How much are e-books worth compared with physical books?

We all have a good intuitive grasp for the value of a physical book. We grew up with them. We know roughly what they cost new (£5-15), what they cost in a second hand book-shop (about half that) and what you’d expect to pay in a charity shop (20p-£1).

We don’t really have a sense yet of what an e-book is worth. A quick survey on suggests that they think an e-book is worth about the same — sometimes a little more, sometimes a little less:

  • The Silmarillion: £5.59 paperback compared to £5.99 Kindle
  • Harry Potter and the Deathly Hallows: £6.29 and £6.99
  • The C Programming Language: £23.64 to £20.09
  • How Bad Are Bananas?: £6.29 to £5.98

The four Kindle editions cost 1.05, 1.11, 0.85 and 0.95 times as much as their paperback counterparts — an average of 0.99 (arithmetic mean) or 0.98 (geometric mean) times as much. In other words, the difference in prices is negligible.

How reasonable is this?

In terms of costs, it seems like a terrible rip-off. I know from experience that creating a physical book (i.e. preparing the digital files for printing) is a lot more work than creating an e-book. And needless to say the marginal cost of each printed book is greater by an infinite factor than that of each e-book. It comes to something like £2 per copy, and on top of that you have to think about warehousing. So on that basis, an e-book should cost significantly less than its printed equivalent — less by an amount related to how many copies are sold, since the more it sells, the more the zero marginal cost dominates the equation.

On the other hand, what about value? Is an e-book worth more to the reader than a printed book? On the plus side, it’s more convenient to carry around with me, and I like being able to search (for example, when I forget who one of the characters is, and I can find his or her name’s first mention to remind myself). On the negative side, e-books are pretty ugly compared with printed ones, often have formatting errors, can’t be conveniently lent to other people, can’t be conveniently passed on to a second-hand shop when you’ve read them, and –worst of all — may be explicitly locked to your device by DRM. (We all know stories of people who have lost their collections due to vendor misdeeds.)

To my mind, the balance of things suggests that on the basis of value as well as cost, e-books are worth about half as much as printed ones.

The Eleventh Doctor: a critical ramble through Matt Smith's tenure in Doctor Who by Mike Taylor

That why my own book — which costs £11.95 as a paperback — is only £3.65 in its e-book edition (or $5.59 in the USA). In fact, in this case, the e-book is less than a third of the price of the paperback, but that’s because the paperback is overpriced, due to the very high overheads of publishing print-on-demand at Lulu.

(Aside: the price I set for The Eleventh Doctor in Amazon’s KDP programme is $4.99, so I don’t understand why they are in fact selling it at $5.59. My apologies for the extra sixty cents.)

Anyway: I wonder what others’ thoughts are on the appropriate relative pricing of paperbacks and e-books?


12 responses to “How much are e-books worth compared with physical books?

  1. Andrew Hickey

    “In terms of costs, it seems like a terrible rip-off. I know from experience that creating a physical book (i.e. preparing the digital files for printing) is a lot more work than creating an e-book.”

    That’s because you don’t have the toolchain that a traditional publisher does. Most publishers have a whole workflow set up to automate the process as much as possible.
    For that matter, it’s not always true even without that. My process for creating a physical book file now is to hit a single button in LyX. Of course, I’ve had to get LyX set up over the years to do it properly, which is why each of my books is slightly better typeset than the one before, as I’ve added options to the scripts it runs in the background, but still, it’s one button.
    Meanwhile, to format anything more complex than pure plain text — footnotes, multiple fonts, that sort of thing — for ebooks requires a lot more work. My use of footnotes means that no matter what word processor I use I end up having to hand-hack the epub and mobi files before they’re done.

    “And needless to say the marginal cost of each printed book is greater by an infinite factor than that of each e-book. It comes to something like £2 per copy, and on top of that you have to think about warehousing”
    It’s actually more like £1, I believe.

    The problem is that the marginal cost per unit, and the cost of the final digital file produced (PDF for the physical book, epub or mobi for the ebook) are absolutely dwarfed by all the other production costs. Charles Stross has a breakdown of the production process at (actually, anyone at all interested in publishing should read the whole “Common Misconceptions About Publishing” series of which that’s a part, which is linked in the sidebar of that piece), and the total cost of publishing a book comes to somewhere between $7000 and $20000. The author’s advance will usually be the same. That means that no matter what, the publisher needs to recoup on average somewhere in the region of $20,000 per title. The additional unit cost of the books doesn’t really add much to that. Stross’ estimate is that in total physical production and distribution costs come to 10-20% of the total costs involved in putting out a midlist science fiction novel.

    On top of which, there’s the fact that physical books in shops act as advertising in a way that ebooks on in databases don’t. The existence of the physical book in Waterstone’s or wherever probably makes as much in additional sales as it costs in paper. I don’t have figures, but it seems *very* likely to me that at least 10% of sales come from browsing, which would mean that the extra 10% of costs would pay for themselves in that way.

