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Kali Yuga · 02-02-2010, 03:03 PM

I'm just going off of my understanding of how wholesale prices and royalty calculations are typically set.

But let's accept your assumptions. In a revised reseller model with lower cover prices, in order for Amazon to make any profit the wholesale price on a brand-new release would need to be under $10:

$8 cover/wholesale price
$10 Amazon's price
$1.60 royalty rate (20% of the wholesale price / Macmillan's net)

In this scenario, it's unclear if Macmillan can still earn a profit, as the cover / wholesale price would need to be cut by nearly 65% in order for Amazon to just break even. I'm pretty sure that would wind up having an effect on royalties.

Overall though, I still think no one really knows the full effects of these changes, and unfortunately experimentation is likely in order. That's my story and I'm sticking to it.

02-02-2010, 03:03 PM	#6
Kali Yuga Professional Contrarian Posts: 2,045 Karma: 3289631 Join Date: Mar 2009 Device: Kindle 4 No Touchie	I'm just going off of my understanding of how wholesale prices and royalty calculations are typically set. But let's accept your assumptions. In a revised reseller model with lower cover prices, in order for Amazon to make any profit the wholesale price on a brand-new release would need to be under $10: $8 cover/wholesale price $10 Amazon's price $1.60 royalty rate (20% of the wholesale price / Macmillan's net) In this scenario, it's unclear if Macmillan can still earn a profit, as the cover / wholesale price would need to be cut by nearly 65% in order for Amazon to just break even. I'm pretty sure that would wind up having an effect on royalties. Overall though, I still think no one really knows the full effects of these changes, and unfortunately experimentation is likely in order. That's my story and I'm sticking to it.