In Which Nathan Bransford Does Some Math

In the comments on my rant about the Amazon/Wal-Mart/Target price war, my friend Eric and I digressed a bit into eBook pricing, and book prices in general.  Specifically, if you take the cost of printing and binding and shipping out of the equation, why shouldn’t eBooks be cheaper than dead tree books?

In today’s post, literary agent Nathan Bransford breaks down the costs associated with producing a book, including how much the publisher actually makes off of the cover price.  As he points out,

Unit costs (i.e. producing the actual book) also varies anywhere from $0.75 to $3.00 depending on the format, quantity of the print run, etc.

He figures in bookseller discounts and author royalties, and then gets into some expenses that are less obvious to readers:

But you have to deduct all marketing costs (ads, sending out copies for review, bound galleys/ARCs if any, co-op), other production costs (cover, seasonal catalog, etc.), and overhead (salaries, health insurance, rent, etc.) before you get to the profit.

How much does all the rest of that cost? I don’t know, I’m not a publisher. But my guess is that all adds up to a pretty good chunk. And let’s not forget that historically most books don’t earn a profit and those have to be paid for as well.

This is the part I want to touch on, both looking at the author’s side and at the publisher’s side.

First of all are the advantages to authors.  Commercial publishers market your book for you.  They put the titles in their seasonal catalogs, and sales reps go out and present those titles to book buyers all over the country.  Even if a book isn’t getting a full-page ad in the New York Times Book Review section, it’s still getting far more exposure than books put out by a vanity press.

Also included are the costs of galleys and ARCs.  Now, not every book will have these, but a lot of times, publishers will make them available, especially for debut authors.  Why?  Because the best advertising isn’t something you can fit into a newspaper ad.  Getting the book into readers’ hands is.  When booksellers are talking up a book before it’s released, that’s what we call buzz*.  This enthusiasm passes from bookseller to readers — the book’s pub date arrives and booksellers start handselling.  “Hi Mrs. Murphy.  Remember how much you loved The Case of the Pilfered Plotbunnies? We just got in this new book called The Plotbunny Detectives and I think you’ll like it.”

Galleys and ARCs are expensive to produce.  They tend to cost more to print than the final version of the book itself.  This is because the print runs are far smaller, so you don’t get as much of a bulk discount.  (Though, with several publishers launching e-galley programs, I’m hopeful that we’ll see even more books getting into booksellers’ hands early.)

Co-op is short for co-operative advertising.  It’s money publishers make available to booksellers for the purposes of advertising their titles.  This could be a mention in a store’s newsletter, a table display featuring certain titles, a newspaper ad highlighting certain books, or a spot on local radio stations.  It helps booksellers mitigate the cost of advertising, and it’s win-win on both sides:  the bookstore gets people to come in and shop, and the publisher sells some books.

Somewhere in that publisher’s cost are the salaries of the editorial staff, and the people designing the cover art, and the people setting up the book’s layout.

Which segues nicely into the publisher’s side.

Something to consider: the only way a publisher makes money is to sell books.  I know it seems kind of obvious, but there are so many costs associated with actually making a book a success that we rarely take into account.

There are all the positions at a publisher that the average reader might never come into contact with:  the customer service reps, the finance department, the sales force, the people working in the warehouse who put the books in boxes and ship ’em out to bookstores.  Their salaries have to be factored into the cost of the books.

Then there’s the last line that I quoted from Mr. Bransford: “And let’s not forget that historically most books don’t earn a profit and those have to be paid for as well.”

Which means that the books that don’t earn a profit get paid for by the books that do.

Is that fair?

Hell.  Yes.

It’s part of what gives debut authors a chance to shine.  The money made by the bestsellers lets editors take a chance on an unknown and lets the marketing and publicity departments get the word out, the buzz started.  Maybe it lets them give that midlist author whose books they love another solid push.

There’s a lot of talk about how commercial publishing is an old, creaky, clunky model.  There’s days it feels like shiny new gadgets and technologies are coming so fast, publishers can barely keep up.  They start figuring out how they’re going to deal with today’s invention knowing that in a week or a month, it might be obsolete.  But for now, it’s the model we have, and it still gets books into readers’ hands.  It still gets writers paid.  Money flows towards the writer, remember?

That’s not to say that we should turn up the stereo so we don’t have to hear the creaking and clunking.  There are brilliant people out there, taking a good look at changes that can be made, at new ways of selling books.  I think we’re going to see some very cool and unconventional things coming that will work, and will challenge the way we think about publishing and distribution (or continue to challenge, might be more accurate).  But neither do I think we should just scrap the old way of doing things.  It’s so hard to get rid of because it works.  It’s imperfect, yes, but publishers and booksellers are going to be looking for ways to merge the old and the new to make something that works even better.

It’s going to be interesting as hell to see what they (we?) come up with.

*Funny thing, I’ve never liked the word.  It probably has something to do with my inexplicable fear of bees.  I see a bee flying around and it’s all oh god get away run oh god HALP. So I hear it referring to stirrings about a book and I cringe.  Hey, some people hate the word “moist.”  Language is awesome.

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