In the last two years, e-books have outsold print books. E-books are taking publishing by storm. While this is great for publishing, it can be a bit daunting for readers. If you are used to going to the local bookstore, browsing the aisles and perhaps reading the first chapter before purchasing, you still can ... with a little adjustment.
Most publishers, and nearly all online book retailers, offer you the opportunity to "sample" a book before you purchase it. In fact, many authors are also offering free reads or free first chapters on their personal websites. Both formats have their advantages and disadvantages. Each format has something to offer, and many readers just want some clarification on e-readers, e-books and digital pricing.

Cost of Traditional Print Books
Large publishers, like any business, have a significant amount of overhead including office space, utilities, benefits and salaries. When they take on a new author, they are never guaranteed that the work generated by the author will be successful. Publishers take an enormous risk by signing an author. Through the printing, editing and distribution process, they incur significant costs. All of these factors go into the final price readers pay for a print book. With the advent of e-books, consumers see that there is no printing and distribution involved, so naturally they think the price of an e-book should be less.

According to publishers, printing a book accounts for only about 8% of its cost. By eliminating this step, the cost of book would only drop about $3.25, bringing the average price of a book down from $26 to $22.75. Even without the printing costs, this isn't a significant savings.

E-Book Pricing
Because e-books are delivered in digital format, many readers complain that e-books should cost less than their print counterparts, and they often are. Most e-books range in price from $9.99 to 99 cents, and many classic books are free online. However, when you get down to the dollars and cents, there really isn't a great deal of difference, especially if you consider books from the larger publishing houses.

First, they still have to pay overhead and employees. Next, you have the editors. At publishing houses, a single book can have as many as five editors, such as content editors, grammar editors, line editors, character editors and final editors. Then, you have the graphic designer. Any reader will tell you a good cover will make him or her pick up the book. A good graphic designer is necessary; even with e-books, the cover matters.

Then you have a marketing department that creates brochures, magazine ads, posters and ads for online markets. Next, you have the tech people who must create the e-book in multiple formats for reading on a multitude of readers. Then, you have to pay a percentage to online outlets such as Amazon and Barnes & Noble for carrying the e-book, which can range as high as 50% of the cover price of the e-book.

What's left over pays the author. That author may have an agent who helps him or her gain a large publisher and agents typically take 15 to 20% for their work. With the exception of ink, printing and shipping, the costs incurred are pretty much the same.

Smaller publishers and independent authors do have a more leeway with pricing, but they still have many of these costs. They must give a percentage of their e-book sales to the online distributor, and unless they are graphic designers they must hire an illustrator to create their cover art. Most authors have to hire someone to convert their books into e-book format. Plus, they still have the marketing and promotional costs that are required to get their books noticed.

However, e-books are lower in cost to produce and that is being reflected in their price. This is a new way of reading, and publishing hasn't embraced the digital world. They tend to use the old pricing methods they've been using for nearly 100 years, and many need to reassess their "agency model" pricing structure.

Price Fixing
The industry is currently involved in a Department of Justice (DOJ) lawsuit regarding price fixing of e-books. The DOJ accused Apple of "conspiring with book publishers to fix e-book prices." The suit began shortly after Apple released its iPad when, the suit claims, there was a 30 to 50% increase in the price of e-books, particularly those from major publishers. The suit contends that this "price fixing" does not allow the market to determine price and publishers can dictate prices to retailers. The suit involved not only Apple, but Hachette, HarperCollins, MacMillan, Simon & Schuster and Penguin. Hachette, HarperCollins and Simon & Schuster settled the lawsuit out of court and without public disclosure. Apple and the remaining publishers have denied any wrong doing and the case goes to court in June 2013.

Pros and Cons of E-Books
The Pros

  • e-books are usually less expensive

  • They come with font flexibility making reading easier

  • You can store thousands of e-books, magazines and periodicals on a single device

  • You can check out library books on your e-reader

  • They save trees

The Cons

  • You must recharge an e-reader

  • Some screens are not easily readable in sunlight

  • They can cause eye-strain

  • All digital data has a shelf-life

  • Book piracy: easy to copy and distribute an e-book and the author receives no pay

Should You Buy an iPad or E-Reader?
There are so many options available it can be a daunting task to decide on which reader you want or need. Here are a few guidelines that might help with your decision.

First, do you just want to read books? If so, consider a Kindle or Nook. These are both good for reading, easy to download books on to and easy to carry. They have adjustable fonts, anti-glare screens and offer audio capability.

Do you want to read enhanced e-books? These are the latest generation of e-books that come with audio and video, and use the web to "enhance" your reading. If so, you might consider a Kindle Fire, Nook Tablet or the newest Google Nexus 7. If you want the ability to use the Internet, text, get e-mail, stream video and audio, and read a book, you might want to buy an iPad.

Cost of Buying an E-Reader
How much you will use the e-reader should determine the type you purchase. A recent article in the Huffington Post broke down the price and how many books it would take to offset the original purchase price. "At average prices, one would need to buy 15 e-books to offset the $189 price tag of a Kindle, 12 e-books to pay off a $149 Nook, and 39 e-books to justify a $499 entry-level iPad."

Like all things digital, the price drops each year. By this time next year, those figures could be much lower. With many e-books in the $1.99 to $3.99 range, you shouldn't have any trouble filling up your e-reader.

The Bottom Line
Readers, like most consumers, want a good product at a low price. Low prices are one thing, fair prices are another. The publishing industry needs to reassess its overall pricing, not just on e-books, and create an equitable market for readers, authors and publishers. Readers need to understand that authors are usually the lowest paid people in the publishing industry. There are excellent e-books available for $1.99 and for $9.99. The market will level out once consumers and the industry find a price they can all be happy with.

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