Let's start with the self publishing author. For this model, I'm going to assume the author hires out for cover, edits, and maybe formatting. This model would differ a bit from author to author. For the self published author costs are paid upfront, before the book is published. So going into it, we're already in the negative. For the purpose of this model, I'll use the arbitrary figure of $300 because it will work well number wise.
The author spends $300 to get the book ready for publishing. Then they price it at $0.99, which is the lowest price (other than free) that vendors allow. This price means the author is only allowed an average of 30% earnings from vendors. This is the normal rate for any book priced under $2.99. For a book priced at $0.99, this means the author only makes around $0.30 a copy. That means they need to sell 1000 copies just to break even. This is why most authors can't afford to do this for all their books, especially the ones writing full time and depending on their income to take care of their families. It's not about being greedy. It's about making an honest wage and meeting financial obligations.
Now, lets take a look at the author published through a publishing company. The same formula applies with slight changes. The upfront costs are covered by the publisher in most cases. The vendor percentages, however, don't change. The $0.99 book is still only netting a 30% earning of around $0.30. This time it is being split between the author and the publisher at a further percentage that is contracted between author and publishing house. If the author received 50% from the publisher, then that $0.30 is split evenly with both parties taking in $0.15 per copy.
I'm sure every author has a different experience, but the math really doesn't change much. Bottom line is the $0.99 book is a great way to market to new readers or even to try and bring interest to a series. That's what it was always intended to be.
All of these figures are based on pricing and what happens once the book is published. I didn't go into the average amount of hours invested in a project as they vary from author to author. What I wanted to share today was how pricing works from this side.
There's no need to worry. The $0.99 book deal won't go away.
Please feel free to let me know any other questions you might have. If I can't answer them for you, I'll find the right person who can!
Thanks so much for making reading a part of your day!