping. |
09-22-2009, 11:19 AM | #8 |
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I cannot account for the rest of things, but I do know that it costs between 20 and 30 cents per transaction for credit card fees, depending on the company. Other reports I've seen show a 15% best case profit margin for the ebook retailer. 15% for the retailer (who is the one covering the expense of hosting the file), 3% (if you just go with an even 30 cents out of $10) for credit card transaction, then shave off 50% which goes to the publisher. Leaves 32% for the DRM company, if the publisher's cut is not separate on the retailer's end from the author's.
These figures are all rough estimates, pieced together. Really, it seems as if there are some taking a bigger cut than they need to, if you make the same assumptions I did. |
09-22-2009, 11:22 AM | #9 | |
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Ultimately, there are ridiculous amounts of waste in the paper book industry. Print runs are often much higher than expected sales (Since the more shelf space they can occupy with the book, the more likely they are to sell copies), books get shipped to the store and back to the publisher (and if the publisher needs more copies later, back to the store again) and then are sold to book stores as remaindered stock. The book keeping must be a night mare (Since money changes hands at each transaction). Honestly, I don't know of another industry where waste is so casually accepted. Frankly, I am surprised Greenpeace and the Sierra Club have not focused in on them for the needless destruction of trees to print paper that will never be read from. -- Bill |
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09-22-2009, 11:57 AM | #10 |
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Bear in mind that while the up front costs are about the same the marginal costs of ebooks is much smaller. Storing and distributing 100000 ebooks is much cheaper than 100000 pbooks.
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09-22-2009, 12:14 PM | #11 |
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They don't cut out the distributors for the most part, big publishers don't sell directly to retailers like FW and BoB for the most part (Amazon and Sony appear to act as their own distributors). Lightning Source (was part of Ingram not sure if it still is) and Over Drive are distributors, among others and they supply books to the retailers. They get their distribution cut. There is also a fee that goes to the provider of whatever flavor of DRM is being used which gets paid on every sale.
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09-22-2009, 12:41 PM | #12 |
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I'm in educational publishing, which is admittedly a different sector of the business, since we don't sell to stores but to schools and districts.
I can verify that the cost of paper and ink should be around $1/book, depending on size, page count, and print run. What I have not seen yet in this discussion is the notion of non-printing production costs. Unfortunately, these are almost all up-front costs and do not change from print to e-ink. If I want to produce a book, I have to pay an editor to go through the manuscript one or more times. Ditto for a proofreader/fact-checker. I have to pay an artist to lay the book out and another artist to do the cover and any interior illustrations. These costs can easily run several thousand dollars. If I'm only going to sell 3,000 copies of the book over its entire lifetime, I need to make more than $2 each just to cover those costs before I've done any sort of advertising, marketing, etc. Granted I can do a half-a**ed job on the editing and layout to save money, but that's not particularly attractive to me as a long-term business model. Now what's attractive to me about e-books as a supplement to paper is that once I've done the above for paper, I can leverage an investment I've already made. That's *If* I'm not just cannibalizing my paper sales by converting them into lower-priced and easier-to-pirate e-book sales. The potential upside is well-known: the ability to make corrections instantly with no inventory loss, much lower storage costs and unit production costs, and the ability to keep my backlist in print where it can generate small profits that could aggregate to meaningful dollars. But I'm also considering producing some materials as pure e-books. No print edition at all. So the entire up-front editorial and art costs -- which stay the same -- have to be borne by an e-edition. Will I even sell enough copies that way to pay off those costs? There's no question that I'll charge less for my e-books than my print books. The question I'm grappling with is by how much! |
09-22-2009, 01:00 PM | #13 | ||
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Ultimately, though, I think that the costs can be trimmed quite a bit from many ebooks. -- Bill |
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09-22-2009, 01:32 PM | #14 | ||
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Shipping and warehouse costs are more, and a lot harder to estimate; that's something where volume gets cheaper. Shipping 10,000 books is cheaper per book than shipping 1,000 books; ditto for storage. Bookstore's cost of shelf space is also part of the equation, part of the money that the store demands. Again, hard to estimate, but much, much cheaper for digital--server space costs something, but not like physical rent does. Hosting 10,000 books, even with a good search engine, is a LOT cheaper than displaying 10,000 physical books. (Plus, of course, the store needs multiple copies of the pbooks.) Quote:
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09-22-2009, 01:42 PM | #15 |
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Another point that we, here, like to stress is many of those fixed costs to prepare an e-book should already be sunk costs in preparation of the p-book. If paperbacks cost significantly less than hardcovers we still expect e-books in today's market to cost something less than paperbacks. And we are often disappointed.
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