Quote:
Originally Posted by Logseman
Game Theory will tell you that, indeed, customers aspire for the lowest price, and sellers for the highest. Obviously, it is the point in which they both agree which will set up the price. However, there is no such thing as "reasonable" price for both parties....
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I would concur that there is no "objective" or "perfect" or "ideal" price.
However, there are definitely circumstances where prices could be classified as "unfair." For example, some may find that charging a premium for a scarce resource during an emergency qualifies as "price gouging." Some may argue the higher prices are justifiable -- e.g. I run a hotel, I charge 10x the normal rate after a hurricaine, on the basis that I need to run a private generator and this increases my costs. Others may say it is not justified, e.g. running the generator did not increase my costs enough to equate a 10x rate increase; my price increase is taking advantage of the dire straits of others, and so forth.
Ergo, one could claim that charging $100 for an official ebook copy of "Lord of the Rings" could be "unfair," as the publisher has an official monopoly over the title and might be regarded as price gouging.
Also, many people presume there is some sort of exclusive connection between cost and price -- and that demand does not figure at all into the price. The public has a
perception that it is "unfair" for a publisher to make a substantial profit off of a book, for example, or to charge the same or more for the ebook than paper, or to charge more for what used to be $10 until now (even though that price was largely subsidized by retailers who were attempting to control the market). Many people also mistakenly believe that the majority of the cost of a book is the paper portion, when the reality is that the paper part (including distribution and returns) is closer to 15%, thus it is "unfair" to charge the same or more for the ebook as paper. Similarly, many people protest that it is "unfair" to charge $15 now for an ebook and $10 later because it is the same exact item, even though this is downright routine market behavior.
And let's face it, most people are just not rational, and are reacting more based on emotion than reason. All they hear is that prices on a new ebook will go up to $15, and the knives come out. I'm confident that if Apple said "our ebooks will be $10," objections to the agency pricing would be minimal. And when people notice that older ebooks are $10 or less, maybe they will calm down. (Maybe.
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So is there a "reasonable" price? That may not be the proper term, as the price will be "whatever the market will bear," and "reasonable" is a highly subjective judgment.
But to me, it is perfectly rational that since supply is flat, the price of an ebook should change in accordance with demand. You want it immediately after it comes out, you pay a premium. If you're willing to wait, you pay less.