    There’s also the fact that the paperback cost you see might not be the paperback cost that the publisher have set — retailers regularly discount physical books compared to the cover price, while publishers set the price of the ebook. If you’re looking at a “full-price” ebook, while the physical book is being sold at a 20% markdown, that in itself more than covers the extra costs of physical production.

    So *for a traditional publisher*, it actually makes sense to me that the prices should be about the same. For self-publishing, of course, it’s a different matter, as both the costs and the expected returns are much lower. So for my own books, my pricing strategy is to set a price which means that I’ll make the same amount of money (usually about £1) from both the paperback *when sold through Amazon* (as that’s where the vast majority of the sales come from, and they take a cut) and the ebook, then round that up to the nearest multiple of $5/£5. That usually ends up with about the same ratio of paperback and ebook costs that you’ve got there.

    (I suspect the extra 59 cents is VAT being added because Amazon can tell that you’re visiting from a European IP address, incidentally — I wonder if your USian readers see the same price?)

  2. Andrew Hickey

    (Although, one also has to be aware that Amazon, in particular, have some very, very, strange business practices that must make sense because of contracts they’ve signed, but from the outside just *don’t*. For example, it is often actually cheaper to buy a CD from them, get it posted to you, and get the “free” MP3 version they throw in with it, than it is to just buy the MP3s. In no sane world would it be cheaper to get the digital *and* physical copies than just the digital, but it is…)

  3. Thanks, Andrew, lots of useful insight there. Needless to say, my own experience is from self-publishing only. I am paying about £2 per copy for printed copies of my wife’s book, but that is in a run of 250 copies (and includes the amortised overheads of admin fees). No doubt when a commercial publisher prints 10 or 100 times as many books, economies of scale kick in.

    If you self-publish hardcopy books, you then need to find a way to sell them online. Turns out that Amazon pay you only 40% of the sale price; and the same was true, shockingly, of a much smaller independent online retailer that I checked out. So simply setting up your own online store may be the way to go.

    On buying MP3s: you can often pick up second-hand CDs at very low prices, then rip your own MP3s, for maybe a third of what it would have cost to buy the MP3s. Yes, it’s a crazy world.

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  5. I can confirm that in America your ebook is $4.99. :-)

    The reason ebooks are as or more expensive than printed books is fear.

    The publishing industry, like the music and movie industries before it is terrified of the digital revolution. I myself see almost no need for real books in the pleasure reading realm. For textbooks, I’m more inclined toward the real, but that’s just a bias that I’m sure will fade over time too. The convenience is just too great. Not as great as it was for music but still large.

    The publishing industry sees this change and fears it will destroy them. Heck independent publishing might. So the set the price to the same instead of enabling a realization of the lower costs of ebook production and distribution. This means people buy about the same number of ebooks as they did real books. Which is slowing adoption (which is still happening blazigly fast) versus if ebooks were reasonably priced.

    But the paper book is in fact dead now. My wife and I haven’t bought a new paper book in years, but ebooks….

    Paper books are dead and publishers hate that fact.

  6. As already pointed out, ebook production and distribution is not significantly less expensive than production of paper books.
    If it *was* less expensive, publishers wouldn’t be scared — as, in fact, they’re not. It’s precisely because they’re *not* scared that the ebook market exists at all.
    Independent publishing will no more “destroy” the publishing industry than independent music production has “destroyed” the record companies, despite the similar predictions about MP3s nearly twenty years ago. Cover design, copy-editing, proofreading, formatting, promotion, and most of all advances (without which writing can never be more than a hobby) will always be necessary — and even if they weren’t, the major publishers have control over the rights to enough books for the life of their copyrights that it’ll be a century or more before they stop making money from their back catalogue.
    What *might* destroy the publishing industry is Amazon — which is why the publishers have problems with them, which are often portrayed by technolibertarian evangelist types as problems with ebooks. Amazon are trying to position themselves as both a monopsony and a monopoly — the only buyer for suppliers (whether that’s self-published authors or traditional publishers) and the only seller for readers. To the extent they can do that, it’s possible for *them* to destroy publishing.
    The other main threat to publishing, actually, is Netflix. To a large extent, the business model of publishing is based on selling a LOT of copies of a few books and using those bestsellers to subsidise a lot of poorer-selling books (which, again, is why independent publishing won’t beat that, because it’s down to volume). However, the mega-bestsellers sell less now than even a few years back, because one of the main drivers of bestsellers was people buying them to take on holiday. Increasingly, people are taking tablets and watching video instead. THAT is what publishers worry about, not people buying books in new formats.
    As for the paper book being “in fact dead”, I hate to tell you this, but “in fact” you and your wife don’t make up the whole of the buying market for books. 73% of new books sold are still in print, rather than ebook, form.

