Quote:
Originally Posted by Shaggy
If two different channels have different costs, and the end price is adjusted based on those costs, then the profit stays the same. It shouldn't matter to the company if they sell via the expensive channel or the cheap channel if the amount of profit they make from the sale remains the same.
Right now what they're doing is charging the same price (or more) for the cheap channel as the expensive channel. That means their profits are a lot higher. That's great for the company, but the consumer is getting ripped off.
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No, the point is to keep the price the same regardless of the channel-that way the cheaper channel is not cannibalizing sales from the more expensive channel. (Assuming total sales are inflexible then the manufacturer would prefer to sell everything via the cheaper channel as that generates more profit. But total sales aren't inflexible. Not all channels reach the entire market-so the manufacturer generally doesn't want to lose one of their major sales channels, which they will do if the distributor of that channel feels that the manufacturer is undercutting them thru a different channel.)
So profit actually rises as costs fall. So rational publishers should prefer to sell volumes as eBooks, but since the eBook market is much smaller than the hard-copy market, they don't want to do so at the cost of losing their hard-copy market. And the way they ensure they keep their hard-copy market is to keep the prices the same in both markets.