Where does the £50 cost of a graduate (e)textbook go?

At a recent meeting I bumped into the joint author of a very popular graduate textbook. It has gone through a couple of editions over 20 plus years and sold 10,000 plus copies in total. The current ebook version sells for about £50. Apparently the two authors get about a pound per copy each. This leaves £48 left. And total income over 20 plus years is maybe half a million, of which authors get around £20,000, leaving £480,000.

All the text and figures are done by the authors, although some professional typesetting is done by the publisher, for both editions. Typesetting is done in a country with a low cost of living, and given that neither words nor text is done, I am assuming this should cost no more than thousands. So maybe we have £470,000 left.

Graduate textbooks are not marketed by their publishers in any serious way. The cost of delivering the pdf of the ebook can’t be more than a pound, so for 10,000 copies that is another £10,000. Leaving us with £460,000 for the publisher, in profits.

Another way to look at this is to compare with say literary fiction, where books sell for perhaps £10 not £50. Typesetting a science textbook will be more demanding, due to its figures, but as far as I can when 10,000 copies are sold, typesetting is a very small fraction of the costs of the book.

Of course the economics change dramatically if only a 1,000 copies are sold at £50, then revene is £50,000 and costs are £13,000. But this still looks profitable. Indeed even if only 500 copies are sold, revenue is £25,000 and costs are £11,500.

To sum up, at £50 per etextbook, about 5 times the cost of a novel, the published should make a profit if only a few hundred copies are sold, and if thousands or more are sold, the profit margin is just crazy. If you buy a popular textbook as a pdf at £50, I think you must be boosting the profits of the publisher by more than £40. That’s a heck of a profit margin.

With that in mind it is perhaps surprising that the academic publisher Elsevier‘s profit margin is only 38%, although that is still higher than that of, for example Apple. Publishing textbooks is at least as much a license to print money as books.