  7. Independent publishing will no more “destroy” the publishing industry than independent music production has “destroyed” the record companies …

    … yet.

    Given time, I think there is every reason to think that both these things will happen. I’m not saying that book publishers and record labels don’t add any value; but what they do contributes much less than half the value to the consumer, and eats up much more than half the cost. Ultimately, that is not sustainable in a free economy.

    We’re already seeing lots of musicians leaving major labels and starting their own little operations (e.g. Neal Morse’s Radiant Records). Musicians and authors have a lot more options now. Conventional publishers (whether of books or recordings) look a lot less attractive than they did a few years ago (and a lot less attractive then twenty years ago, when they were the only option).

  8. Andrew Hickey

    I can’t agree.
    First, because those things do still need doing — they might not make up fifty percent of the value to the customer, but they make up *some* of the value, and take up about fifty percent of the total person-hours put in. Either the writer does those things herself — in which case her productivity drops to fifty percent of what it was, and value to the reader drops by fifty percent — or she contracts with skilled professionals to do them. So they’re actually adding fifty percent of the value to the customer *by freeing up the writer to double her productivity*.
    Secondly, because publicity is important. Remember that those musicians are *leaving* major labels — but they’re still starting there. They need the labels to build a fanbase, before being able to do it themselves. And the best way to get publicity — not just advertising, which is ineffective, but to get seen by book-buyers for bookstores, to get a dump-bin at the front of Waterstones, to get reviewed in the newspapers, and so on — is to work with an organisation that has experience with those things, that has contacts with the people you wish to reach. You can write and self-publish the best book in the world, and without publicity no-one will discover it.
    And thirdly because writing is unlike music in that there’s no equivalent of “live performance”. Given that it takes many years for the average book to earn enough to pay for the time taken to write it, the only viable way to become a full-time professional writer is to receive advances against royalties from a publisher.

  9. Those things … take up about fifty percent of the total person-hours put in

    Really? I would have guessed more like 10% in my case. Maybe you’re just a much, much faster writer than I am.

    Secondly, because publicity is important.

    Please. The first thing any writer who’s signed up with a traditional publisher tells you is that you still have to do all your own marketing. People who’ve been in the game a long time will tell you it wasn’t always like that, but it is now. If you’re Robert Ludlum or J. K. Rowling, a publisher might publicise you. Otherwise, no.

    The only viable way to become a full-time professional writer …

    I suspect they’re on the way out, too.

  10. Andrew Hickey

    I’m a fairly fast writer, but I’m talking about production to the standards of a professional publisher, which is higher than the standards I (or any self-publisher I know) can do. And neither of us have had to do all the additional stuff that comes with producing a large print run, dealing with multiple distributors, localising the book to different markets and so on. Stross’ estimate in the piece I linked is that the whole process is about twenty person-weeks per book.

    And when I talk about marketing, I’m not talking about advertising to readers — that’s never been done except for the biggest books. Publishers spend, on average, about five percent of the expected cover-price total sales of a book on marketing, but it’s almost all spent on buying placement in shops. Getting placed on the tables near the doors in bookshops, or on the new release shelves, or getting put in three-for-two offers, costs serious money — usually $1 US per copy placed there. The same goes for visibility on Amazon, or the smaller ebook shops. And not only is that expensive, but the bookshops will, in general, only do deals *at all* with known publishers,

    There are other things, too, but that’s the bulk of the marketing spending — and it makes a HUGE difference to sales. Other things include getting reviews — not just in newspapers, but in industry magazines which affect how bookshops order the books — getting pull quotes to put on the cover, and that sort of thing. That’s all marketing, and it’s that, not advertising, I’m talking about.

  11. I mainly buy ebooks now. I buy paper books as gifts or when production value or physical access is important – art books, travel books, text books. I expect them to a maybe 20-50% cheaper than hardcovers. If I think the ebook is overpriced, I buy a used paper copy, waiting a bit if necessary.

  12. TL; DR: I don’t think there’s any price ratio that “ought to” hold. There are many different variables at play, and publishers should be free to pursue different pricing strategies for different books.

    I still prefer printed books for pleasure reading, although I can imagine a tipping point when tablets become good enough that I might switch. I have sometimes bought printed books even though the PDFs are free.

    When buying technical books for work, I prefer PDFs to read and search on my laptop. I would be prepared to pay as much for the PDF as for the book. I’d pay a little more to get a bundle of both the physical book and the PDF, but not twice as much.

    I do not want an ebook that is not a PDF or similarly open standard.

    At my job, incidentally, I write reports indirectly funded by the government. We give away PDFs of the reports for free and sell (nice, glossy) physical copies for $20 to recover the costs of printing. (Government officials and other VIPs get their physical copies for free.) Not that all publishing can or should work on that model, but there it is.

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