Why Are Ebooks More Expensive Than Real Books?
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Have you noticed how sometimes, when you go to buy a book on Amazon, the prices seem a little off? Maybe the Kindle version costs more than the paperback, or maybe more than the hardback as well.

At the time of writing, that’s the case with The Mirror Thief by Martin Seay on Amazon’s US Store and The Girl on the Train by Paula Hawkins on Amazon’s UK Store, to cite just two examples. It’s easy to find others if you look through the bestseller lists.

So how does an ebook end up being more expensive than a real book? Surely a few hundred kilobytes of text should cost a lot less than an inch-thick stack of paper that you can hold, sniff, and even throw at the cat?

We decided to investigate this phenomenon. And we discovered there’s a lot more to the pricing of books than you’d think.

Physical Books Don’t Cost That Much

It seems logical that physical books should cost a lot more to produce than ebooks. Publishers have to actually print something onto real paper, package it, and deliver it to a warehouse. With an ebook, publishers just upload a text file to a server and the job is done.

For publishers, though, the physical production costs of releasing a book are only a tiny part of the whole cost. Let’s take an imaginary book, Why I’m Awesome by Harry Guinness (it got a rave review in the New York Times). The publisher sets the list price for the hardback at a fairly standard $25. Let’s look at how that breaks down.

First, a retailer pays the publisher around half the recommended retail price for the book. In this example, Barnes & Noble (or one of Amazon’s physical bookstores Amazon Loves Bricks and Mortar, Trump Branded a Loser... [Tech News Digest] Amazon Loves Bricks and Mortar, Trump Branded a Loser... [Tech News Digest] Amazon plans brick-and-mortar stores, Donald Trump is a Loser.com, Microsoft acquires SwiftKey, your Kindle is due a new update, and LEGO Star Wars: The Force Awakens gets an amazing trailer. Read More ) pays $12.50. The other $12.50 goes towards costs, profit, future discounts, and so on.

I, as the author, get a royalty for each copy sold. With a typical deal, that’s going to be about 15% of the list price, or $3.75 on a $25 book.

The publisher isn’t going to handle distribution out to thousands of tiny bookstores either. They’re going to farm that job out to a wholesaler — a wholesaler who needs a cut, too. Let’s give them a fairly typical 10% of the list price, so around $2.50.

Printing Costs Aren’t a Big Factor

So where does that leave our publisher? They haven’t even started making the book and their cut is already down to $6.25. From that, they’ve got to pay for marketing (my book tour isn’t cheap), proofreading (I spell color “colour”), editing (you should see my first drafts), and so on. They also have to turn some kind of profit.

When everything is said and done, the publisher’s production cost for a hardback book is about $2.50, or 10% of the list price. For a paperback, the cost is between $0.75 and $1. The other expenses, which ebooks share, eat up most of the rest of the money. The specifics can change a little depending on what format the book is and what sort of deal the author has, but, for the most part, these numbers fit the above pattern pretty well.

This all means that the cost of producing a physical book really isn’t a major factor in the price — and that’s without touching on digital-specific production costs and the opportunity cost of having hundreds of thousands of dollars tied up in inventory.

The Agency Model

Another factor to consider is that ebooks are priced differently than real books.

Physical books are sold to retailers at around half the list price. They can then sell them for whatever they like. The Mirror Thief‘s publisher recommends selling the hardcover for $27.95 but it’s available on Amazon for $17.91. That $10 discount is coming straight out of Amazon’s profit margin. Amazon is gambling that the extra copies it will sell will more than make up for the lost profit margin.

Mirror Thief on Amazon Book Listing

However, ebooks are sold under the agency model. The publisher sets the price and gets 70% of each sale, and the retailer gets the remaining 30%. Amazon actually has no control over how much each Kindle copy is sold for.

This is the reason ebooks sometimes cost more than real books. The publisher has listed the hardcover of The Mirror Thief at $27.95 and the ebook at $20, which is a reasonable 30% markdown. Amazon, instead of selling the hardcover for anything near the list price, has chosen to sell it at a serious discount — so much of a discount that it now costs less than the originally-cheaper ebook.

