The Coming Storm

E-books are bringing big changes to the publishing industry. Whenever e-books are discussed, publishers like to remind people that the actual printing of a book is a very small piece of the overall cost of the book. They remind us of this point for one simple reason–they have to justify why the e-book costs as much as the printed version.

The numbers are misleading.

There are many costs that go into getting a book ready for publishing. They include:

Cover Design
Cover Artwork
Content Editing
Copyediting
Final Layout
Marketing
Promotion
Printing

I’m probably leaving some things out, but these are the major costs. As you can see, printing is just a small part of that.

However, the cost of the physical book is higher than just the printing. For example there is cost in physically moving all of these books from the printers to the stores–gas and labor. Then there is the process of getting the right books–in the right numbers–to the store. This is a complicated process and requires oversight–more labor. Then there is the labor cost for store employees to unpack and place books on the shelf. There is also an opportunity lost cost. If I stock my store with books A, B, and C, then books X, Y, and Z get shipped back to the publisher. If a customer comes in looking for book Y, I can’t sell it. And speaking of those books being shipped back to the publisher, that is more gas, more labor, more oversight. The publisher has to eat these costs. All of these costs–not just printing–dissapear with e-books.

If these expenses are not bad enough, there are further expenses in just turning on the lights for publishers. Remember, the publishing company and all its expenses have to come out of the books they sell. Each and every book has to pay for editors, managers, office assistants, interns, office space, office supplies, business travel, business lunches, web hosting, IT, etc. Authors are supporting the many, many people who work in the publishing industry, and this is why authors only see ten to fifteen percent from the price of each book.

So let’s take publishers out of the picture for just a moment. E-books allow authors to sell straight to consumer and bypass many of these extra costs. I just went through this process, and so I have a rough idea of the expenses. You can spend more or less, but the below costs will get you a very decent book (assuming you start with good content):

Cover Design – $500
Cover Artwork – $1000
Content Editing – $2000
Copyediting – $1000
Final Layout – $500
Marketing – Varies
Promotion – Varies

Assuming an author has mastered their craft, $5,000 will get you a very professional looking e-book.

How many books would you need to sell to see a return on the $5,000 investment? Amazon allows authors to keep 70 percent of the cost of the book. If you price your book at $1.99, a price at which Joe Konrath has had good success, you would need to sell about 3,600 books to earn back the $5,000.

How probable is this? Hard to say. In my recent (unsuccessful) Kickstarter campaign, I pre-sold 300 copies of my YA novel, Almost Super. I spent zero on marketing and promotion. Amazon gives you a much wider market. Joe Konrath has compiled a list of authors who are selling e-books, and many of them find they sell between 10 and 20 a day. This would mean it would take a year to recoup the investment. Add Lulu.com paperback sales (no additional costs), iPad, Nook, and Smashwords, and you have an even wider market.

There is a reason that many of the big publishers aren’t embracing e-books, or at the very least, trying to enforce old pricing scheme on the new model–it’s the only way they can keep things running as they have been.

But the model is changing, and it’s bringing new opportunities to authors and publishers who ‘get it’. We should be watching these new models, and finding out how to take advantage of them. As Eric Hoffer so eloquently put it: “In times of change learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists.”