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Originally Posted by andrewburt
Out of curiosity, what pricing thread is that?
Our experiences (as a publisher) regarding "price elasticity of demand" have been that there's not as much demand change as people think, even between $.99 and $9.99. Which is to say, if people want a book, they seem to generally pay the asking price; and if they don't especially want the book, even a $.99 price doesn't do that much to entice them.
(Bear in mind too, as you may know, that under $2.99 on Amazon a KDP publisher gets half the income, 35% of the price instead of 70%, so you need to sell twice the delta just to break even. An author/publisher nets $7 on a $9.99 title, but only $.35 on a $.99 title, so you need to sell 20x as many just to break even, and more than 20x for it to be beneficial.)
In our pricing experiments, we haven't seen that high a level of increased buying. For some titles the number of sales remains the same regardless of price(!), and for some the increased number of sales at lower prices still nets less total income. Hmm.
As a publisher I'd love it if lowering the price earned more income for the author and us, but sadly that hasn't been our experience.
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This has kind of been my theory on the3 pricing of a lot of e-books. The point of selling books is profit, not number sold. And for a lot of these books, you would have to have a *huge* increase in demand to see a corresponding increase in profits. And I don't think you would see this with many authors.
The universe of people who would even pay $3 for a Bradbury book is fairly limited (I'm leaving out the 99c pricing because the lower profit makes the number of additional books you need to sell for the same profit even more extreme); I would be surprised if dropping the price from $10 to $3 would cause sales to more than triple.
I.e., if Fahrenheit 451 sold 10,000 copies at $10, it would net the publisher $70,000 after Amazon, etc. takes their 30% cut. To make the same $70,000, the book would have to sell more than 35,000 copies. (As described above).
But it's more complicated than that. The advantage to pricing at $3 is that you get consumers who wouldn't buy at $10; the disadvantage is that you lose out on the $7 profit you would have made from those consumers who *would have* purchased at $10 but now don't have to.
Given that books aren't all sold at once, the best profit-maximizing approach is something like what the publishers already do: change pricing over time.
Example 2: F.451 goes on sale for $10. 10,000 buy it in the first year and the publisher makes $70,000. After a year, the publisher drops the price to $3, and the remaining 25,000 people who would have paid $3 now do so, and the publisher makes an additional $50,000, for a total of $120,000 - better than either $10 or $3 pricing.
[And of course it's more complicated that that - the publisher would probably drop the price first to something like $6 to get the additional profit from the people who would pay $6 but not $10, and then after another year drops the price down to $3.
And of course (at least for someone like Bradbury), there are always new customers who might pay $10 after a couple of years for a variety of reasons, including having just gotten a new e-reader].
So I think that pricing is pretty complicated, but that what publishers are doing often really does make sense wrt making a profit. Or at least it's not completely stupid.
But the actual numbers are going to be different for authors who are not top tier like Bradbury - random midtier author backlist probably won't be worth as much as F.451.]