Cost of eBooks vs dead-tree books

[binaryhermit]

I don't have any direct knowledge, but that sounds right.

[darryl]

Originally Posted by pwalker8

Another aspect to consider is prices of books that are out of print and not available as an eBook.

These types of books are, of course, scarce, and the price set by the market.

Originally Posted by pwalker8

Overall, the publishers have done a reasonable job of establishing price points to maximize their profit, using a pricing model that has been successful for a long time. They have really done a better job than the music industry or movie industry, in that regard.

I once thought that the Big 5 strategy on e-book prices was ridiculous. This was based on what seems to be my assumption that those only willing to buy at lower price points would lose interest in the book and not buy it later at a lower price. However, consider the results of this poll:

Mobileread Poll on E=Book pricing

Flawed as the questions were, 56% of people would be prepared to buy the e-book later at a lower price. Combined with those who would pay the full e-book price, buy the print book etc. the assumption is hard to justify. In fact, it appears that the traditional publishers lose very few sales with their initial high e-book prices. In this case their pricing is totally understandable and rational.

Originally Posted by Apache

A friend in the text book publishing business told me that they used to pay professors if they required students to buy their books. And that professors also change books every couple of years to prevent the students from using used text books.
Apache

I can vouch for your comments, at least as of about 15 years ago, with the exception of paying academics. This is a practice I never encountered, though Publishers were always generous, liberally providing "desk copies" of books and establishing and maintaining amiable relationships.

[rhadin]

Originally Posted by Apache

A friend in the text book publishing business told me that they used to pay professors if they required students to buy their books. And that professors also change books every couple of years to prevent the students from using used text books.
Apache

This I know to be true. That is what publishers I worked for did back in the 80s and early 90s. Whether it is still true or remained true after I left working as an employee, I cannot say, but during my employee tenure it was most definitely true.

I can also say that during my employee years the way a textbook's (ie, a book intended for classroom use) price was set was not based on cost but based on what marketing believed could be charged but not less than a certain percentage above cost.

Non-academic books (ie, non-textbooks not intended for classroom use), like novels, had prices set other ways, primarily by what other publishers were charging for similar books. "Similar" meant, for example, MMPB Romance Fiction, that is the type of binding and the broad shelving category. There was an informally agreed upon price range; one book might be $7.95 retail and another $9.95 in the same category, but none were $10.95 and only certain series were less than $5.95 (the prices are given as examples and should not be taken as the correct prices; I don't actually remember what the specific prices were back in the late 80s). Hardcovers were generally priced at double the MMPB, although that was not cast in stone. However, there was an informal ceiling price.

If you could trace pricing easily, you will note that prices rose in tandem across publishers. When hardcovers rose to $2.00 at one publisher, the other publishers quickly followed suit. There was enough variation that no antitrust collusion could be charged -- at the time.

Setting of the initial retail price for MMPBs and hardcovers was based on predicted sales and costs; there was generally a margin that was expected by the publisher. The costs to produce a MMPB and a hardcover (excluding distribution costs, just production costs) were identical except for the actual cover cost and the dust jacket. The hardcover with the dust jacket generally added less than $2 to the production cost for an average print run. All pricing was based on the initial print run which was the publisher's best guess as to how many books in the specific format were likely to be sold within a specified period of time. Subsequent print runs cost less to produce overall because many production costs were not repeated (eg, editing, design) and a book that went through multiple print runs (think, eg, a John Steinbeck novel) had decreasing unit costs and thus higher profits.

One important thing to remember about publishing that is not true of most other industries, which is that it is the large-volume sellers that support the publication of the low-volume sellers. In the absence of a Steinbeck novel that brings in revenue for decades, some other low-sales author would not have been published. Of course, self-publishing today changes that equation but not by much.

[frahse]

Originally Posted by Apache

That is why painters used to have patrons.
Apache

And invariably the old composers. Mozart, et al.

[frahse]

Originally Posted by pwalker8

The break out of the pricing of a paper book has been posted here before, only a small percentage of the cost of a paper book is associated with the physical act of printing the book, i.e. paper and ink. Roughly half goes to the retailer, most of the publisher costs are associated with basic business expenses and the cost of actually creating the text (, , artwork, etc...) and making up for other authors not covering the cost of their book. The last is the expense that most people tend to either ignore or discount.

