Quote:
Originally Posted by bgalbrecht
My biggest concern is that ebook dynamic pricing doesn't have the book return feedback that paper books do. With paper books, if the publisher gets a lot of returns, he's crediting the bookstores, and (at least for HBs) ends up with stock to warehouse. With ebooks, there are no returns, so unless the publisher is attentive, there's no incentive to drop the price of an older backlist book.
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We can look at the shareware software industry as an example of why there is still an incentive to lower the price on backlisted titles (publishers who fail to do this are giving up revenue).
Shareware authors will usually have a price for their software, and unlike books, it will go up over time as more feature-packed versions get released, inflation takes its toll and so on. However, you see an interesting series of peaks of software sales:
- When the first version of the software is released, you get a spike in sales, as people try out and buy your product.
- When you run short-term price-drop, you will get spikes in your sales as people who tried it and didn't want to buy for full price get tempted into buying at the lower price.
- New versions also tend to cause a sales spike due to publicity, and added value tempting more people to buy.
Books have a similar series of spikes, that align with the book releases. Most of the sales of a book happen when the various editions get released. Too long after that, you lose interest from buyers (posts in this thread tend to echo this). If the person doesn't pick up the hardcover, then they might pick it up once they see the trade paperback, or perhaps the mass market edition. In the book industry, you also get a cheaper product at each step, with smaller margins, but usually higher volumes.
The concept of selling a product at X% margin, and then dropping the price to smaller margins at higher volumes isn't unique to books. After you've got your first surge of sales at 15$ for your "same time as Hardcover" eBook, you won't see a surge of sales like that again unless you drop the price. They will produce more sales by price dropping the eBook every few months until it 'bottoms out' at same price and you let it sit there. It also makes sense from a profit maximization standpoint to charge above-average pricing at first release to get those who
really want the product to buy, and then drop the price to get the next group to buy, and so on.
It gets tricky when as a lot people mention, eBook pricing isn't in a vacuum, as it basically competes with the printed book as well. So if they price drop, for it to be effective, they have to price drop along the same schedule as the printed books.
It will be interesting to see if this model works (it has worked for other markets for decades) when applied to eBooks. I'm willing to let them give it a shot, but if their pricing isn't palatable to customers because they fail to price drop it, the bottom out point is in a weird place, etc... then that's that, it doesn't work here (not with the current buyers in the market, anyhow).
EDIT: And in any case, I was never a big hardcover guy. Not until recently anyways. I have hardcovers for my collection for durability, and stuff I just read for fun but don't really collect are more eBooks and less paperbacks these days.