How Much Does It Cost To Produce An EBook?

11 Sep

In light of the ongoing argument that Big Publishing is charging far too much for eBooks, which it is, I thought I’d jot down a few figures. All of the numbers below are taken from my experience and rounded up for ease of calculation.

-Computer – $309

-Keyboard/Mouse – $56

-Microsoft Office – $170

-Power Supply – $250 (per month)

– Cover Design – $500

– Editing – $500

Total: $1785

Let us assume, for the sake of argument, that you put your eBook on Amazon at $3, which is the lowest price you can offer and still get 70% royalties. In order to cover your costs, you need to sell (1785/3=) 595 eBooks. Anything after that is pure profit.

But wait! There’s another issue. You just bought everything brand new. There’s no real need to buy a whole new set of computers, keyboards, word processing programs, etc for your next eBook. You’ve already got them! Therefore, your next eBook only costs:

-Power Supply – $250 (per month)

– Cover Design – $500

– Editing – $500

Total: $1250

And you only need to sell 417 copies to break even.

Now, these figures are a little vague. I’ve been known to go through one keyboard every three months (I prefer a separate keyboard because it’s cheaper to replace keyboards than laptops) and you may be able to find cheaper editors. (You can also get cheaper cover designs if you use stock images.) However, there is no real need to set eBook prices much higher. The higher the cost, the fewer you will sell, particularly if you’re a newcomer to the field. At some point, the price becomes so high that your customers revolt and start downloading pirated copies instead.

Why would this happen?

Consider the following example. Download a free book from my site – pick any title you want – and save it to your desktop. Right-click on it, select ‘copy.’ Right-click on your desktop, select ‘paste.’ Hey, presto; you now have two copies of my free book. You can do this with any eBook unless the producer has added DRM and most DRM can be circumvented if you know what you’re doing (and DRM is itself an incentive to piracy, as even the least annoying version of it is incredibly frustrating if you use multiple devices.)

The problem this causes for Big Publishing is that most people are perfectly capable of working out that eBooks simply cost much less to produce than hardbacks or paperbacks. There is, for example, no real danger of accidentally overproducing the books and having to hand them out to discount stores just to get rid of them. You can keep them on sale as long as you like without having to invest in a second printing. But the downside is that your customers are quite capable of noticing when they’re being gouged. The high prices charged for eBooks – like Star Wars; Aftermath ($13.99) – are indefensible.

Now, assuming the figures I noted above are true for Big Publishing (they’re probably not), they need to sell 128 copies to break even. But the question rises – how many people are going to buy the eBook at such prices? 

And how many of them are merely going to skip the book or download a pirate copy instead?

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35 Responses to “How Much Does It Cost To Produce An EBook?”

  1. Dustin September 11, 2015 at 8:17 pm #

    I can’t remember the last time I spent more than $3.99 for an e-book. Even at that price I’m not generally buying it unless it’s the equivalent to over 600 pages. I just can’t see how they can justify charging the same price for an ebook as they do for print.

    • Dennis the Menace September 16, 2015 at 6:51 pm #

      I just spent more than that for William’s Forschen’s new sequel to “One Second After” that was released yesterday. But I think that is because it came from a regular publisher.

  2. Dad September 11, 2015 at 10:18 pm #

    You forgot your time..

    • Martin September 12, 2015 at 11:08 am #

      This ^..

    • Alex Nagy September 14, 2015 at 3:04 am #

      You cannot really count your time, to be honest. If you were to count up all the hours you spent on the initial manuscript, endless revisions, etc. and only considered your time at minimum wage for your area, you could never price the book high enough to make your money back.

  3. Jack Hudler September 11, 2015 at 10:48 pm #

    I’m currently on disability, so spending >$5US on any ‘ebook’ is a very cognitive decision. If I don’t know the author… forget it, it’s DOA. Over $10US and it has to be a story I’m seriously invested with over the years (i.e., I started it during the dead tree era). However, I wouldn’t buy any new works at that pricing from anyone.
    The only exception to this, it technical works; something like Precision Engineering from Professor Slocum… yep I’d save up for that.

  4. Dennis the Menace September 11, 2015 at 10:49 pm #

    -Power Supply – $250 (per month)

    WTF?

    My two bedroom apartment with the portable air con unit in the bedroom running every night during the summer months is only $77/mo. During the non-summer months, its more like $25 – $40.

    So where does the $250/month power figure for your laptop from?

