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Oh dear.
This is hauntingly familiar. If we screen out the clueless, who have no idea what it costs to make something and sell it at a profit, the discussion boils down to pro-rata pricing, vs. marginal pricing. The airline business has managed to lose all of their historical profit in a decade or so by chosing badly.
/Gross Oversimplification On: One school says, "Take all your costs and divide by the number of books you sell; that's your min. price." The second says, "What's the cost to produce of one more book?; that's the price of your most-difficult-to-sell copy. You sell the others for more." You then tack on your profit to either of them if you can.
The right answer is whichever one (or some combination) doesn't cause you to go out of business. Simple, no? Marginal pricing allows you to maximize throughput and avoid unsold inventory, thereby capturing all (or at least more) of your maginal costs. Pro-rata pricing may not capture the premium you can get for some fraction of your production, but you're not vulnerable to losses in normal times.
High competition can lead to you selling all of the product at the marginal price, with low profit, thereby going slowly and painfully out of business. Pro-rata pricing can lead to you being uncompetitive, and slowly losing volume, shrinking your business, while making ever-decreasing profits.
Regards,
Jack Tingle
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