People Pay for Value and Convenience

When you buy a book, you’re not buying the physical pages. You’re really just buying the content The End of Ownership: Netflix, Spotify, and The Streaming Generation The End of Ownership: Netflix, Spotify, and The Streaming Generation Streaming media is convenient, but you're giving up something important: ownership of digital media. Read More . If that wasn’t the case, all books would be interchangeable. But they’re not. Try giving someone The Bible instead of Harry Potter for Christmas if you don’t believe me.

With ebooks, customers have already demonstrated a willingness to pay for reading material. Kindles start at $69.99, and the Kindle Oasis costs $289.99 3 Compelling Reasons to Buy an Amazon Kindle Oasis 3 Compelling Reasons to Buy an Amazon Kindle Oasis Once you get over the shock of the price of the Kindle Oasis, you'll find that it actually offers a lot of bang for your buck. Here are three reasons to consider buying one. Read More  (£269.99), which would pay for a lot of second-hand paperbacks.

Buy Now On Amazon

Publishers know that ebook users are some of the most voracious readers around What's the Best Way to Read Books in 2016? What's the Best Way to Read Books in 2016? Reading is still a popular pastime -- people are just using a wider range of devices than ever before. So, with that in mind, let's look at the best way to read books in 2016! Read More . They will pay for the books they want to read, whatever the cost. With the Kindle, in particular, they also don’t have any decent alternative way to get ebooks. You can sideload ebooks from other platforms How To Manage Your Ebook Collection For The Amazon Kindle With Calibre How To Manage Your Ebook Collection For The Amazon Kindle With Calibre The biggest problem with an eReader like the Amazon's Kindle is that it requires unreasonable effort to move books between different devices. Before Kindle, I fell in love with Calibre. A bit on the heavy... Read More but it’s an awkward workaround that most users won’t ever even attempt. In other words, ebook buyers are a captive audience who have shown they’re willing to pay top dollar.

Some Countries Tax Digital Products

Finally, some countries, such as the UK, tax digital products differently to books.

Physical books, newspapers, and magazines are all exempt from VAT in the UK. Digital products, however, aren’t. This means that retailers are supposed to pay 20% VAT on any ebooks they sell — a cost they pass along to the customer — and which they don’t have to pay on hardbacks or paperbacks.

Given that the production costs of physical books is about 10% of their list price, this extra 20% tax is more than enough to wipe out any savings. Amazon and other major retailers currently do their best to get around these extra taxes but governments are closing the tax loopholes. So in the future, extra charges like these will make a big difference to prices.

Does Price Matter to You?

To me, an extra dollar or two doesn’t really matter when I’m buying a book. I’m happy to pay it for the convenience of having it arrive instantly — and also not having to get dressed and go out in public. I also don’t mind supporting the authors I love. But you may disagree.

Would you ever buy an ebook that costs more than the hardback? Do you accept that the pricing of physical media and digital media is just different? Please let us know your thoughts in the comments below!

Image Credits: pathdoc/Shutterstock

Explore more about: Amazon, Amazon Kindle, Ebooks, Reading.

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  1. me
    May 6, 2019 at 5:46 pm

    I will never ever pay for ebook same as paperback. WTF??? This is just a rip-off. Anyway I can buy any real book in our value village stores (goodwills etc) for 60 cents up to 1 dollar - we have plenty of them and I can find literally any of what I need, just need time. Can find there any book within 1 year gap or less, just have to wait a little bit, sometimes it is less than a year. Have pretty good collection of books with history. 10 bucks for digital edition! What do they think???

  2. Shaun
    May 4, 2019 at 2:00 pm

    I personally won’t pay the same as a hardcover. The article breakdown on costs associated with the book are the exact reason. In digital you only have the author, the retailer, and publisher. All the others are cut out and should then lower the cost. Digital should be a boost to authors a way for people to purchase books cheaper but still purchase. I know many people that buy books at thrift stores or do book swaps. If digital was cheaper the way it should be it would bring in some of that revenue

  3. Adrob
    April 16, 2019 at 1:55 pm

    But wait there is more. Aside from the principle the retailer has to ship the book for free in the case of Prime and that also cuts the profit of the hardcover. And for the Kindle I have to put up with the ads so Amazon is getting revenue from that to augment its overhead.

    I’m not buying an e-book that costs more than a hardcover.

