If cost of production were the only concern, software would be practically free, especially for downloads as the marginal cost is almost zero.
What you're paying for is intellectual property, the time the author spent writing the book, and the incentive for people to produce things you're willing to buy. If books were free, authors wouldn't write very much and nobody would have anything new to read.
As someone who writes software for a living, I can easily understand. No one would fund a project if there wasn't any money in it. No publisher would advance any money to an author for a title that would sell for next to nothing. So part of the cost of a book (or software) is the money it took to produce it in the first place, i.e the advance (or R&D monies).
Considering the effort that goes into writing a book, I don't begrudge an author his/her $10 for a new offering or the $6 for a paperback, even if it is electronic. I consider it a bargain.
