On a typical hardcover, the publisher sets a suggested retail price. Let’s say it is $26. The bookseller will generally pay the publisher $13. Out of that gross revenue, the publisher pays about $3.25 to print, store and ship the book, including unsold copies returned to the publisher by booksellers.
For cover design, typesetting and copy-editing, the publisher pays about 80 cents. Marketing costs average around $1 but may go higher or lower depending on the title. Most of these costs will deline on a per-unit basis as a book sells more copies.
Let’s not forget the author, who is generally paid a 15 percent royalty on the hardcover price, which on a $26 book works out to $3.90. For big best-selling authors — and even occasionally first-time writers whose publishers have taken a risk — the author’s advance may be so large that the author effectively gets a higher slice of the gross revenue. Publishers generally assume they will write off a portion of many authors’ advances because they are not earned back in sales.
Without accounting for such write-offs, the publisher is left with $4.05, out of which it must pay overhead for editors, cover art designers, office space and electricity before taking a profit.