Intuitively, we all know that the unit sales rate of a product is a certain function of, among other things, price. For some products, the effect derived from price overwhelms the effects of the other variables. As a result, these products behave (in the marketplace) as if they were fungible commodities.
The change in demand/sales volume for a product as the price changes is what is known as Price elasticity of demand:
http://en.wikipedia.org/wiki/Price_elasticity_of_demand
For this exercise, the subject is eBooks.
The question is: "What is commercial eBooks' price elasticity in the *aggregate*? That is, eBooks as a whole, not individual titles. The interest is trends, not anecdotes.
A product with low elasticity will respond with small sales volume changes with price changes whereas a product with large elasticity will respond with *big* volume swings with price.
A recent Smashwords post by Mark Coker presents a case arguing that eBook price elasticity is very high and that a 70% cut in price can result in a 500% percent increase in sales volume. (Six times total sales at the lower price than at the higher.)
http://blog.smashwords.com/2012/07/h...ould-harm.html
Granted that he has an interest in presenting his company's business model in the best light and thus taking his claims with a grain of salt, I have seen similar results from analyses of Amazon ebook sales rankings.
He uses his findings to argue that the higher price limits the audience size for traditionally published titles (for comparable titles, obviously).
Anybody have other (semi-reputable) numbers that refute or support this thesis?
(For that matter, does anybody care?
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