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Big publishers have different contracts with Amazon than self-published authors, so your calculations are not correct, and without seeing the actual contracts, it is impossible to say what a big publisher makes on an ebook sale.

Also, what matters with ebooks is not how much the publisher makes per sale, but how much they make overall. Since there is almost no additional cost to sell an ebook, it is better to sell 1000 books at $4.99 for a total revenue of about $5000 than it is to sell 300 books at $9.99 for total revenue of $3000. Amazon knows what prices produce the largest revenue which is why the ebooks in their own imprints are generally priced at $4.99

The real reason that publishers price ebooks higher is to protect their paper book business and the somewhat exclusive arrangements they have with brick and mortar bookstores. It may be working for them in the short run, but if Barnes and Noble does not survive, they will be even more dependent on Amazon, which by the way now sells over half of the paper books in the US, and most of the recent increase in paper sales have been on Amazon as sales at other stores has been flat or declining.

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I agree with your post, excepting one issue. The deep catalog. Those books in print are mostly driven by used purchases and library checkouts. And they’ve mostly been forgotten and don’t sell well. They are not making alot of money off of those books. Those books should not be priced at $10 for the ebook version. They would make alot more money selling them at a lower price point (supply demand) and gain positive reception which would benefit all of their sales. I would tweak their model with that one addition, I think

$14 when only the hardcover is out (what they currently do)
$10 when the paperback is released (what they currently do)
$6 when no longer selling well (what they should do but are not)

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But no major publisher wants their ebooks to sell in much quantity under Amazon’s terms for sound financial reasons. They’re typically publishing bestsellers from popular authors. There’s no reason for them to price those books under $10, and their authors would raise hell if they tried.

And what happens the moment they price a Kindle ebook at over $9.95 to cover their expectations? The royalty that Amazon pays drops to 30%. Price a book at $9.95 and they get a bit under $7.00, which may not be enough for them, their authors and their expensive advertising. Raise that price to $10.95, and Amazon is only paying them a bit over $3, and pocketing the other $8 itself. Those publishers are not in business to make Jeff Bezos rich.

Assume for instance, that to recoup their costs and please a famous author, they must earn $10 per sale, whether that book is print or digital. If the great bulk of their sales came through Apple, which pays 70% at all retail prices, they could price the ebook version just over $14 and do fine.

But since Amazon dominates the ebook market and is only paying them 30%, they must price that ebooks at over $30 to earn that $10, with some $20 of that going to Amazon. Why would they want to do that?

Note too another factor. These people print and sell books in large quantities and have efficient distribution systems. A book that might cost a smaller publisher $6 to print and ship, they can distribute for $3. For them the cost ratio between print and digital are far different than they are for small printers and independent authors.

That’s why they’re delighted that ebook sales have flattened out at 20%. They’re smart business people. They’ve run the numbers and know that selling their ebooks by Amazon’s rules makes no sense. Amazon’s rules mean they have to price that ebook high to earn the same income that print books give. And given that they have to price ebooks high to earn little, low ebooks sales don’t bother them in the slightest.

I suspect the attitude at the major publishers is that they’ll market ebooks for those who won’t buy anything else and that will pay close to hardback prices for them. For those who want their ebooks to be priced well below their print books, they care not. Why should they price low and lose money while enriching Amazon?

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