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.