You are ignoring shipping, storage and handling as well as unsold books.

My main point still stands. Once the book is digitized (for either printing or for the eBook) it will be cheaper to get the eBook completed and in the customer's hands. So it definitely should be cheaper for the customer with the eBook and the authors get their money as usual.

As for authors that don't sell very well, it will be cheaper for the publisher to put their work into eBooks and much less has to go in the landfill.

[ownedbycats]

Originally Posted by frahse

and much less has to go in the landfill.

"If you bought this book without a cover..."

Apparently they strip the cover and send only that back to the publisher for renumeration. Then the rest of it's supposed to get pulped. Very wasteful.

[latepaul]

Originally Posted by rhadin

price was set was not based on cost but based on what marketing believed could be charged but not less than a certain percentage above cost.

Cut this out and keep it folks. This is how goods are priced in a free market economy.

[darryl]

Originally Posted by latepaul

Cut this out and keep it folks. This is how goods are priced in a free market economy.

Except if there is strong price competition in a market, when competitor's prices became a major factor in the price that can be achieved. There is no effective price competition in the textbook market, and little in the tradpub e-book market. Lower Indie e-book prices do not seem to be exerting a significant downward pressure on most tradpub titles, as per my previous post in this thread. Nor do I think they are likely to do so unless the market changes dramatically, as it no doubt will over time. In the meantime, I would not be surprised to see more successful Indie authors experimenting with the Big 5 practice of pricing their new releases at a premium and picking up demand at lower price points later.

[frahse]

Originally Posted by frahse

You are ignoring shipping, storage and handling as well as unsold books.

My main point still stands. Once the book is digitized (for either printing or for the eBook) it will be cheaper to get the eBook completed and in the customer's hands. So it definitely should be cheaper for the customer with the eBook and the authors get their money as usual.

As for authors that don't sell very well, it will be cheaper for the publisher to put their work into eBooks and much less has to go in the landfill.

GREAT IDEA just ocurred while the comments above!!

The Publishers as a general rule should not print paper/pulp books until eBook sales reach a point that indicates a big seller.

Of course Leather and "lame" covers will be available for these premium paper books. Or even fine wood.

[pwalker8]

Originally Posted by frahse

You are ignoring shipping, storage and handling as well as unsold books.

My main point still stands. Once the book is digitized (for either printing or for the eBook) it will be cheaper to get the eBook completed and in the customer's hands. So it definitely should be cheaper for the customer with the eBook and the authors get their money as usual.

As for authors that don't sell very well, it will be cheaper for the publisher to put their work into eBooks and much less has to go in the landfill.

I'm not ignoring any such thing. The physical generation, storage and handling cost of paper books have come way down as a percentage of the cost of the book over the years. Amazon has driven such cost way down and Amazon is the biggest bookstore in the US. I don't think you understand exactly how Amazon does business.

Your point continues to be inaccurate. Most of the cost in a book is in the people time it take to create a quality book - writing, editing, formatting. That's why indie books that use the same business model as the main publishers (a couple books per year) tend to be priced within a dollar or two of the publishers books once they hit paperback.

[frahse]

Originally Posted by pwalker8

I'm not ignoring any such thing. The physical generation, storage and handling cost of paper books have come way down as a percentage of the cost of the book over the years. Amazon has driven such cost way down and Amazon is the biggest in the US. I don't think you understand exactly how Amazon does business.

Your point continues to be inaccurate. Most of the cost in a book is in the people time it take to create a quality book - , editing, formatting. That's why indie books that use the same business model as the main publishers (a couple books per year) tend to be priced within a dollar or two of the publishers books once they hit paperback.

That's why I only consider "paper" books vs eBooks.

Paper is paper including all derivatives! Not to be confused with an eBook.

The admonishment "Don't confuse oranges with apples" includes tangerines with the former.

[rhadin]

Originally Posted by frahse

GREAT IDEA just ocurred while the comments above!!

The Publishers as a general rule should not print paper/pulp books until eBook sales reach a point that indicates a big seller.

It's a great idea except that pbooks still outsell ebooks in many categories and publishers still need to try to recoup production costs.

Publishing a book is a gamble. Very few books turn out to be like the Harry Potter books, and that is even more true among nonfiction books.

I would also note that in many categories, book sales are driven by people like me -- people who do not buy ebooks but do buy pbooks.