    • chrishanger September 11, 2015 at 11:17 pm #

      The place I live now has recently jacked up its electric price. That’s for the entire house, because I couldn’t isolate the precise laptop-only figure.

      Chris

      My Site: http://www.chrishanger.net/
      My Blog: https://chrishanger.wordpress.com/
      My Facebook Fan Page: https://www.facebook.com/ChristopherGNuttall

      • Fred Sanders September 12, 2015 at 5:04 am #

        I was actually going to leave the comment that I don’t think figuring in your entire electric bill at the worse time of year per month should be considered as an expense for your books. But i guess you could say that would cover the cost of your time writing & researching it. Why not include the cost of your internet connection, grocery bills, etc. 🙂

      • Steve Willson September 12, 2015 at 7:38 pm #

        Unless you use your electricity for nothing but operating your laptop, that’s a pretty absurd figure for power. Now, is your laptop used only for writing novels, or does it get used for more mundane things (such as answering comments on your website) or reading Drudge Report?

        Nonetheles, you overall point is valid: ebooks released by the big publishers are ridiculously overpriced. No ebook should be more than half the price of its bound edition and 25% would be more reasonable. That’s why I buy almost no full price ebooks by those publishers. I read them for free via Kindle Unlimited, wait for specials, or simply do without unless it’s a book in which I have some particular interest such as a series I already have a big interest in

  5. Alfred September 12, 2015 at 12:39 pm #

    Rather than quibble about Cost Accounting issues, the underlying point remains: eBooks are cheap to publish, and the big publishers are ripping off the consumers (and retailers) with their pricing.

  6. david jennette September 12, 2015 at 1:49 pm #

    Ok, i’m going to guess and say that while yes the price is somewhat inflated do to the book coming from a big publisher, I think what’s also driving up the cost is the hands the manuscript has to go threw before release. basically if something is released by a big publisher there are more people to pay so there you have it. a higher price.

  7. Anarchymedes September 12, 2015 at 5:32 pm #

    Now wait a minute: a subscription for Microsoft Office 2013/365 costs $12/month (in Australian dollars), and the power supply, I’m assuming, is used not only for writing. On the other hand, I’ve never heard of a computer capable of running MS Office costing $309: my Nexus 9 tablet running Android Lollipop costs around $560AU (and it’s not a PC). In this case, hardware costs aside, most of the expenses boil down to the cover art and editing. For the former, I’d recommend mastering Blender 3D and GIMP (free open source equivalent of Photoshop). Both of these products have large communities where art, while not free for commercial use, is reasonably priced for Indies.

    • Steve Willson September 12, 2015 at 7:40 pm #

      My two-year-old Toshiba laptop cost US$225 new and ran a full version of Office 2007 just fine. I’ve seen plenty of $300 laptops.

    • Alex Nagy September 14, 2015 at 3:06 am #

      My $300 smartphone can run all of MS Office.

      • Anarchymedes September 14, 2015 at 9:46 am #

        Yeah, mine does too: MS Office for Android.

      • Steven January 16, 2016 at 4:10 am #

        I would be THRILLED at the idea of writing a novel on my phone.

      • Alex Nagy April 8, 2016 at 6:49 pm #

        I’m not, honestly.

  8. Anarchymedes September 12, 2015 at 5:47 pm #

    Sorry, forgot another point: Big Publishers producing hard cover and paperback books have their long-standing and sometimes weird traditions and requirements (Chris, you’ll remember me asking the question about the book’s length in words, for example). And quite a few people out there are still total Luddites who believe books must be printed on paper, full stop. That’s why the Big Publishers are in no hurry to lower their prices.

    • Dennis the Menace September 16, 2015 at 6:54 pm #

      …just like the dinosaurs were in no big hurry to move south when a certain asteroid gobsmacked the Earth.

  9. Meg Dunbar September 12, 2015 at 6:42 pm #

    When you go through a publisher they set your releases too…often much later than you’d like to fit their lineup. Every month it is not on sale and on amazon recommend lists (how I found your books) loses you money.
    Ebooks are always my preference for environmental reasons as well! Imagine calculating every book you sold as a paper vs electronic environmental footprint.

  10. hahaha September 12, 2015 at 9:31 pm #

    https://www.literatureandlatte.com/scrivener.php

    Scrivener is better than ms word for authors I think. (I mostly write salescopy, but the program was created to help authors organize their work)

    • hahaha September 12, 2015 at 9:32 pm #

      Also cheaper for those who dont have word already.

