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The HarperCollins rep is right: There is a non-zero cost associated with producing and selling an eBook. I've read her statement a few times and she's not saying that producing an eBook costs more than a pBook though she is saying that producing an eBook as well as a pBook costs more than a pBook alone. This is particularly true if the publisher is covering the costs of multiple DRM formats.
Then there are marketing costs.
So sadly, it's not quite as easy as intercepting the digital type and firing it out as an eBook.
When you add in the fact that DRM-laden eBooks over $10.00 don't sell all that well it's easily possible that HarperCollins would be unable to reach their revenue expectations for the book at $11.99.
The problem is they took the wrong approach when they tried to fix the problem.
They probably figured they would lose less than half their potential sales due to the price increase, which would more than double their potential revenue.
It looks to have backfired.
They would have been better off producing the book DRM-free at a lower price point-- which would have given them more sales (Fictionwise is pretty clear that multi-format books sell better than secure ones) and lowered their costs.
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