Metaphorically, the value of books is infinite.
Economically, the value of books is much, much lower.
So how do editors/publishers negotiate the waters between the "real" value of books and the "dollar" value of books? It isn't easy.
In a market system, one variable brings millions of pieces of market information together, and that is the price of a product. Publishers want to charge as much for a book as possible; consumers want to pay as little as possible. The prices settle where quantity demanded and quantity supplied meet.
And, sad to say (from the publisher's perspective, of course), the prices have settled at a very low number. While it's true that book prices have gone up in recent years (mostly due to the price of inputs, such as paper--as well as the massive advances that are the result of a very flawed agent-driven system), they are still very low when compared to the price of other consumer goods. Mass market paperbacks run $5-$7; trade paperbacks, $10-$15; and hardcovers, anywhere from $21 to $28 (for fiction). Now think about all the costs that it takes to write, edit, typeset, design, produce, market, and distribute each book, and you'll realize that even hardcovers bring in very little profit.
So, why these low, low prices? Competition. The market for fiction is monopolistically competitive--meaning that many people (publishers) are in the market producing basically the same product. In strictly economic terms, a mystery novel is a mystery novel--what distinguishes one from another is packaging, author, advertising, marketing, and so forth. But in a pinch, when one mystery novel isn't available, readers are just as likely to pick up another one in the same genre. Think about it this way--If you go to the supermarket to buy a bag of Wise potato chips, and Wise is out of stock, aren't you going to buy a bag of Lay's or Ruffles instead? So publishers can't really charge above the market price for any book, unless they have something really, really special on their hands. People might be willing to pay a few dollars more for a new Stephen King book, but they're not going to pay more for a book by an unknown.
Prices are low, then, for a couple of reasons:
(1) A huge amount of competition.
(2) The generic nature of the product.
Now, if 75% of mystery publishers went out of business and the number of mysteries (and novels in general) published each year were to go down significantly, publishers could raise their prices. People who wanted to read mysteries would be forced to pay the higher price to get their fix, and they'd perceive the value of these mysteries to be much higher because of their relative scarcity. But we all know that's not going to happen.
Another serious problem from the publisher's perspective is used sales through the Internet. In the old days, if you wanted a book you either borrowed it from the library or bought it at a bookstore. There was no easy way to located a cheaper used copy. Now it's as easy as pointing a mouse to Amazon marketplace. It goes without saying that authors get zero revenue from used book sales, and authors receive no royalties. Particularly when we are trying to break a new author, these used sales hurt our bottom line badly, reducing the number of new copies purchased (by some estimates) by 50% - 75%.
Of course as publishers we can't expect consumers to subsidize our operations by purchasing only new books, when cheaper alternatives are available. But the next time you purchase or swap a used book through the Internet, please understand the effects of these transactions on publishers and writers.
A lot of writers are fond of giving away complimentary copies of their books. That's all well and good--but every copy you give away is one less copy that you sell. On the positive side, of course, giving away free books does help to get word out about your book. Our publicist tries to find the balance here, but it's tricky. A few years ago we tried to do book club outreach for a couple of books. We sent free books to book clubs around the country and tagged them in inconspicuous ways. We waited a few weeks and then purchased used copies through Amazon marketplace and found that most of them were copies we'd provided free to book clubs.
Which brings me to the topic of reviews. Most of the major review publications receive more books than they can ever review--and most of them end up in the used-book market almost immediately. Personally I find the ethics of this practice questionable, except in the case of publications (especially on the Web) that get no advertising revenue and need to support their existence through used-book sales. As an industry, we benefit from the existence of these review journals and Websites and understand that we need to subsidize them.
I will say this, however. If you accept or solicit books from publishers that you have no intention to review, but every intention to sell, you are an immoral slug.
Economists talk about phenomenon known as the "diamond/water paradox." In a nutshell, water is essential to human life and should be valued highly by the marketplace. Diamonds are practically useless (except in some industrial applications) and should have almost no value. (I'm reminded of Voltaire's Candide, with the children playing in the streets with diamonds and rubies, because the society is smart enough to understand that the gems have no value.) A man dying of thirst in the desert would gladly trade his diamond ring for a glass of water. That same man would never trade his only glass of water for the Hope Diamond. However, diamonds are relatively scarce when compared to water--and therein lies their value.
We're in a similar situation with books. They are the cradle of culture and essential to any literate society. But there are now so many books that they've become almost as ubiquitous as water. The average consumer sees them as interchangeable and therefore doesn't value them highly enough to pay more than $6.99 for a mass market paperback (of which a publisher must sell tens of thousands of copies to begin seeing a profit).
So, if you are an aspiring (or even published) author, and you get frustrated with your publisher's unwillingness to spend money, I hope this post will help you understand better why we (1) don't want to give you hundreds of free copies to give to your friends and family; (2) send packages the cheapest way possible (the price of express mail is astronomical); (3) don't take out ads in trade journals that cost thousands of dollars; (4) can't support author signing tours that won't even come close to bringing in revenue equal to our expenses in the effort.