Why Some E-Books Cost More Than The Hardcover

This post, by Nathan Bransford, originally appeared on his Nathan Bransford: author blog on 3/10/11.

The good people at Reddit recently noticed something peculiar and engaged in a spirited debate about it. The topic? A bete noir for many an e-book reader:

E-books priced more than their print edition.

How could this possibly be? Paper costs more than electrons, so surely e-books should be cheaper, right?

Believe it or not, this isn’t a glitch. And it’s not happening because publishers are asleep at the wheel either.

Come down the rabbit hole with me into the wholesale/agency tunnel, and I’ll tell you why this is happening.

Ye Olde Wholesale

First, as always, we have to start with some dry background information. For a very long time publishers have had a system where they set the suggested retail price and take roughly half of that. Whatever the bookseller wants to charge from there is their business.

So, napkin math, if a book is listed with a $24.99 cover price the publisher would get about $12.50 of that, which they would split with the author, cover their costs, hopefully make a profit, etc. (Further background here.)

If the book sells for $24.99 the bookseller also gets $12.50. Or, if the bookseller discounts it to $19.99, well, that comes out of the bookseller’s take and and the bookseller gets about $7.50. Heck, the bookseller could charge the consumer $10.00 and take a loss. That’s their business. The publisher still gets their $12.50.

For a long time this system worked without too much disruption. Then came Amazon.

Enter the Kindle
 

Read the rest of the post on Nathan Bransford’s blog.

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