Are Publishers Making a Killing on E-Books? Part 1
In a post last spring DBW’s Jeremy Greenfield wrote,”Publishers are making a killing on e-books because they cost nothing to produce, distribute and sell and are almost 100% pure profit. At least, that’s what many consumers think.” I’ve been brooding about it since then and thought it might be helpful to give those consumers some insights into how publishers arrive at their prices.
Few subjects have elicited as much wild conjecture as the prices of e-books. Reading rabid allegations of price-gouging, one has to wonder what these critics know about manufacturing costs that we in the e-book industry don’t. Following the proverb Don’t judge another until you’ve walked a mile in his shoes, it might be educational for you to imagine what it would cost you to duplicate the processes that at least one publisher – my own, E-Reads – performs to get a book into the marketplace from raw state to finished product.
E-Reads is among the oldest independent e-book publishers. From its founding our principle has been to split all net receipts with authors on a 50-50 basis. Although we occasionally publish original books, our stock in trade is reprints of previously published ones, particularly genre fiction such as fantasy and science fiction, romance, and action-adventure thrillers. Unlike self-published authors for whom the publication process is generally fast and inexpensive, E-Reads’ production line is artisinal, calling on skills – many of them quite demanding – drawn as much from Old Publishing as from New.
All publishers incur three fundamental types of expense: hard costs, labor and overhead. Many authors contemplating self-publication look at the hard costs but don’t always focus on the softer ones, namely the value of their time and the cost of living.
Let’s, therefore, start with this question: how much is your time worth? If you earn, say, $60,000 a year, your time is worth a bit under $30.00 an hour for a forty-hour week. That is the cost of your labor for publishing your own e-book. But you also have overhead expenses to meet such as rent or mortgage, utility bills, transportation, computer equipment, depreciation and countless other necessities and amenities. When publishers prepare a profit and loss analysis for books they contemplate publishing, they tack on to their hard expenses something like 30% or 35% as the cost of overhead, and you should too. By adding $10 – around 30% of your $30.00 an hour – onto your labor cost, your true hourly expense is more like $40.00 than $30.00. Obviously, you should adjust these numbers if your time is worth more or less than that.
The first task we perform to reissue a previously published book is to accurately reproduce the printed text as a digital file. Even if you possess the original text file, for publication purposes it’s useless. The text you turned in to your publisher was subsequently copyedited and proofread. You may want to key into your computer the changes that your publisher made to your original text file. That will probably take you a minimum of a week – 40 hours. If your hourly cost is $40.00 that’s $1,600.00, a foolish expenditure when it is so much cheaper to have your printed edition scanned.
Scanners in effect take a digital photo of every page of your book and create a crude computer-readable text. I say “crude” because although good scanners are 99% accurate, a 1% error rate in a 300 page book amounts to as many as 900 errors. In any event, scanning costs vary widely from $50.00 a book to several hundred dollars. Let’s say $150.00, plus, say, an hour packing up and delivering or sending your book to a professional scanning firm.
You will then need to proofread your digitized text. Reviewing and correcting should take about one or two minutes per page, or about 450 minutes for a typical novel that will end up at 300 printed pages. That’s about eight hours.
Once you have a clean file in hand you’ll want to convert it to ePub, the universal language of e-book publishing. The conversion software is a free download, but the time to convert your text and make sure it’s properly formatted for various retailers may take three or four hours. Say four.
You’ll have to make a cover. If you choose to buy or commission commercial art the sky’s the limit. We use, and adapt, stock art, which our designer manipulates to properly fit the style of a book cover. We subscribe to a stock art service to guarantee that the rights to the images we use have been cleared. To the cost of clip art fees or subscription add the value of your time to produce the cover and write jacket copy (and don’t forget the bar code!). This will all take two hours if you’re lucky. Better allow for three.
You’ll need to furnish a variety of metadata to retailers or they won’t accept your upload. That includes list price, territory, ISBN number, BISAC code, foreign currency conversion, sample chapter, and many other items. For a taste of what you’re getting into, you might want to read Mastering the Mysteries of Metadata first. But allow one or two full days. For the sake of argument we’ll split the difference at 12 hours.
If you want your book printed on paper you can do it cheaply enough through a variety of commercial processes. How good the book will look – many have special formatting issues – is hard to say. Because we are a professional publisher and our POD titles are sold on Amazon, Barnes & Noble and other retailers, we take great pains. It may take a day or two of special formatting for print on demand, for the editorial processes are quite demanding. If you want to adhere to our standards, let’s say one eight-hour day.
Assuming you’ve performed these tasks to perfection you will want to upload the book to various e-book retailers and a print publisher as well. E-Reads’ uploads are managed by Ingram’s excellent CoreSource. But as that is a service for publishers and not individual authors, you may want to employ commercial companies like Bookbaby, which will upload to all major retailers for as little as $99.00. Otherwise, to upload to all significant retailers on a do-it-yourself basis it will take several hours of trial and error, for retailers often send you error messages and you will need hours more to troubleshoot and re-upload. Three hours sounds about right.
There are other functions but these are typical ones. Tallying up the hours you’ve spent we get 31. At $40.00 per hour that’s a cost of $1,360.00, plus several hundred dollars in hard costs. Let’s round it off at $1,600.00 to get your previously published book back in print in all formats. That doesn’t include a penny for marketing and publicity.
In the next installment of this posting we’ll set some price points for your book and figure out how many copies you have to sell to make your money back – plus a profit.