How Much Do Books Really Cost to Make?

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With the release of the iPad and that whole paradigm shift in the way we read thing on its way, a number of people find themselves asking the following question: If e-books negate the costs of printing, binding, mailing, and shelving books in stores, why do they still cost so much? (Five of the six largest publishers will price iPad books at $12.99 to $14.99.) The New York Times explains that "consumers exaggerate the savings and have developed unrealistic expectations about how low the prices of e-books can go." Here's what we're forgetting:

On a typical hardcover, the publisher sets a suggested retail price. Let's say it is $26. The bookseller will generally pay the publisher $13. Out of that gross revenue, the publisher pays about $3.25 to print, store and ship the book, including unsold copies returned to the publisher by booksellers.For cover design, typesetting and copy-editing, the publisher pays about 80 cents. Marketing costs average around $1 but may go higher or lower depending on the title. Most of these costs will decline on a per-unit basis as a book sells more copies.

And that's without paying the author-he or she usually gets around $3.90 on a $26-book, meaning that the publisher is now left with $4.05, "with which it must pay overhead for editors, cover art designers, office space and electricity before taking a profit."Granted, we're talking big publishing houses here, but it's a fascinating breakdown.