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Ebooks Vs. Print Books: a Breakdown of Production Costs

By Clogsandtulips @clogsandtulips
Ebooks vs. Print Books: a breakdown of production costsWith the advent of ebooks, a flood of debates over ebooks versus print books has broken out.
One such debate is why some ebooks cost almost as much as thier hardcopy siblings. Afterall, with an ebook there are no printing or shipping costs. There's no reason why all ebooks can't be priced at $0.99.
What these people forget is that ebooks also need editing, copy editing, cover design, illustrations that all must be paid for and can cost a pretty penny.
Plus, you have to factor in the cost of formatting. Not all ereaders are created equal. So if an author wants to make their ebook available on multiple ereaders, they must have it formatted for each one. That costs money.
And you also have to pay your retailer, some of which take up to 30-70% of the retail price.
Author Nathan Bransford provides an easy-to-follow breakdown of how the retail price is distributed to all parties involved in ebook and print book sales. He also goes on to explain in another post the reason why some ebooks cost as much as or more than the hardcover versions.
Authors like Amanda Hocking, who became a millionaire selling her ebooks for just $0.99 each, take a risk. The risk that their ebooks will go viral and sell enough copies to cover their initial cost. These authors come along once in a blue moon. But they have succeeded in making readers feel that they should get all their reads for such a low price.
Which leads us to another gripe from readers: why do print books cost so much? It certainly can't cost that much for a bit of paper, ink, and cardboard.
No it can't. And it doesn't. But the price on the back cover of the book in your hand doesn't just cover production costs.
Assuming you're going the route of traditional publishing, here's a rough idea of your book's journey...
It starts with you
You, the author, spend hours over the course of years to crank your book out onto the page. Before you can send it off to an agent for possible representation, you need to make sure your manuscript is as perfect as you can get it. This means hiring a professional editor and/or copy editor to look over it. You must then make any necessary changes and do any necessary rewrites.
Then take it to your critique group and send it off to friends, family and trusted readers for their feedback. Back to the drawingboard to do some more rewriting and you're ready to send it out to agents.
And more agents. And more agents. Some may offer feedback, sending you back to the manuscript to polish. Once you do get an agent, he or she will read your manuscript and send you a list of even more edits and this will continue until you've got it as perfect as you can get it.
Your agent will send your manuscript off to publishers and, once you finally get one interested, they will look over the book and give you even more edits until they feel it is ready to be sold.
Your advance from the publisher in addition to royalties once book sales have paid the publisher back for your advance earn you roughly 8-15% of the retail price. Agents typically take a 10-15% cut from this.
On to the publisher
Once in the publishers hands, they will find and pay someone to format the pages, someone else to design the front and back covers (and inside jacket for hardcovers), and yet another person to take care of any necessary illustrations. Once all this has been done, editors and copy editors at the publishing house will have another go at your book.
The publisher will then have what are called galley copies printed. These are the copies that get sent to authors, experts, and reviewers to get some blurbs for the back of your book. Everything will then get sent off to be printed (some publishing houses have printing presses, but not all).
But the publisher's job is not over. They also send your book out to distributers and cover marketing costs for your book. And they have to pay you your advance.
Publishing houses are expected to cover all these costs on just 45-55% of the retail price. If the book doesn't sell, they lose money and must rely on their bestselling books to make up for the loss. 
The distribution phase
The distributor works on getting your book in the stores. They distribute a catalog of books to retailers, then take and fulfill those orders. Until your books get shipped out, they are kept in the distribution warehouse.
By taking 10% of the retail price, they are able to pay for  packaging and shipping, catalog production and distribution, rent, utilities, and staff.
Books for sale
Retailors sell the books. They need staff to stock the shelves, manage the warehouse, and work the registers. They need to pay rent and utilities for their store. They need to pay for marketing for the store.
Book stores take roughly 40% of the sale price. However, books are also sold at general retailers like Walmart, Target, and Sams Club, where books are not the primary sales item. To make sure that books are able to compete with the other products, these retailers require a percentage closer to 60.
So all in all, though $25 may seem steep for a hardcover, if you think about everything that goes into getting the book into the reader's hands, $25 seems like peanuts.
For more reading on this subject, check out the websites below:
What is your opinion on the prices of ebooks and print books?
Image: zebramaedchen, Flickr
© 2011 Tiffany Jansen, writer

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