Home » Big Publishing, Royalties » How Much Does an Ebook Cost a Traditional Publisher?

How Much Does an Ebook Cost a Traditional Publisher?

31 January 2012

From author and regular commenter Lily White LeFevre:

I was talking to my husband about publishing over dinner the other night, trying to explain to him why I’m not going to be pursuing a traditional publisher any time soon and what it would take for me to do so. He listened to my description of the rights grabs and the eternal shelf-life of digital and the low royalty rates, and said, “Well, when a business is failing from being outcompeted, sometimes it trims the fat and fixes the problem and sometimes it just grabs everything it can before it goes under.”  Obviously big publishing is doing the latter.

I told him that what I would require to even consider a publisher is a 50% split on cover price for digital, and that even then the publisher would have to work to convince me they are worth 50% of my book forever.  If they really focus on “distribution and promotion” as he called it, then maybe.

Anyway, I thought it might be fun to think about what the actual cost to a publisher would be to put an ebook together, therefore how many copies they would need to sell in order for the book to become profitable.

. . . .

A few key assumptions:

  • There is no editorial tinkering involved–the editor acquired the manuscript as-is with just a few polishing and tightening edits.
  • The author is a careful writer who has good grammar, a readable prose style, and didn’t leave a ton of typos.
  • The book is 80-90K, so it will take an editor about four hours to read if they just read it.
  • I am working with a no advance, 50% of cover price split for digital royalties.
  • The entire cost of production is being put on the ebook, because the print book has become the ancillary format.

I know from my own editing work that I need about three passes after the initial read-through to make a substantive macro- and line-edit. We’ll double the amount of time to allow for marking up and making notes. So…4 hours for base read + 3 passes x 4 reading hours x 2 double the reading time for editing = 28 hours of editing before it gets sent back to me.

The next round of edits only needs 2 passes, so 2 x 4 x 2 = 16 hours.

Then a round with the copyeditor, 2 x 4 x 2 = 16 hours.

Then a round with a proofreader, 2 x 4 x 2 = 16 hours.

Then it goes to the formatter. For a novel-length ebook that will take about four hours (basing this on my experience of two hours for a novella, but only some of that time would be increased by a longer work) = 4 hours.

The copywriter spends an hour coming up with the back matter = 1 hour.

Upload to various sales channels = 1 hour.

That is 82 staff hours. We’ll assume they get $20 per hour on average (obviously the big editor gets more, but I bet the copyeditor, proofreader, and formatter all get less, so it averages out). I am using $40 as my multiplier to account for business taxes.  The total cost in staff time needed to get my manuscript converted to an ebook and uploaded is therefore 82 x $40 = $3280.

The only other fixed expense is the cover art, which can probably be gotten for $300, but we’ll say they are really concerned and pay more. We’ll make it an even $1000 to add in the five minutes it takes somone to slap on the title and author.

Total bill is $4280.

Let’s round it up to an even $5000 for easy math.

. . . .

We’ll assume the publisher uses the mmpb price of $7.99 as their cover price.

Retailers take 30% of that, leaving $5.59 per copy coming back to the publisher. If they pay me 50% royalty on every copy sold, then we need to sell 1790 for the publisher to break even.

. . . .

My prediction is: this kind of split is how publishing houses have to go in order to survive the digital revolution. If they can add a legitimizing value to consumers who don’t want to have to vet for quality, only content, and can get immediate access to promotion avenues a self-publisher can’t or has to be very lucky to hit, then they might remain worthwhile business partners.  But right now, an author demanding 50% of cover on digital would get laughed out the door, unless their last name is Rowling or Meyer or King or McCarthy…and possibly even then.

Link to the rest at Lily White LeFevre

Passive Guy will note that it’s never taken him anything close to four hours to format a manuscript for an ebook. If he did it every day, it would probably be less than 30 minutes.

Big Publishing, Royalties

30 Comments to “How Much Does an Ebook Cost a Traditional Publisher?”

  1. Only thing about her numbers is that the cost to the publisher for work hours spent is not the hourly wage, but roughly twice that, to account for health care costs, floor space, equipment and other support expenses.

    • Also downtime. Employees do have to rest their eyes, and have a coffee break, and pause to organize their task list.

      And most importantly, they have to check their work.

