Guest postsSelf-Publishing

The Price is Right?–ebook costs and pricing

From Rick:

This week, we have author Graeme Reynolds doing a post about what it costs to bring your finished novel out as an ebook, along with some thoughts on pricing it. Last November, Graeme self-published his first novel High Moor, an extremely well-written, classic werewolf tale (with a few enhancements). So, Graeme is well qualified to speak on the topic of ebook pricing.

I not only had the privilege of reading it as it was being written, but I helped him with the editing. I’ve been thoroughly impressed with his efforts to date and look forward to reading the sequel.

Please be sure to check out Graeme’s blog: Graeme Reynolds’ Blog

And check out his novel: HIGH MOOR

Now, without further interruption, here’s Graeme.


A few weeks ago, I was reading an interview with a reasonably well-known author, who stated that ebooks should be priced at an appropriate level to reflect the work that had gone into their production. I’ve heard similar sentiments from others in the publishing industry over the last year or so, some of which was constructive, and some of which was little more than thinly veiled moaning about the alarming number of people that seem determined to give their books away for nothing, or next to nothing.

So, what is the right price for an ebook?

Traditional publishers have one opinion. They feel that an ebook should be sold for the same price as a physical book, even going so far as to charge a hardback price for the electronic version when a book comes out, then dropping it in line with the paperback price when that one is released. They argue that the content is what people are paying for, that the medium it’s delivered in is largely irrelevant, and that the cost of producing an ebook is the same as producing a hard copy.

Amazon would seem to have a different opinion. Given their royalty structure, they appear to think that a list price of $2.99 to $9.99 is appropriate for an electronic book. That is the 70% royalty sweet spot and anything that falls outside of that price range gets their royalties slashed to 35%.

So, let’s take a look at the costs associated with creating an ebook. Once the author has a decent manuscript that they have edited themselves they will need to get an editor, proofreader, cover artist, and interior layout designer involved. A large publisher may use more than one editor, one of which will go over the story, while the other will error-check the prose. Most smaller presses will use one editor for both tasks.

Most freelance editors tend to work for around a penny a word, although I’ve seen them charge as much as four times more and four times less than that. The old adage of “you get what you pay for” rings true in these cases, with the lower end of that scale often delivering a much less thorough edit. The difference between the top end and mid-range is marginal from the sample edits I’ve had done, so as an illustrative figure I’m going to say that around $1000 is about the cost of getting a manuscript edited.

Proofreaders also vary in price by a fairly wide margin. Some will charge the same as an editor, while others will work for considerably less. It’s important to use them, because they are your last defence against errors in the manuscript making it out into the real world. For the sake of argument, let’s say $500 for a proofreader on a standard 90,000-word book, although the reality will most likely be less than that.

Cover art is one of those things that you would think expensive, but is probably less than most people imagine. I got the cover for my novel done for less than $200, and that included everything from a whole lot of concept drawings to narrow down the best way forward and a whole lot of revisions until it was exactly right. You need to be careful with artists as there are a lot of people out there that just Photoshop stock footage and then bill you for the stock photo on top of their fee, or who want to retain copyright, but even so, $250 should be able to get you a decent cover and maybe even a paperback version as well.

Lastly, there is the expense of getting someone to lay the book out for you so that it displays properly on e-readers and looks good in paperback if you decide to go down that route. To be honest, there are plenty of guides available that make the ebook layout fairly straightforward, but I would recommend using a specialist if you are going down the paperback route, especially if you want to use Lightning Source as the paperback POD supplier as it costs every time you need to make a change. Again, there are plenty of places out there that will do this for $100, but even the top end places don’t tend to charge more than $250.

So, there we have it. The cost of putting a good quality book together is around $2000. Realistically, if you shopped around you could probably get it done for $1500 or less. OK, there are going to be other expenses along the way, such as paying for review copies, advertising etc., but for the sake of argument let’s stick with the $2000 figure.

Now, as I understand it, traditional publishers will pay royalties to their authors of between 15 and 25% for ebook sales. Let’s be generous and go with the 25% of the profit. So, for an ebook priced at $9.99, the publisher will get $6.99 from Amazon at 70% royalties. That means the author will get around $1.74 per ebook sold, however if they have an agent then another 15% of that will go to them, which would give the author royalties of $1.52 per book sold.

Compare this against a self-published ebook, priced at $2.99. The author will need to cover off the $2000 fees for editing, cover design etc., but they will make $1.97 per sale, which will all go to them. Put the cover price up to $3.99 and the author makes $2.67 per copy after Amazon deducts their “delivery charge.” And because they are considerably cheaper than the $9.99 traditionally published books, they are probably going to sell more copies. This would hold especially true for authors who were already traditionally published and had an existing fan base. The costs of creating the book are fixed. Once they are paid, then you don’t have to worry about them again and those costs would be covered after you sold your first 1000 ebooks, at which point everything from that point onwards is pure profit. Forever.

I sold the first 1000 copies of my novel, High Moor, in less than five months. I spent less than $100 on advertising and my biggest additional costs were setting up the paperback and the cost of some physical review copies. This from a completely unknown author with no previous publishing history outside of some short stories, so it shows that it can be done.

Of course, at the other end of the scale are the people who seem determined to give their books away for $0.99 a copy, or even for free. They argue that they are building a fan base and creating a market for their next book. Some people have even been successful taking this approach, however there are lots more people who have not.

The fact is that selling a book for $0.99 drops you down into the 35% bracket, so the author only makes $0.35 per sale. Which means that they would need to shift almost 6000 copies to cover the cost of getting the book done properly in the first place. While moving those sorts of numbers isn’t impossible, it’s considerably less likely and it generally means that the writer is almost certainly going to try to cut corners on things like editing to keep costs down. The net result of this is that readers are starting to associate the books at a permanent $0.99 price bracket as badly edited junk, and with good reason. An overwhelming number of them are exactly that.

The exception to this is when an author has a series and they give the first book away for free or at a reduced rate to hook the readers, or when the author does a short sale to boost sales rank and visibility. Both of these are examples of using pricing as a tool, and my own personal experience indicates that they can be very effective over short timescales. If they are set to the reduced level for longer than 48 hours though, then sales seem to plateau and then fall off quite sharply. I am putting this down to association with the aforementioned badly edited junk at a permanent $0.99 price point, but I may be wrong. I’m just going from my own experiences here.

So, after all of that, what is an appropriate price for an ebook? Well, it’s going to be down to the individual, but the way that I look at it is this. If I sell my book at $2.99 a copy, then I will make more in royalties per copy than if I had a traditional publishing deal. Not only that, but I will probably sell more books because of the lower price point. A $2.99 book will sell better than a $9.99 one, or even a $3.99 one, and more sales means a better sales rank and better visibility. Which means more sales.

You see how that works?


Thanks for the info, Graeme, and thanks for taking time from your busy schedule to visit us here.


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