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Why Does a Hardcover Book Cost $18?

by Harold Underdown

It does seem hard to believe that a children's book should cost so much. But $18 is a typical list price for a picture book or a middle-grade novel. Surprisingly, little of that consists of profit for the publisher. . . .

On average, the publisher receives only $9, or perhaps a little less. So half of the $18 is the wholesaler and bookseller's part--their overhead and profits. What's left? Assuming a picture book and that the publisher does a print run of 10,000 copies (this is fairly typical for picture books--generally, the more copies one prints, the lower the price per copy), of that $9.00,

$3.60 is overhead (see this article for what's included in "overhead.")
1.80 is the royalty to author and illustrator
1.75 is the cost of paper, printing, and binding (known as "PPB," of which binding is almost half)
.35 is the cost of preparing the plates (not plates anymore, of course--now digital files.)
This leaves the glorious sum of $1.50 profit per book, assuming all goes well and that the entire printing is sold. And assuming, on the other hand, no subsidiary rights income, which would increase the amount of profit.

These costs are for an imaginary book, of course. Most books will vary from this, by a lot or a little, in a number of ways: this assumes a 10% royalty based on list price, but royalties can also be paid on net price, or with different percentages; overhead could be higher if the publisher spends more on marketing; paper can be more or less expensive; special features like fold-out pages or cut-outs add to production costs.

But this breakdown gives you a sense of the costs involved, especially when you multiply these costs out by 10,000 to see what a publisher has to invest or account for in their planning for each book: $17,500 for "PPB"; $3,500 for plates; overhead of $36,000; and an advance, which will be at least several thousand dollars. For the publisher to break even, a book has to sell six to seven thousand copies. Many books, of course, do not reach that point. A few others go way beyond that. And some books provide additional revenue in subsidiary rights. A publisher's business depends on enough books making money that the company overall makes money.

What if the book isn't a picture book? Then the plate and printing costs may be lower, and the publisher may be able to do a smaller print run and still keep their per-book costs down. Most of the other numbers work out pretty much the same.

I don't claim that this information explains the financial side of the business in any detail, but I hope it gives a sense of why the process of committing to a book can be a lengthy one--publishers are taking a financial risk. And in almost all cases, they do an analysis of costs for the book, in more detail than I've gone into here, before making a decision.

Some more discussion of this subject can be found in this blog entry.

Please let me know your questions and I will update and expand this as needed. Copyright © 1998-2018 by Harold Underdown. Last updated January 1, 2018.

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