      When people do tasks at home, they don’t include the time it takes _around_ the job.

      The issue, imho, is not whether the publishers can justify their costs — of course they can — but rather that the publishers need to find ways to cut those costs, because the reader can’t or won’t pay the price.

      And this is not a change in the reader behavior. Most books are shared out in one way over many readers. Only a minority of readers ever actually paid full price for all books. Most of us paid full price for a few books, and got hold of the rest with discounts, or used, or trading or libraries.

      That price deflation they’re talking about isn’t deflation. It’s pretty much the same as always. It’s the business model that has changed.

      • Agree, to some extent, Camille, but question the generalizations about reader behavior as it relates to acquisition practices. I figure over the past forty years I’ve read 12,000 print books. I NEVER went to the library for my genre fiction, NEVER borrowed a book of genre fiction, and NEVER lent one with the expectation of having it returned. I take my used books to the jail, where the people reading them are unlikely to spend their money on books in any case. But then, genre fiction isn’t whining as loudly about epricing as hardcover is, and I have no insight into what those production costs are. Yet another area where the publishing industry might want to acquire more data.

        • Yeah, and you gave the book away — which means they had at least two readers, and probably a lot more.

          With ebooks, you cannot donate that book. And publishers are not giving libraries much of a of break — so if you want to support the prison library with an equivalent gift, you’ll have to give them enough to buy the books again.

          The thing is that this has been studied hard for decades, and there is tons of data. Historically books were considered assets, something you could pawn or sell for ready cash. The average book has something like four readers — only one of whom pays the publisher for it.

          (I believe the four book number was post-war numbers, but it was long ago that I was reading those studies, and I couldn’t put my finger on it.)

          Just because you don’t use the library doesn’t mean no one does. Books are durable goods. They not only end up in used bookstores, but people trade them all the time. There are garage sales and rummage sales and donations.

          Look at what a thriving business folks have reselling books and videos on Amazon.

      • I don’t know about the US, but in Canada many (most?) publishers are outsourcing substantive editing, copyediting, and/or proofreading to freelancers because they don’t want to pay for the downtime. The going rate is $30-50 at the low-end of the range.

        • TL, when I said downtime, I didn’t mean time when there is no work to do. I meant the natural part of the job that people discount when they are doing it themselves. It applies to outsourcing too — it’s built into the rate.

          What I was commenting on was people saying “It doesn’t take that long to format a book!” Sure it does. In house or outsourced, downtime is a part of the business.

  2. $20/hr. for professional copyediting and proofreading? I haven’t seen that price in years.

    Also, Mark’s correct–you haven’t factored in overhead–but then, why should you? Why does the publisher insist on that Manhattan building, and why should you have to pay for it?

    Finally, $20/hr. is not a liveable wage if you want health care, life insurance to protect your family, and savings for retirement. Freelancers, who don’t have the overhead of Manhattan publishers, have to pay 12 percent of that $20 just in social security.

    I’m all for self-publishing, and I believe the current publishing model will have to be completely revamped to make publishers and authors happy, but $20 an hour for professional copyediting as part of your calculation bothers me!

    • I also thought it was a little low, Nancy. However, this sort of cost varies a great deal across the country.

      I recently heard a multi-published author who is also a professional editor estimate $1,000 as the cost for editing a novel in her area.

  3. You all may be very right that $20 for editing is low…I may have taken too seriously the complaints of editing being an “underpaid” profession. Also where I live (deep South) $20/hour is a very livable wage, especially if one is married with a spouse who also works.

    I did double the wages to account for business taxes and expenses, and I padded upward on the times (as PG says…would it really take someone who formats all day every day 4 hours?), so I think this is a fairly accurate reflection of cost. But please people who know such things, weigh in! I am quite curious about this.

    • I’ve been making ebooks every day since Spring of 2010. By the time I go over a manuscript, mark it up, convert to XHTML, clean it, build the style sheet, compile in various formats, test the formats on multiple devices and platforms, and make adjustments accordingly… 2 to 4 hours is right on target.

      If it’s your own book — one in which you’re intimately familiar — then I can see it taking less time. When you’re coming in blind as I do…

  4. I format the manuscript as I go, now that I know what needs to be done.

    By the time the copy-editing is done, I can upload it the same day.

