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Originally Posted by rvdparis
Just a quick revival of this thread:
Can anyone explain the pricing structure of eBooks or regular hardcover or softcover books? Is it market based? Is it to recoup fees? Is it marketing costs?
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Market-based... except that publishers don't understand the market and are guessing blindly.
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So can anyone explain
1. Why ebooks are expensive at all?
2. and why ebooks could possibly be more expensive than their hard/softcover counterparts, or why ebooks on certain sites can be 2 or 3x more expensive than on their publisher sites, or Amazon.com?
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Publishers have in their heads a "minimum cost for books" that's about 30% lower than standard paperback prices. For printed books, this is about right--it takes a certain amount of money to cover all the production, distribution, and storage costs, and even if a single book drops below that level for whatever reason, the costs over several production runs average out.
This cost includes the fact that if they produced lines of books at half or lower of standard pback prices, customers would demand to know what's up with all these $8 pbacks when they could be $4. (Possibly reasons some books could be cheaper: Printed on low-quality paper with less QC in the publishing process; higher print run that cuts costs; guaranteed pre-sales, like to schools; nonprofit group supporting part of the production costs. Whatever.)
The problem: Their estimates of "what it costs to produce books" includes aspects that are irrelevant to ebooks. They don't have a mental way to tag production costs for those; the tech is too new, and changing. They don't know how to estimate the "store" costs of coding for search engines and shopping carts--and effectively no inventory space costs. They don't know how to estimate production costs for format conversion, nor how to advertise to the ebook market.
They're stuck between trying to market to pbook readers who want "the new high-tech version of books," and ebook readers who want "reading material that doesn't weigh anything."
They don't know the market--so they invent prices out of pretty much nowhere. They have nothing to do with production costs, because production isn't standardized enough to know what those costs are yet. They have nothing to do with advertising expenses, because they're still experimenting with marketing. They have nothing to do with distribution costs, because those vary so wildly depending on ebook stores' contracts, they can't be used as a baseline.
They know all those things cost
something, so they make up prices that they're pretty sure will cover all those things (plus DRM), so that when they do figure out the details, they won't have to adjust all their prices upwards, which they know will cost them sales.
Regular ebook readers have the chance to make a difference here--supporting small, independent ebookstores that sell non-DRM'd ebooks for $3-7 is a (slow) way of letting the big publishers know what the market will bear. Because they're looking for that price point.
AFTER they figure out their baseline for standard novels, they'll start figuring out how to price textbooks and tech manuals.