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Old 01-27-2010, 11:08 PM   #6
rmm200
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Join Date: Jan 2010
Location: Bend, OR
Device: Sony PRS-600
Publishers like most American corporations at this point, are not trying to build a long term business, or take less money now for more in the future. They want results this quarter.

Pricing an Ebook at zero, they have lots of sales and no profit. Pricing an EBook at $100, they have no sales and the same no profit.

The happy spot is somewhere in between.

I am sure some publisher is running Monte Carlo simulations as we speak, saying at $9.99 we sell so many units for this much profit. If we lower the price to 9.50, we sell this many more, for this much total profit. If we raise the price to $10.25, we lose this many sales but make this much profit. (plug in the numbers as appropriate.)

The publishers will set their price at the point where their profit - this quarter - is maximized. That way they keep their jobs and their stock goes up.

Robert
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