Wednesday, March 03, 2010

More On e-Books and p-Books

Many thanks to Angela James (Executive Editor for Carina Press), who responded to my post yesterday with the digital royalty rate for her new publishing venture. Using her 30% figure, I'm reposting the information from yesterday, plugging her royalty rate into the worksheet in place of the 25% reported by the New York Times. I've also adjusted the publisher's overhead/profit figure downward to re-balance the equation again:

-------------------------------Hardcover---------e-Book

Cover Cost---------------------$26.00------------$12.99

Retailer's Share--------------($13.00)------------(3.90)
50% on Hardcover
30% on e-Book

Net to Publisher---------------$13.00-------------$9.09

And here's how they say they spend that money:

Design, typesetting
& copy-editing------------------$0.80------------$0.50

Printing, storing
& shipping----------------------$3.25--------------n/a

Marketing-----------------------$1.00------------$0.78

Author's Royalty
15% on Hardcover
30% on e-Book-------------------$3.90-----------$3.90

Overhead & Pub-
lisher's Profit-----------------$4.05--------------$3.91

Total Costs--------------------$13.00------------$9.09

An interesting picture, isn't it? On the e-book side, my heart was really warmed by the symmetry between the retailer's share, the author's royalty and the overhead/publisher's profit. Each gets about $3.90.

Reminder: I'm not jerryrigging this. All the numbers above are straight from the New York Times' article with the exception of the 30% Carina e-book royalty rate and the overhead/publisher's profit rate, which I had to lower to accommodate the 5% higher royalty.

Of course, the more streamlined and efficient the publisher is, the more profit the house can make.

And, this scenario is based on a retail price of $12.99 for the e-book, and we don't know if Carina is using that price point. Angela: If you're feeling generous, would you share the retail price for your e-books?

It wasn't all that long ago--about twelve weeks, in fact--that three of the Big Six announced they would deliberately withhold the e-book release of best-sellers in order to support their hardcover format. These numbers help to explain why.

At the time, Mike Shatzkin said on his blog: "...this is really about the agents and publishers trying to take control of ebook pricing, and value perception, back from Amazon."

Regular readers of this blog know that I am no fan of Amazon. I regard them in the same light I do Wal-Mart. You can read about the Wal-Mart Effect here.

I am, however, rapidly becoming a fan of Carina Press . . . and any other innovative and forward-thinking publishers.

3 comments:

Lynne Connolly said...

30% is actually low by epublisher standards. The average is more like 35% and often higher. One of my publishers gives me 50%.
But - go, Angie!
And a big cost is the setup of a shopping cart and the servicing of credit cards and their payments. You have to ensure a secure site.
The article is way wrong, btw. or that's what's coming out on most epub private lists.

Bernita said...

It might be worth noting, however, that some e-publishers calculate the higher royalty rate on net rather than on cover, as Carina does.

Angela James said...

There are definitely expenses involved with production of an ebook not listed so I wouldn't rely too heavily on that article. The other thing to remember is that each publisher will have different costs associated with ebook production, depending on how much they pay for the various things needed--and some places might have additional costs for extra things they do.

Our book prices aren't public yet, let me check and see if I have the okay to share them and I'll get back to you!