Quote:
Originally Posted by Kolenka
Hardcovers on sale are usually loss leaders to get people looking at the store for other stuff while they are there.
Places like amazon have lower staff and lease costs for their locations (just the warehouses), where the MSRP is set to provide a buffer for physical retailers to be able to pay for the costs of operating the store and paying the staff that work there. Which also encourages them to lower their prices below MSRP to drum up business because of the lower overhead they pay for their business model.
Right now, ebooks follow a similar model of wholesale pricing with a buffer in the MSRP for the retailer. The catch is that Amazon and the like have used this to go back into loss leader mode on bestsellers. If the publishers try to go for a percentage cut instead of the flat price, then their revenue actually DROPS versus the wholesale model when Amazon and B&N go into price war mode and keep selling the books for 10$ or less. But the percentage cut winds up being more fair to the smaller sellers in the long run.
It's not a simple math problem.
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I understand the “loss leader” concept however there is only so far Amazon can take that. Unless I happen to be extremely lucky all the hardcover books that I have bought from Amazon have been discounted considerably from the suggested price. This tells me that Amazon is still making money off of most of them if not all and as long as the publisher is getting their cut it shouldn’t matter.
Now you do point out about going to a percentage cut instead of a flat rate. If that is not what they are doing now with the physical books then why change now? And if they are already going to a percentage cut now then what is the difference for an ebook? Do they actually expect to get the same money for an ebook when there is less cost in making them? Even with their own percentage figures regarding printing costs there should be at least $3 diff form the publisher’s standpoint and about the same from the distributor and retailer.
This is a simple math problem but unfortunately only the publishers know all the variables and figures. There is no denying that ebooks are cheaper to make, store and distribute and have no costs related to having unsold books yet the publishing company does not want those savings to go to the public. Should we get all of those savings? Maybe not but it sure would help the industry if we got most of those savings.