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Originally Posted by Cimmerian
Someone was asking about e-books economics here. It's quite simle - you need to find such a price for a book that will still be making sales and will not require huge processing efforts. So when you sell for 3 bucks, you sell a lot, but total is much less then if you sell few same copies for 40 bucks, and you put a lot more efforts in processing transactions for smaller amounts. If you put a book for 40, you will have fewer sales, but also fewer transactions. The trick is to find such an equilibrum that will mximize profits with minimum efforts.
In addition to this, distribution takes AT LEAST 55%, so if you buy a book for 12.95, publiesher gets less then 6 dollars (or an auther if he sells himself) - so the money from the sales are about equal to suggested to 5-6 dollars. This is when the price is 12.95.
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You are conflating two different business models, and it doesn't work that way.
You have several costs: the cost of acquisition (IE, the advance payed to the author), the cost of preparation (line editing, copy editing, proofreading, and typesetting), the cost of manufacture, the cost of warehousing, and the cost of distribution.
Acquisition and preparation will be there regardless, and creation of an ebook edition in addition to the electronic format sent to a printer will be negligeable.
Cost of manufacture and cost of warehousing essentially don't exist for ebooks. You have a master copy of the electronic book, sitting on a server. the server will have a cost, but the share of that cost born by any individual ebook will be miniscule.
Cost of distribution will be the cost of the server, electronic payment setup, and bandwidth. Tiny for any individual book.
The standard discount to retailer for "dead tree" editions is 40% (but publishers are beginning to experiment with higher discounts, in exchange for less returns). With ebooks, the publisher deals direct with the customer. There normally isn't a retailer in the middle getting a cut.
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This is without promotional expenses.
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Most books don't have promotional expenses. Publishers reserve promotion for established best sellers and new books the publisher hopes might become a best seller.
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In my personal opininon an e-book can not possibly cost less then 12.95, otherwise it will be a loss for publisher, and such publisher will have to go out of business very fast because of never getting invested money back.
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You haven't thought it through.
At present, and for the foreseeable future, ebooks are simply a variant edition, offered
in addition to the dead tree edition. When Baen began the Baen Free Library, it was intended specifically as promotion for their paper editions (and succeeded very well). Jim Baen stated in an email that he did not see electronic publishing as a source of profit at the time. The Webscriptions program has subsequently done nicely, but I suspect it's still a small fraction of Baen's total revenue.
But meanwhile, take manufacturing, warehouising, and distribution costs out of your model, and see if you still hit a minimum $12.95 price.
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Dennis