Quote:
Originally Posted by darryl
From what I can see the Big 5 are experimenting with what seems to be a very rational approach to maximise their e-book profits. New Releases are priced at a premium, as they always have been. However, when those prepared to pay that premium have been exhausted, the price is now often reduced, either permanently or for short promotions. It seems that the Big 5 are experimenting in pricing e-books so as to pick up demand at successively lower price points. Some Big 5 e-books are in fact sufficiently reduced in price so as to compete with Indie titles, if not permanently at least in periodic promotions. So far as older back-list titles are concerned, I'm not sure what is happening. Whilst some seem to be priced to compete with Indies, many seem to be available only at $9.99 and above.
Agency is still relatively new to the Big 5, as is retail price competition. They continue to experiment in an ever-changing environment. As has been pointed out in this and other threads, costs including production and distribution are relevant to pricing only when considering the lower boundary of possible selling prices. This is usually only a primary consideration in a highly competitive market. Rational sellers seek to set prices so as to maximise their overall profits. For the Big 5 the print book remains the primary product, with e-book's ancillary. They produce paper books and e-books. For Indies, e-books are the primary product. Where paper books are available, they are usually produced on demand rather than printed and distributed through physical book stores. It is naive to believe that the relevant considerations used in setting an e-book price are the same for Indies as for the Big 5. In particular, the Big 5 must consider the effects of e-book prices on paper book prices, and the status of e-books as ancillary to paper books. Likewise, Indies don't seem to care about paper book prices or in fact paper book sales. It quite simply makes sense for the Big 5 to keep e-book prices at a level that does not risk cannibalising their paper book sales during the periods when most paper books are sold. Likewise, once paper book sales have slowed down or stopped, it makes sense to then experiment with lowering e-book prices to pick up the demand at lower price points. This is simply not a consideration for e-book only publishers.
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Another aspect to consider is prices of books that are out of print and not available as an eBook. For example, I can buy a copy of the The Harper Encyclopedia of Military History: From 3500 B.C. to the Present by Dupuy and Dupuy, a book of rather specialized interest which I bought at list price for $65 when it came out some 30 years ago, for prices ranging from $163 to $333 used and $253 new. One can't pound the table about the publishers in this case, since it's no longer in the publisher's control. It's purely a case of the market searching for the proper price point for a book of limited interest to the general public.
Overall, the publishers have done a reasonable job of establishing price points to maximize their profit, using a pricing model that has been successful for a long time. They have really done a better job than the music industry or movie industry, in that regard.