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Originally Posted by Elfwreck
With a standard 30-40% return-and-pulp rate for pbooks, how can that be?
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Before I answer that, a quick disclaimer: I don't work for a publisher or retailer, so I don't have precise figures.
That said, my best understanding is as follows. In the standard model, the cover price for a typical hardback is $25-30. The retailer buys their copies at about half that cost, and prices it as they see fit. They can sell it for above or below their costs, and return copies with no real penalty; AFAIK the typical retail price is closer to $15-18. The author's royalty is based off the cover price, not the actual price the retailer sells at. In addition, the paper costs of a book are only 15% or so of the total costs. I assume this includes returns, but if it doesn't then with a 50% return rate, paper costs are still around 22% or so.
Ebook readers presumably loathe the idea of spending more than $10 for any ebook, even a brand-new one. (That may not end up being the case, if the agency model genuinely engages in dynamic pricing, and visibly lowers cost as books age.) If that's the case, then the public want publishers to cut their prices by 50-66% -- though to the consumer this looks more like a 30% cut.
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Originally Posted by Elfwreck
The public is mainly asking that the costs that don't exist for digital content be removed from digital pricing.
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Well, sort of.
The public has little concept of the actual cost of the paper portion, and their perception is (as far as I can tell) wildly inflated. It doesn't help that publishers essentially foster this illusion by charging significantly more for hardcovers than paperback; however, I'm quite confident that it does not cost 2x or 3x as much to print a hardcover as it does a softcover. This is why the hardcovers are "high margin" sales.
I.e. the
actual costs of a book are the elements that people don't consider, are not aware of, and/or do not value: advances, editing, retailing, overhead and so forth.
And again, in a few years the idea of basing prices relative to paper costs will be largely moot, as paper gets sidelined.