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Originally Posted by EscapeVelocity
The highest cost for books, will be marketing costs....not production costs.
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No, the highest cost is the editing cost. As it is currently for paperbooks. Savings on printing, etc., are 10-20% of the cost.
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$3 million revenue on 1 million sales is better than $2 million revenue on 200,000 sales.
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Yes, clearly.
But there are significant problems with this simplistic analysis. The biggest question is whether you can really quintuple your sales by dropping the price from $10 to $3. I am very skeptical that you can - it's rare that even a freebie is downloaded millions of times.
And of course $2 million revenue on 200,000 sales is better than $1.5 million revenue on 500,000 sales.
But even better would be $2 million on 200,000 sales. Then later drop the price to $6 and get, say, $1.8 million on 300,000 sales. Then drop the price again to $3 and get $1.5 million on 500,000 sales. Total profit is $5.3 million using your assumptions.
And of course this is basically the approach that publishers are taking.
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This will also drive ebook reader sales. As people seek to lower the costs of their reading. Reading will also significantly increase as an activity, creating a larger market for future sales.
But alas...
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Perhaps - but right now only 10-15% of the population reads one book a month or more, and I don't think that dropping the price of books would have much of an effect on this numbers, given that books are already free at libraries.