Penguin this week announced that they would be making certain of their titles available in e-book form. You can read more here.
Basically Penguin are simultaneously releasing a couple of novels in traditional print format (you know bookshops and stuff) and also as e-books. They also have plans to make their back catalogue available for download.
However, I think Penguin have missed a trick here. They plan to sell the e-books and print books at the same price. Not only is this wrong because the reader will be reluctant to pay the same for an e-book as a 'normal' book, knowing their is no print cost. But Penguin could sell the e-book at a lower price and still make more profit and here's how.
I talked here about the idea of history publishers using e-books.
For me the perfect publisher would offer a combination of approaches:
1. Traditional books: 'Real' books sold either via bookshops, amazon or the publisher's website.
2. E-book versions: These are digital versions of the 'Traditional' book made available for download at a reduced cost.
The success of this approach hinges on cost.
I spoke to a good friend who runs an excellent small print publisher, producing high quality books for a limited market. It's not Penguin but it was as close as I could get! He suggested a print cost of about £1 for a 160 page book with B&W photographs. However, this price was based on a 3000 book print run and therefore needs an initial outlay of £3000. As for pre-production costs he was less able to give an exact figure suggesting each book is very different. However, having worked as an editor I know a price of £1000 per a novel sized book is not to far from the mark. Add to this design costs, copy editing and other smaller jobs and you are soon at a figure of £2000.
OK. This means for a 3000 book print run we could be looking at a total cost of £5000 pound. So about £1.65 per book.
Now, the price we sell to the shop will be about 60% of the cover price. So for a £7 book we will be selling for about £4 - giving us a figure of £12000 turnover per print run, but a profit of £7000. However, for a small press it could take up to three years to clear this stock.
So what if you were to produce an e-book version of this book? Well, the picture looks quite rosy. The chances are you have sent the file to the printers in a pdf format, so transforming this to download product is fairly easy. You may need to employ a web designer but this is a fixed cost and will be ignored for his argument.
The calculation comes down to download figures. The e-book would need to be cheaper but your costs would be based on the number of downloads. Let's say you sell a quarter of the books online that you do through traditional outlets. This would give you a sale of 250 books. Now the cost of these book is zero, since the hard copy version is paying for the pre-production, this means these sales are pure profit. So, if you sold them at half price - £3.50, it would produce an additional profit of £875. Not bad!
I think the main argument against his approach is that the 250 e-book sales would impact on the traditional books sales. Maybe. No one really knows for sure. The current thinking is that a person who downloads a book is probably a different person from that who would buy it in the shop. However, the profit on the sale of traditional book is £2.35, the profit on an e-book is £3.50!
So in my view Penguins approach is slightly wrong.
E-book versions of novels great!
E-books of back catalogue great!
Full price to download - boo!