    • I’m still posting drafts to a filter on my journal, so I’m not sure I can format-as-I-go entirely, but I can certainly apply macros, or format as I copy-edit, and upload at the end of that — and it doesn’t take long. I have to fix my em-dashes, add non-breaking-spaces, replace HTML markup for bold and italics, change from my typing-style to a reading-style, and… that’s about it, really. Oh, and frontmatter/backmatter boilerplate.

      Which is to say, formatting should be pretty breezy once one gets the hang of it. O:>

    • Oh, I’m so with you on that one, K.A.! *grin*

    • When I put my first book through the Smashwords meatgrinder I expected problems after hearing how much trouble it is. So I read their how-to manual and discovered everything they suggest changing at a macro level was how I have my Word settings defaulted. So it was a snap for me…I just spent the two hours learning I had already (accidentally) done it “right”. But, yeah, if you are publishing a strictly text book and work in Word as a base program it’s easy to keep everything set to ebook conversion standards and it saves a lot of time and frustration later!

      • I’m glad to know I’m not the only person who finds the Meatgrinder requirements to be trivial! :D (Especially compared to other requirements I’ve had to abide by, with multiple font-styles, so that something could be poured quickly into Quark for layout…)

  5. Cover costs can be highly variable–if you start with a custom photo shoot, then add in an artist’s time, then an illustrator’s time to design the titles and layout… $1000 is a decent estimate if the publisher uses stock photography–possibly several images to create a single cover–but since the cover is often THE most important marketing item in a book’s repertoire, getting a good one is worth it.

    That said, an author (or an author’s generous friend) who has a big font library, Photoshop, and a creative eye can probably do a great cover for a lot less than $1000.

    You also haven’t included anything for marketing. Not sure if that was intentional, but most big publishers make at least a token effort (often not more, but even a handful of online ads cost money). Is this a first title for the author? If so, you should figure something so people will even hear about it, let alone go buy it.

    Also, charging $7.99 (akin to a mass market paperback) for an ebook will certainly depress your sales, when comparable ebooks are priced under $5. You might wait a while to see all those 1790 sales. Spread those earnings over two years and see how they look.

  6. For non-fiction (business/technology), you can pretty much double that to $10k due to the editing and graphics. Textbooks would be at least $20k for the additional editing and professional graphics needed. However, given the higher prices for non-fiction ($20) and textbooks (<$50), the breakeven volume is pretty much the same: ~2000 books.

  7. I have yet to see any evidence trad publishers know how to market ebooks. The know how to market to each other and to retailers, not to readers. As for promotion? They passed that off to writers long ago. What is valuable in physical bookstores (publisher packaging) has little value in ebooks. So a trad deal for ebooks means the publisher gets to do the (relatively) easy, one-time stuff and the writer is stuck with the time-consuming, ongoing chores.

    85% to writers, 15% to publishers sounds right to me.

  8. My DH did a similar set of calculations fifteen months ago to convince me self-publishing was the way to go. His total matched Lily’s total, so I think she’s on the money.

    Corners can be cut depending on a writer’s knowledge, skills, and willingness to trade favors. So far, my total outlay has come in well-under $5000 per book.

  9. Some small publishers are using a model with similar percentages (49% to the author, no advance) right now. I would expect the big boys to follow as soon as enough big names start squawking and threatening to go elsewhere.

    Splitter

  10. PG, I recommoned your blog to my writing friends with any interest in ePublishing, but I wish you’d do you link aggregation more like John Grubber does with Daring Fireball: he takes a sentence or less, makes his comment and leads his followers to read the entire post at the author’s site. When you “excerpt” more than half of the article and bury a link at the bottom, you’re depriving the people who write the content traffic and any revenues or reputation they would gain.

    Daring Fireball is so popular that a link on his site has been known to break servers because he has so many followers that will click through his links. His system is a win-win for him and the people he aggregates from. I hope you’ll take that stance when you’re mostly reposting.

    • Interesting thought there, but, despite your concern about lengthy excerpting, I know for myself I still click through if it’s an article that interests me. I think PG never ‘buries’ his links–in fact, if there’s a lengthy excerpt on a subject of interest to me, I scroll past the excerpt to the bottom of the post, where PG ALWAYS puts the link. I want to read the original article, and the comment thread there (which is usually not nearly as interesting as the comment threads here :))

    • London – I’m very careful about fair use in all of my excerpting and have had only two complaints out of over 1,800 posts.

