Andrew Zack argues eloquently that eBook production costs are higher than readers expect and understand.
Originals are books that are first appearing in eBook form and are not reprints of previously published books. And here the argument that eBooks should be cheaper and easier to produce than paper books really fails. To produce a quality eBook takes just as long and costs just as much as producing a quality paper book. Yes, you save some money on paper, printing, and binding. And you save some money on warehousing and shipping. But you incur other costs. But first let’s look at the commonalities.
Of course the grim reality of the marketplace is that it doesn’t matter how much something costs to produce, consumers have an expectation of ‘value’ that is very hard to shift. The trick is to find a profitable balance: if a reader won’t pay more than $5 for an eBook (a reasonable price as far as I’m concerned), then if your eBook upfront costs and per-sale costs are greater than $5 per unit you are not going to have much luck.
Bear in mind I’m no expert on this at all, and have no experience selling books, just buying them. Personally, I’m not optimistic about the $0.99 eBook model, either (but hey, if you can make quality eBooks and sell them profitably at that price, I support you).
Andrew goes through the cost and royalty breakdown for his own small publishing business, and determines:
So who is getting rich here? No one, really. And are readers being overcharged for e-books? No.
However, have readers been led to believe that eBooks should cost less than they do? And far less than printed books? Yes.
It’s a lengthy but valuable article, so do have read of the entire argument here: http://www.huffingtonpost.com/andrew-zack/making-ebooks-is-harder-t_b_1610953.html