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Originally Posted by DMcCunney
No, it doesn't. But fixed costs are allocated across the production run, and become unit costs. There is more to unit costs than the simple incremental cost of making one more of whatever it is.
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And you do not know what that proportion is until you know how many units you have actually sold.
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There is certainly a measurable minimum cost. It will be what you must charge to cover your costs and make enough to remain in business. How large that number is depends upon what your total cost is and how many of whatever you are making that you expect to sell. If your total cost is $100,000, and you expect to sell 1,000 of whatever it is, you must charge $100 per copy simply to cover your costs, and will probably have to charge twice that to make enough money to remain in business. If you expect to sell 10,000, your minimum cost drops proportionately. But you will have an ultimate limitation on how far your price can drop based on the total number of copies you can sell.
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There seems to be an all encompassing pessimism that no books will ever actually cover their costs. Only in the last sentance does 'expect to sell' become 'can sell'.
My point is that
once you have covered your costs, it is always a good thing to sell more eBooks, it is not like a physical object where it there is a minimum price forced by the manufacturing process. I'm not saying you start at a low price, but that there is nothing preventing you from ending up at a low price.
There is also a vicious circle problem. If you only expect to sell 1000, and so charge $100, you probably will only sell 1000, because you are charging so much.
Once you've exhausted the market at $100, you can try selling some more at $75, then $50, and so on. This is exactly the model that pBooks use, with hardback, trade, mass market then sales.
Retailers know that demand is elastic, that is why they have sales, BOGOF programmes and so on.