      I write The Passive Voice as the kind of blog I would like to read. I’m looking for the gist of the idea of an article or post, then I’ll click through if the gist doesn’t tell me as much as I want to know. For me, Fireball-style link aggregation is unsatisfying because it doesn’t tell me enough to decide if I really want to read the whole thing.

      One of my purposes is to send a lot of traffic to the sites I quote. From emails and requests to link to new blog posts I receive, it seems to work. I receive a lot of messages that say something like, “I couldn’t figure out why my traffic exploded, then discovered you had linked to my blog.”

      One of the ways I encourage people who are interested in the topic to go to the original source is to nearly always strip out links in the excerpt and seldom using any images I find in the original post.

  11. “Passive Guy will note that it’s never taken him anything close to four hours to format a manuscript for an ebook. If he did it every day, it would probably be less than 30 minutes.”

    I must be doing something wrong.

    After I make sure I have all the bits and pieces of the manuscript ready to go, it takes all of a maybe 5 minutes to go into Scrivener’s compiler function, tweak a few settings to get it to look the way I want it to, and push compile. Then lo and behold a .mobi or .epub or .pdf or .doc or .younameit file gets spit out, which I then check on my kindle, Kindle for Mac, adobe reader, or adobe digital editions to make sure it looks right.

    Done. Total time…ten minutes? Maybe?

    But then I’m not directly tweaking XML stuff like Rob in Ohio so maybe I’m missing out on some awesomeness or something?

    • Scrivener does sound nice on the publishing side of things, Michael, but after I tried it, I decided it didn’t work the way I wanted to work for creation.

      Importing and checking in Jutoh probably takes more time than the publishing step in Scrivener takes. However, most of my time is spent double-checking the various formats to make sure chapter 32 didn’t go hincky on me for some reason, the start page is the same for all versions, etc.

    • If you’re missing out on anything, it’s just that you, as a one-man shop, set things up to convert properly, the way YOU want.

      Current manuscript format is not very good for clean conversion, and neither editors nor most traditional writers have any idea what to do to make it easier to make a clean transition.

      And you also get to set your standards, based partly on how it suits your entire workflow. When you have a team of people, nobody gets to set the standard just to suit them.

      I’m not saying that publishers can’t streamline their process — heck, they HAVE to. I’m just saying that their bloat is built in and their difficulties are legitimate.

      • Oh no denying that, Camille. I understand why it would take a big publisher more total time, especially if they’re converting an older text that had to be scanned in or something. I was trying to comment more on the indie types who keep saying it’s so hard and takes so long to format a MS for ebooks.

    • Part of what you’re missing is that WYSIWYG tools tend to add a lot of bloat to the XHTML and CSS it produces for the ebooks. PG mentioned a hinky chapter 32 and both of you can probably attest to formatting something a certain way only to have the result look bad when you gen the ebook… even though the MS looks the way it should still. In most cases, that’s due to inefficient code behind the scenes caused by applying a style in the word processor and some part of that style — or the text it’s applied to — getting corrupted or garbled somehow.

      Your advantage in fixing that is that you know your work. I make ebooks for other people, so I don’t have that advantage. To make up for that, I spend time on the front end simplifying a lot of the formatting in the MS so that I can add back to it. I often compare the process to rehabbing a house: I strip manuscripts down the studs, then build out and finish from there. As a result, I don’t worry about a hinky chapter 32 or wonky start pages because I’ve used a semantic, structured markup throughout the book at the code level.

      As far as the rest of my time goes, it’s testing: Kindle, Kindle Fire, Nook, Nook Tablet, iPad and iPhone (each of the major apps), ADE, Kindle for PC, Nook for PC, Kobo, Sony.

  12. Lily White LeFevre

    RE how long formatting takes: my timeline was about 10 minutes to do the formatting and about an hour and a half to go through the entire document and make sure I didn’t miss something. I’m enough of a perfectionist and concerned about creating a professional-quality product that I’m never not going to take that time to check everything is right. I can’t speak for those who need hours and have to re-format a lot, but I consider the time taken to check my work part of my formatting time… :)

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