Quote:
Originally Posted by DMcCunney
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
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Sorry, but the market for each and every book is 6.8 billion and increasing. There is no other limit to the market. By lowering prices and increasing availability, you are more likely to reach that potential market of 6.8 billion.
What comes to the "sweet spot", once you have covered your production costs and price of each consequent product is cost + something, you make profit, but even at cost, it's better to sell than not because you still have capital costs to cover. Besides, higher revenues do not equal higher profits. I can have high revenue and still make loss or I can have relatively low revenue but make high profit. The world is full of examples of both cases so I wont give you any here.
Only factor that has any effect on pricing and availability is the producers strategy: do you want to concentrate only on short term high profit (stars and question marks) products or long term revenue generators (cash cows and dogs). For a publishing house, I'd say it would be foolish to only concentrate on stars as that is very risky strategy in already risky business.