How much do books actually cost to produce?

There’s an interesting post on The Guardian books blog today: The true price of publishing.

Most people instinctively feel that ebooks should be substantially cheaper than paper books, because an ebook is not physically “made”: there are no printing costs. But if, says Levine, the real value of a book resides in the “text itself”, then the delivery method shouldn’t much matter. The fixed costs – acquiring, editing, marketing – remain unchanged.

That’s a tough argument to get across, I think, because Amazon in particular has been very aggressive with ebook pricing. Because ebooks are cheap, Joe and Jane Public expect future ebooks to be cheap too. They neither know nor care that VAT wipes out most of the production cost difference (VAT is levied on ebooks but not printed ones).

Aggressive pricing isn’t new, of course. Amazon has been doing it with print for ages – when did you last pay the RRP for *anything* on Amazon? – and supermarkets often use books as loss-leaders. In most cases the winners aren’t the publishers or the authors; they’re Amazon, and the supermarkets. You don’t really have a business without them, but their demands for discounts mean that it’s not much of a business with them.

This is something I want to come back to when I have a bit of time to do the subject justice: I think the aggressive pricing of ebooks by name authors with backlists to shift, and the rush to undercut their prices by almost every new ebook author out there, could be a form of collective career suicide. Once something’s devalued, it’s hard to change people’s perspectives of what constitutes fair pricing. Just ask the developers getting slagged on iTunes for daring to charge more than 79p for their apps.

According to The Times, most books don’t sell:

Last month [in 2008] Nielsen Bookscan, which tracks book sales nationwide, showing that, of 200,000 books on sale last year, 190,000 titles sold fewer than 3,500 copies. More devastating still, of 85,933 new books, as many as 58,325 sold an average of just 18 copies. And things aren’t much better over the pond: I read recently that, of the 1.2million titles sold in the United States in 2004, only 2 per cent sold more than 5,000 copies.

If the public comes to expect professional cover design, production and editing at amateur-hour prices, I suspect there’s going to be precious little profit for the overwhelming majority of ebook authors. Even if you do 3,500 copies, if you’re doing them on the Kindle store at 99p a pop then your entire take is £1,050 before tax.

Most writers will be lucky to do one tenth of those sales: in 2007, the Guardian reported that “the average sale of a hardback book by a first-time writer is 400 copies”. That’s £120 in Kindle money. If you’re doing things the DIY way and paying for a cover designer and an editor, you’re going to make a significant loss.

I’m not arguing that nobody can make money from ebooks. Of course they can. Some are shifting tens of thousands of books, and making tidy sums out of it. But it’s important to remember that they’re the exceptions.

I’ll come back to this soon, I’m sure.

12 thoughts on “How much do books actually cost to produce?

  1. Gary says:

    BTW, I know that the figures for hardback book sales or paperback book sales don’t necessarily equate to ebook sales, but it’s bloody hard to find any reliable data.

  2. g24 says:

    This problem of lower perceived value is common to most goods and services delivered over the Internet; content, apps, software, etc.

    Personally, I don’t expect an ebook to be significantly cheaper than the same content served up on a tree. If anything, ebooks have significant added value: speed of delivery, search, multiple bookmarking, annotation, zero physical storage needs, no squashed bogies, and so on.

  3. Gary says:

    > This problem of lower perceived value is common to most goods and services delivered over the Internet; content, apps, software, etc.

    Yes, absolutely. I’m surprised by the number of people who think it won’t happen in publishing, when it’s happened not just in every other industry but in other aspects of publishing too.

    > Personally, I don’t expect an ebook to be significantly cheaper than the same content served up on a tree.

    I do, even though it doesn’t really make sense :)

  4. Squander Two says:

    Surely where the big savings occur in ebooks is in the lack of print runs and the resultant zero risk of having to throw anything away. If publishers can publish anything safe in the knowledge that selling even fifty copies will make an albeit tiny profit, that’s a huge benefit for them.

  5. gary says:

    Not paying for stuff that’ll end up pulped is a help, definitely, but some costs are more significant the fewer copies you sell – editing, say, or marketing. The answer to that, of course, is to find people who’ll do it for less – but that in turn drives down wages, so once again there are losers.

    I don’t have a downer on ebooks at all, but I do think – like music, like apps, like anything Long Tail – the money goes to the platform provider, not the creators.

  6. Squander Two says:

    You’re not wrong, but just to be clear, there’s really sod all saving in not paying to have books printed and unsold; the saving is in the huge advantage of not having to risk paying to have books printed and unsold.

    God, I’ve been working in the financial markets too long. I’m seeing all costs in terms of risk. True, though.

  7. gary says:

    Heh. I do think, though, that trad publishers are pretty good at taking risk into account: they’re very picky about what they take on, and the margins are calculated on the basis of a few hits subsidising a lot of misses. They’re operating across a portfolio of titles, spreading the risk, whereas for many self-pubs your portfolio is one book.

    What’s quite interesting about Kindle is that amazon doesn’t actually do anything: it provides an empty shop and a credit card reader, letting others do the work – creation, pricing, promo – and take the risks while it takes a very large cut. Very clever.

  8. Tony Kiernan says:

    >>“the average sale of a hardback book by a first-time writer is 400 copies”. That’s £120 in Kindle money

    So, what do those 400 copies equate to in £££££s? And to whom? Is that “first time writer with 100,000 advance”? Or “400 copies that make – in actuality – 25p profit a piece for the producers/publishers”?

  9. Gary says:

    There’s a bit of a rammy going on over at Portfolio publishing’s blog, where Adrian Zackheim has posted a thing about “the myth of self-publishing”. It’s polarising a bit in the comments – Zackheim is a bit too “yay-publishers” when he talks about how much promo they do” – but Joe Konrath’s figures for fixed costs are worth repeating:

    “Fixed costs of self-pubbing include $500 for cover art, $300 for proofing, $250 for e-formatting, and any editing costs. ”

    I do think the big winners – among authors – in electronic book publishing are authors who already have a profile and an audience. Konrath, for example.

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