Book readers used to ponying up $26 for an average hardcover book may find the digital versions a bargain at $12-15 on the iPad, but is it really such a good deal for the publisher?

The New York Times posed that exact question over the weekend, and the findings may surprise you. While it’s true that not having to print and distribute books are a huge cost savings, the lower price for electronic delivery can’t negate the costs of overhead, marketing and royalties to authors.

Leaving out the cost of overhead, the bottom-line profit on a $26 hardcover book is estimated at only $4.05, compared with a $12.99 e-book at between $4.56-5.54 profit. And if publishers were bold enough to offer $9.99 e-books, that profit would fall closer to $3.51-4.26.

The newspaper arrived at those figures by factoring in all of the costs that have to be deducted from the sale price. In the case of a hardcover book with a $26 list price, the publisher may only actually see $13 -- and out of that, they might pay $3.90 for the author’s royalty, $3.25 for printing, storage & shipping, 80 cents for design, typesetting & editing and $1.00 for marketing.

Under Apple’s agency model for e-books, the publisher sets the sale price and Cupertino will get a 30 percent commission. That means in the case of a $12.99 iPad book, the publisher is paid $9.09, out of which gets deducted the author’s royalty (an estimated $2.27-3.25), digitizing, typesetting & editing (50 cents) and marketing (78 cents) to arrive at the $4.56-5.54 profit.

So yes, an iPad e-book has the potential to be more profitable than the traditional hardcover -- but the entire e-book market is currently estimated to be only three to five percent of the overall book market. Publishers won’t necessarily reap any rewards from those extra dollars until that market share increases accordingly. It’s unlikely that the traditional paper book will be going anywhere for a long while, if ever.

For established authors such as Interview With a Vampire scribe Anne Rice, e-books just create another level of confusion. “None of us know what books cost. None of us know what kind of profits hardcover or paperback publishers make,” she commented.

“For all I know, a million books at $9.99 might be great for an author,” Rice concludes. “The only thing I think is a mistake is people trying to hold back e-books or Kindle and trying to head off this revolution by building a dam. It’s not going to work.”

“If you want bookstores to stay alive, then you want to slow down this movement to e-books,” said Mike Shatzkin, chief executive of the Idea Logical Company, a consultant to publishers. “The simplest way to slow down e-books is not to make them too cheap.”

(Image courtesy of The New York Times)