[Kali Yuga]

Originally Posted by Sil_liS

I really don't see why it comes as a surprise that they make a very small profit from hardcover sales when they give the books to the big retailers at 50% of the "price".

OK then, time for a quick lesson in retail.

1) Generally speaking, the publishers make more profits off of hardcovers than paperbacks. Again, a paperback might cost $1.50 to manufacture and a hardcover $2.00, even though the hardcover's list price is twice that of the paperback. The publishers often make more money off of hardcovers than paperbacks.

2) It is absolutely normal for the retail price to be significantly higher that of the wholesale price; a 100% markup is actually outstanding these days. Retail markups are how the retailers are actually able to survive.

3) Amazon may get a break on wholesale prices compared to a one-store independent bookstore, but not a better price than Borders, B&N or other large stores. (Too much of a break could easily veer into anti-competitive behavior.) Their main advantages are the efficiencies they can come up with in terms of inventory management, the lack of paying for physical stores and staff, advertising, branding, and better lines of credit.

Originally Posted by Sil_liS

So why is it that the publishers refuse to have ebooks come at a smaller price? Why didn’t they want to just set the price of the ebook to 10% lower than the current pbook?

People don't want a 10% price break. They want a 50% or greater price break, as evidenced by demanding that no ebook be more than $10 -- no matter how long the book has been out. Again, as Thompson pointed out, most people erroneously believe the paper portion constitutes a huge chunk of a book's cost, but that is no longer the case.

And let's face it, some people around here won't be satisfied unless the price on a new ebook is $5.

Plus, ebooks do actually vary in price; generally speaking, the higher the demand, the higher the price. It just fundamentally doesn't make sense to peg ebook prices off of paper. That type of thinking is almost entirely due to transitional issues.

Originally Posted by Sil_liS

After that we have the costs in relation to moving the books.

Most of which is normally the responsibility of the book distributors and retailers (not the publishers). And it's not that big.

For example, Amazon spent $307m on world-wide shipping costs, which was 4% of their net sales. That's for everything they sell, including that $700 50-pound TV where they comped you the shipping costs.

Amazon has spent years squeezing every possible efficiency out of their warehousing and delivery process. So have most other major retailers, especially Walmart, as they realized that if they can control those costs then their net profits will be better and/or they can offer customers lower prices. Borders or B&N may not be in quite the same league as Walmart, but I'd be mildly surprised if all the shipping and warehousing costs were more than 5% of the costs for most big book retailers.


So, just so we're clear on this: You don't seem to know much about publisher's real costs, you don't know yet how retail markups work, you don't know shipping costs. Publishers and retailers pretty much know these things, and attempt to use their knowledge to set the prices -- albeit with very different agendas.

And yet, you believe you know what the right price ought to be for ebooks?

The reality is, you don't. What you know is the price you prefer to pay and the price you're willing to pay. There's nothing wrong with that, but don't be surprised when those are very different numbers than the price someone is actually willing to sell something to you.