Quote:
Originally Posted by EricDP
But those costs are not per unit. They are spread across the total of the number of books sold. Increase the number of books sold, and those costs per unit go waaaay down. The best way to increase the number of units is to drop the price. The unit cost of an eBook is lower already, so you can drop the unit price, increase sales (which dilutes the creation costs), and therefore drop prices even more.
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I think you're making an unwarranted assumption about elasticity of demand. Every book has a market: the total number of readers out there that might want to read that book. If you're Stephen King, Tom Clancy, or the like, that total market will be hundreds of thousands to millions. If you're most other authors, the total market will be tens of thousands.
If the market for a book is 50,000, and I can sell 50,000 copies priced at $10.00 each, what happens if I cut the price to $7.50 or $5.00? Do I magically conjure new readers out of nothing because of a lower price?
Lower prices boost sales, but there's always a "sweet spot" - cut prices too much, and you get
less total revenue, because the existing audience is simply paying less for the book.
There are limits to how much lower pricing will help sales, because there are only so many readers who want to read any particular title. The trick is pricing at a point that will generate the maximum revenue and profit, not the maximum unit sales.
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Dennis