  4. Lisa
    March 14, 2019 at 6:11 am

    It doesn't make me happy because I still feel an ebook should not be more expensive than a physical book but if the difference isn't big and I really want the book I still get it. But there is a limit. "Night and Silence" from Seanan McGuire in example, the 12th installment in a series, is priced 13,99 Euros on Amazon.de (double the price of the previous installments) while the paperback is listed at 7.99 Euros. This doesn't make me buy a book, it makes me angry. It feels like the publisher is trying to rip me off because they feel they can (assuming that so late in a series anything will be paid by the people who have followed a story this long).

  5. R.M. Hodegson
    March 13, 2019 at 3:16 pm

    Most of the comments about digital format are rubbish. There are free apps that will reformat a book in about 30 seconds. Any format you want.
    What you see in book prices is a very old model being retrofitted to the new era of digital books. People, for the most part, have reconciled themselves to paying outrageous prices for hard and softcovers. Except outside the USA where the prices are 50-100% higher. The fact that the production costs are fixed for the first run of books seems to be ignored in the article. Publishers have been known to reprint books many times, even sell the rights many times. They are not making a small amount of money on a good first run. How could they pay six digit advance royalties? Digital books have very little cost because all hard/soft copies are already in digital format. The fixed costs of production, promotion, distribution, and middlemen are done. Perhaps royalties are paid to the writer depending on the individual contract. The only cost is storage and server space. When I want to by Frankenstein; Or, The Modern Prometheus by Mary Wollstonecraft Shelley at the Project Gutenberg site it is free. Online you might pay $0.99 at Amazon or more elsewhere. The cost is insignificant to the price of ebooks. All the heavy lifting happens as the original book is released. What you see in the e-book price is the calculated demand and how much they can charge for it. Greed. They know they can always release it again and price it less or sell the rights to someone else. Do not be deceived at all levels it is greed that makes a book worth a dime or $1,000. The costs are insignificant to make a book compared to the monetized rights of the original manuscript.

    • Quentin
      May 5, 2019 at 10:19 am

      When you buy an ebook, you own it as you would a paperback or hardcover edition. You have paid to own it.

      That said, I am not familiar with all of the ebook readers - i use Kindle.

      With a Kindle, I can buy and download an ebook to my Kindle or use the Kindle app which is available for Windows, Mac, etc.

      When using the app, the ebook is downloaded to your PC in a format compatible with your e-reader. That file can be shared just as any other file can be shared. The other reason I use a Kindle is the 'send-to-Kindle' feature. This feature allows you to email a .pdf version of a book to your Kindle (again, app or physical e-reader makes no difference).

      So yes, the model seems to be broken. Ebooks should not cost more. But you can borrow ebooks from friends or find books in other formats and convert them. For the very expensive new books, I wait for the price to drop and find other books to read in the interim.

  6. MarkM
    February 9, 2019 at 1:12 am

    Bottom line, using the author's numbers, 70% of the suggested list price on a hardback never make it back to the publisher and author - 50% for retail, 10% for distribution and 10% for production costs. Provided the book is priced between $2.99 and $9.99, that 70% gets reduced to 30% for the ebook. On the example $25 suggested list price hardback, the publisher and author would make only slightly less if they priced the ebook at $9.99 per copy ($7.50/copy versus $6.993/copy ... and the above analysis ignored the capital costs associated with printing the book upfront as well as any return costs). Net, net, the $9.99 ebook price is very sustainable for the publishers.

  7. LMHill
    December 8, 2018 at 8:37 pm

    I had an original Nook device when the ebook trend first started. I chose nook over Kindle because nook had the option of lending the books to other nook owners. My grandmother and I were fast readers and we would read and switch books, so I bought her a nook as well so we could share, plus she was house bound so it was easy for her to access new books. Within a year of purchasing the nooks, the lending option was gone. The price of ebooks has increased, and I remember one of the main draws for purchasing an ereader was that the ebooks were cheaper. I think publishers are setting the prices high because people are lazy and will pay it, not because they won't make profit if they set the price lower.

