What you have to do is look at fixed costs versus the contribution margins possible with the product MIX (hardback, paperback, and ebook), just as Lee has been talking about.

If you're interested I've written a lengthy blog on this. Look in the comments as well. This is coming from the perspective of someone who has a Masters degree in accounting. Fixed costs, whether the be direct or indirect (commonly called "overhead), contribution margin, segment margin, and the factors of product mix are the key things that need to be understood to see why ebooks "cost" much more than people imagine. If a business gets these things wrong, it will kill them dead.

http://johndbrown.com/2010/02/amazon-vs-macmillan-the-heart-of-the-issue/

Part of the problem is that book publishing is anything but as simple as some people think it is or want to make it. Another part is that often those of us who are familiar with it don't realize how opaque that process can be, and another part is, as I've tried to point out, that economic models based on either "unvarnished" entertainment models or industrial models don't work, because publishing is truly a "mixed" business.

As with any organically evolved system, we have settled into local minima which are not necessarily the global minima (the "perfect" results). However, it is hard to beat the results more than two hundred years of highly competitive capitalism. In other words, it's stable because it works better than any of the other easily implemented alternatives. Parameters must change before another system such as ebooks or simultaneous releases will make economic sense to the producer.

What is preferred by the customer is not always best.

Besides, I'm confused as to how the "one true" price could ever be calculated. The current system seems to serve people quite well, as those who have money pay more and receive more (quality, timeliness, and ease-of-purchase). Those who spend less receive less.

P.S. Thank you, Mr. Modesitt. Some aspects of this dialog clearly seem irritating, but your answers have been fascinating as they shed light on the internals of book publishing. It's not wasted effort.

As far as price considerations why in the world does Amazon care what you charge? As long as someone is buying them don't they get a cut?

One solution might be to wait to publish Electronic (Kindle et al) until the paperback version comes out. Or better yet add a level – hardback comes out, year later electronic comes out, year later paperback comes out.

Whatever the solution the quality control portion of the publishing business cannot be skimped on. There are many authors who've suffered recently from having poor editors (not you). I mean in some cases no one has run a spell checker. And yes I know running a spell checker for a piece of fiction can be painful (all the names come up as problems) but nothing drives me more nuts than to have page after page of common errors jump out at you.

Not to mention the additional quality issues when converting to ebook. I don't know what the process is but I have several Kindle books (again not yours) with duplicated pages, missing pages, repeated paragraghs, and the one that makes me foam at the mouth – out of order sentences.

So in short I don't mind what the price is but I do love my Kindle – it's just so much easier to carry around and read, especially the nice thick books:) And since you are one of my five favorite authors I would like to be able to purchase more of your books for my Kindle.

Mass market books are the cheapest quality. Trade's typically better but not always, and hardcover books are the most enduring. Like with most products, you pay more for things that last. To do a simple comparison yourself, grab a 15 year old hardcover book of yours and a 15 year old mass market book. All other things aside (that is, so long as they were taken care of in similar ways) the mass market pages are more brittle and are considerably more aged. Their bindings are also noticeably weaker than their hardcover counterparts, too. These effects of aging are even more noticeable in books that are read repeatedly.

The aging of books is predominately why I decide to buy some books in their hardcover edition. If I want to keep hold of a book for a considerable period of time, I don't leave it to chance with a mass market book. If I want to keep a book around long enough to read it for a few decades, the higher price of the hardcover is insignificant to me. I've had to buy multiple copies of paperback books before within 5 years, and I take very good care of my books. In the end, it's a wash. I might even end up spending more on a given mass market title if I want to keep it around for the same amount of time as the hardcover edition. It's a bit like Kharl and his view on his barrels. You spend more now, but you save in the long run.

I know it's simplistic to say, but what I've gathered from reading blogs this past weekend is that selling hard backs is purely a marketing tool for frontloading cost recovery to the "early adopters" of any new book. That essentially, the cost for producing a hard-back, paperback and e-book are essentially the same, with printing, inventory, distribution being so small a portion of that as to be insignificant. If this is the case, then wouldn't it make much more sense to sell all versions for the same price? In other versions of entertainment you don't see this model. There's essentially one DVD relased of a movie or one album released at any given time. Sure there are director's cuts, but you're getting new content, and not required to wait until all the people who might possibly want the director's cut buy one before the standard version of a DVD comes out.

Let's face it… in the grand scheme of things, the hard-back is a small niche market for relatively few readers and libraries. Why not set one true standard price for a book (paperback or e-book), release them all at the same time and get out of the hard-back market all together. From what I can see, the higher cost of paperbacks and the deep-discount cost of hard-backs are getting within about $8-$10 dollars anyway.

Studies have shown that radio and television ads, per se, do little for sales. Now… an appearance on Oprah… that's another thing, but those can't be bought.

Now… despite all the cries about e-books being the wave of the future, sales numbers remain minuscule by comparison to hardcovers and paperbacks. This means that while "conversion costs" are lower than direct production costs of old-style books, the cost per e-book remains comparatively high, and it will until e-book numbers increase.

The "Baen" experiment was hugely successful in familiarizing readers with Baen authors, but from what I've heard,far less successful in shifting Baen's output toward significantly greater e-book sales.