Half of the $16 is the wholesaler and bookseller's part--their overhead and profits. On average, the publisher receives $8, or perhaps a little more. Assuming that the publisher does a print run of 10,000 copies (this is fairly typical), of that $8.00,
$3.20 is overheadThis leaves 80 cents 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.
1.60 is the royalty to author and illustrator
1.76 is the cost of paper, printing, and binding (binding is about half of that)
.64 is the cost of preparing the plates
These costs are for an imaginary book, of course. Most books will vary from this, 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 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 before a book is released: $17,600 for "PPB"; $6,400 for plates; overhead of $32,000; and an advance, which will be at least several thousand dollars. Just 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.
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
Please let me know your questions and I will build up this page, going into the areas you want to know about in more depth. Copyright © 1998-2006 by Harold Underdown. Last updated February 6, 2006.