      • Steve Willson September 13, 2015 at 12:26 pm #

        I downloaded the trial version of Scrivener yesterday and plan to give it a try. Given that the bulk of my writing is never intended for publication (as it involves stories about characters in my role-playing campaign) it may be overkill, but it would be nice to have something to better coordinate my thoughts.

  11. RandyBeck September 13, 2015 at 3:17 am #

    With all this talk about Microsoft Office, I’m surprised nobody’s mentioned OpenOffice, which is what I’ve been using for a few years now.

    It’s currently maintained by Apache, which caused some to create a branch called LibreOffice. Both have versions for PC and Mac, and I see that LibreOffice has a viewer for Android.

    They’re open source, and (best of all) free. If you move to a new PC, Mac, or Linux, you just go online and download a new one. There’s no reason to be using an old version.

    If you’re interested, I recommend looking both up on Wiki to see which one you prefer.

    • Steve Willson September 13, 2015 at 12:23 pm #

      I’ve used both versions of OpenOffice. While they are serviceable, quite frankly they are just not as good as Office. The clunky interfaces on both are reminiscent of Windows 95, and their formatting leaves a lot to be desired. I try OpenOffice out every year or so, hoping with each new version it has finally reached the point it can replace my Office 2007. Thus far it continues to disappoint me.

      That having been said, OpenOffice is still more than adequate for basic writing, even if one is not planning to publish ebooks. It’s better to get on with the writing bug as best you can even with marginal tools than not do it at all. : )

      • RandyBeck September 13, 2015 at 3:44 pm #

        Frankly, I had gone from a really old version of Word when I switched to OpenOffice, so I’ll concede that my using it doesn’t mean that much — other than that I’m frugal.

        In the end, differences in formatting doesn’t mean much. I convert everything to HTML when I’m ready to publish, and then I use a text editor to strip out a lot of the extra junk that they leave in there. The epigraphs at the start of each chapter are formatted completely differently than what OpenOffice does, but I would have had to fix that that no matter what word processor I use.

        Of course, there’s also LibreOffice, but I suspect you’d be just as dissatisfied. Until a few more years go by, anyway.

        Anyway, I’m happy with it.

  12. Duncan Cairncross September 13, 2015 at 4:45 am #

    Ok – so I already have most of that for other purposes
    I’m left with
    Editing
    Cover page

    Where do you recommend for editing?
    Is there a service of some sort?

    • RandyBeck September 13, 2015 at 5:21 pm #

      I’ve seen there are editors available on the web, but I do editing (which needs to be a lot more than just proofreading) mostly “in house.” I suppose it looks it, but we do what we can.

      I’ve seen this place for book covers:
      http://thebookcoverdesigner.com/

      Be careful. I’ve noticed a lot of pieces of stock images being used there. But it looks like there are some really nice ones among the weeds. None of them cost anywhere close to the $500 Chris cited, but, if I may say so, his recent covers look pricier than they used to.

      Sorry for the sales pitch, I’ve got some cheap covers on my sister’s currently-empty site here:
      http://www.authordir.com/covers/

      But that site is only temporary. I may be taking the good ones and putting them up on the above site after I give it a closer look.

      That being said, there are very good reasons to look for something more expensive. A $500 cover is actually an investment more than a cost.

      Plus, if the book is your pride and joy, then it’s more than just an investment.

  13. Tim September 13, 2015 at 7:44 pm #

    Excellent information. My limit is $4.99 and that is pushing it for me for Kindle books. I have noticed some of my favorites authors have climbed to $7.00 or $8.00 dollars now or greater and they have lost me as a reader. Shame …. thank-you for putting up your costs .. all authors should have a chance to make a profit and living from the time put into writing. I do a lot of reading .. make use of Kindle Unlimited when I can .. though my understanding authors who take advantage of this .. do not make as much per book.

  14. Lodrik September 15, 2015 at 4:13 pm #

    i am so happy that love and air feed you, but most authors need eat real food every few weeks for the work they do ^^

  15. Dennis the Menace September 16, 2015 at 8:59 pm #

    BTW, some interesting facts that have just come out about the e-book publishing biz:

    http://pjmedia.com/instapundit/214545/

  16. Steven January 16, 2016 at 4:13 am #

    If you are really worried about keyboard use and power then you can go write in the public library. Cover design you could farm out to some student for “exposure” (lol) which just leaves editing.

    By the way, could you please let me know which pirate sites have your books? So we can avoid them?

Trackbacks/Pingbacks

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