Where does the money go?

Our Managing Director Tommi explains how the money from our books is spent and why ebooks aren’t free.

Why do books cost what they do?

In the past month we’ve been asked both why our books are so expensive, and how they are so cheap. It’s all a matter of perspective of course. If you compare a specialist book with one aimed at a general audience, then one will seem more expensive than the other.

To illustrate what makes up the price of a book, my father once showed me a simple greetings card, and a nicely bound notebook. Both were about the same price, yet one had about 200 pages, while the other was simply a piece of card with a design on it. If you count just the materials involved, clearly the notebook should be the more expensive.

So, when you pay 40 dollars for a book, where does each of those dollars go?

Naturally every book is different, but here is an approximate breakdown, based on selling the number of copies that we predicted when we printed the book.

Bookshop/Wholesaler/Retail chain $14
Author/Editor Royalties $2.75
Printing $4.00
Design & typesetting $3.00
Marketing $2.90
Warehousing & delivery $3.90
Overheads & rent $1.80
Staff salaries/taxes/employment costs $6.50
Profit to be reinvested or paid out to shareholders $1.25
Total = $40

Pie chart representing breakdown of cost

We’ve also been asked “shouldn’t ebooks be free?” The argument is that since there is no physical product, there aren’t any costs involved.

Of the expenses detailed above, the only costs that are related to the physical book product are warehousing and delivery, and printing. So I would certainly agree with those that suggest that ebooks should be cheaper than printed books. Thus we do in fact price our Kindle and epub ebooks at between 25% and 50% discount from the print price. However there will always be some quite substantial costs involved in properly publishing ebooks, including the selection, editorial and marketing costs.

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