  8. Lynn Lanning
    March 28, 2018 at 4:12 am

    I won't pay more for an ebook than I would for the physical book. As much of my reading is of the mystery-thriller genre, that means I won't pay more than the paperback price of the book. I've got a long list of books I'll buy if the price becomes reasonable. Some have been on the list for years. There are some I prefer to listen to, and I like to buy the audio CD sets for those. I'll pay whatever those cost, up to a point (which varies by how much I want a particular book). But most of my reading is now on my Kindle, and I'm finding plenty of lower price offers while I wait for prices to drop on my list.

  9. Lee Keyes
    March 12, 2018 at 12:50 pm

    I believe the answer is hogwash. If you factor in printing, handling, and shipping the paperback or hardcover book cost appreciably more to get to the consumer. Also this book can be shared and resold. Kindle books are finite. To share them you either have to give someone your account information or shre your device. In my opinion they are more expensive because they have niche audience and are taking advantage of it.

  10. Jacqueline Johnson
    March 6, 2018 at 11:31 pm

    As an adult on-set epileptic who can now only read digital material, I have found this practice to be discriminatory. No, I have not complained, but my reading is now limited. I can no longer look for books at yard sales or used bookstores. The library is a still great for resource materials, but fictional ebooks by popular authors is sorely lacking, nearly non-existent. In order to continue reading anything longer than a short newspaper article without having a seizure, an e-reader was a necessity and not a convenience. The high price tags make it difficult. Sure, I could stop reading altogether, but recreational reading as well as keeping up with what they are doing in neurology, any medical discoveries for epilepsy is a good thing. Although the brain is not a muscle, it does need exercise.

  11. Clifford Blizard
    December 19, 2017 at 5:35 pm

    One issue missing from the discussion is the problem that ebooks often cannot be loaned. Physical books have a huge advantage in that they can be passed along to others. Then there is the natural discount for most used books, often to a small fraction of the original price. A book might be $19 as a Kindle ebook, $15 as a paperback, and $3 as a condition very good used hardcover.

  12. L. Howard
    December 1, 2017 at 8:42 am

    Currently on Amazon the ebook for the Great Gatsby is $12. The paperback is $5. It's completely outrageous.

    When you say 'people pay for convenience', remember that at the same time publishers are getting access to a larger market; more people are buying their books, and they ought to reflect that in the ebook price.

    But, they realize that to lower the ebook price devalues their already inflated IP from physical books so they keep the prices high.

  13. Laurence Goldman
    October 8, 2017 at 9:55 pm

    What bullshit.

    • D Booth
      January 9, 2018 at 1:11 am


  14. Laurence Goldman
    October 8, 2017 at 9:54 pm

    what bullshit

  15. Lynn
    August 21, 2017 at 10:51 pm

    Unfortunately, I have no choice in the matter. I am legally blind and can only read books in ebook form, as I can change the font size, font type, and contrast to enable me to read (I find white on black much easier than white on black). Personally, I feel publishers are discriminating against people with certain disabilities with the current ebook pricing, as some people can ONLY read the ebook form.

  16. James L.
    July 28, 2017 at 12:41 am

    I have to agree with Lee for the most part. Except for a very few favorite authors, I refuse to pay the high price of ebooks from large publishing houses. Ebooks come with some pretty severe drawbacks. Most of them require a dedicated (and different reader) from each bookseller. Most of the readers are horrible, the best I have run into is Kindle and except on their own PaperInk models the applications are horrible on all the various devices. Therefore, unless you are willing to be locked into a particular bookseller you can't combine your libraries easily.

    This also gives them captive markets and allows them to charge roughly whatever they want and basically price fix. I read four to six books a week which makes that few dollars of difference per book add up very quickly. The fact that the publishing houses weren't satisfied with 50% of the price of a book and have upped that number to 70% and also deprived the booksellers of the choice of how to use their 30% just highlights the problem.

    • Lynn
      August 21, 2017 at 10:55 pm

      One of the reasons I like iPads better than the other ereaders even though they cost more. I've found an app for every ebook retailer I use. Now if only the price of ebooks would get more reasonable so I can actually AFFORD them, as I can ONLY read books in ebook form!

  17. Lee Butler
    July 22, 2017 at 8:42 pm

    There are to many great authors selling their books a $5.99 or less. I have stopped buying books from the big authors. I refuse to pay more for an ebook than a paperback.