Oh, one more thing: Publishers also rely on library sales to help cover production costs and libraries still put pbooks at the top of the buy list.

[Uncle Robin]

Originally Posted by rhadin

I would also note that in many categories, book sales are driven by people like me -- people who do not buy ebooks but do buy pbooks.

As an ebook-only buyer/reader, the truth of the above is painfully evident. With the exception of KU crud, "ebook-only" is MUCH less common than "pbook only"

[leebase]

Originally Posted by JSWolf

Agency eBook pricing came about because of illegal collusion. So it should have been not allowed to continue.

Or...if we open the book to the earlier chapter....

FIRST act of aggression was AMAZON putting the ENTIRE NYT Best Sellers list on sale for $9.99 when the going rate was $25 to $30 for a hard back.

Amazon did this to prop up the sales of their $500 ebook reader.

Publishers did not want $9.99 to become the "new book price". There IS NO REASON books cost $25 to $30 in hard back form. It's simply a cost the market would bear.

Cheaper paper back books cost less, NOT HAVING ANYTHING TO DO WITH REDUCED PRODUCTION COST -- but merely as a way to sell books to people who couldn't afford the hard back book.

The hard back book is the only version sold at first so -- while a book is in it's highest demand form, it's at it's most profitable price.

Amazon was threatening the very heart of the profits of the publishers.

Amazon was SO POWERFUL that individual publishers feared taking them on by themselves. They were ALL angry about the situation.

Without Apple, ebooks would have become time windowed -- just like the paper back version.

Apple got mixed up in this ALREADY ONGOING TUG OF WAR. But Apple certainly did NOT create this problem -- AMAZON DID.

Apple with it's impending iPad device was the very thing the publishers thought could take on Amazon's stranglehold. Apple, didn't intend for one moment to go into the "sell ebooks at a loss" business.

Apple and the publishers had to pay a big fine. But -- there were only EVER going to be 2 possible outcomes. Time window ebooks, or let the publishers set the prices for ebooks...thus Amazon and all sellers became "agents" not "retailers" with respect to ebooks.

You can thank AMAZON for this.

[JSWolf]

Originally Posted by leebase

Or...if we open the book to the earlier chapter....

FIRST act of aggression was AMAZON putting the ENTIRE NYT Best Sellers list on sale for $9.99 when the going rate was $25 to $30 for a hard back.

Amazon did this to prop up the sales of their $500 ebook reader.

Publishers did not want $9.99 to become the "new book price". There IS NO REASON books cost $25 to $30 in hard back form. It's simply a cost the market would bear.

Cheaper paper back books cost less, NOT HAVING ANYTHING TO DO WITH REDUCED PRODUCTION COST -- but merely as a way to sell books to people who couldn't afford the hard back book.

The hard back book is the only version sold at first so -- while a book is in it's highest demand form, it's at it's most profitable price.

Amazon was threatening the very heart of the profits of the publishers.

Amazon was SO POWERFUL that individual publishers feared taking them on by themselves. They were ALL angry about the situation.

Without Apple, ebooks would have become time windowed -- just like the paper back version.

Apple got mixed up in this ALREADY ONGOING TUG OF WAR. But Apple certainly did NOT create this problem -- AMAZON DID.

Apple with it's impending iPad device was the very thing the publishers thought could take on Amazon's stranglehold. Apple, didn't intend for one moment to go into the "sell ebooks at a loss" business.

Apple and the publishers had to pay a big fine. But -- there were only EVER going to be 2 possible outcomes. Time window ebooks, or let the publishers set the prices for ebooks...thus Amazon and all sellers became "agents" not "retailers" with respect to ebooks.

You can thank AMAZON for this.

No, I can thanks Apple and the price fix six. They did the illegal collusion. They did not take down Amazon. They took down many independent stores. They basically gave a more business to Amazon. What they did backfired. The Justice Department really screwed things up with the punishment after the trial. It was a slap on the wrist to them and the customer lost big time. In face, we are still losing and probably always will be losing thanks to the shenanigans and how it all played out.

Fictionwise allowed some sale eBooks to be bought and then the price you paid held as credit towards other eBooks. It was a ery good system. I bought a lot of eBooks from Fictionwise. They had a very good business model that works very well. Apple and the price fix six took them town and forced their successful business model to collapse.