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Pricing an e-book higher than the paperback is not ridiculous. That's capitalism. If technology has enabled a new version of a product that is superior for th

by T-hawk 14y ago

Pricing an e-book higher than the paperback is not ridiculous. That's capitalism. If technology has enabled a new version of a product that is superior for the customer in convenience or capabilities, the customer will be willing to pay more and the producer has every right to capture that, regardless of what it costs to produce. (Leaving aside OCR quality issues.) This happens all the time. DVDs cost less to produce than VHS but sold for more because customers were willing to pay. TicketMaster can charge its service fee because customers will pay, even though it's certainly lower cost for TM to email PDFs than to staff a physical box office and buy ticket printers. A smart capitalist captures the consumer value he creates, regardless of his own costs.

waterlesscloud 14y ago
Conditionally superior in convenience, pluses and minuses in capabilities, definite minus in terms of ownership. Ticketmaster is an effective monopoly, publishers are an effective oligopoly. Neither are exactly capitalism's finest examples.
cabalamat 14y ago
> If technology has enabled a new version of a product that is superior for the customer in convenience or capabilities, the customer will be willing to pay more This might be true if people were rational utility-maximisers. They're not, and people are quite capable of choosing not to buy something if they feel it's a rip off.
- philwelch 14y ago
  ...at which point the price would fall, which it empirically hasn't, implying that customers are, indeed, willing to pay more after all.
Havoc 14y ago
You are quite right, in that prices are set to whatever the market will bear. You're viewing things from the perspective of an individual price setter though. I was talking more in terms of a bigger picture view: In a competitive market with high net profit margins more competitors should enter the market & undercut the existing prices. Mean that in the long run, the sales price of an item should approach the cost price. Now producing & delivering an additional ebook costs perhaps 1 cent, while producing an additional paper book costs perhaps a dollar. So ebooks should be sold at 1 cent + minor contribution to fixed cost + near zero profit, while paper books should be sold at 1 dollar + minor contribution to fixed cost + near zero profit. i.e. ebooks should be dirty cheap compared to paper books. Yet in practice ebooks are somehow maintaining their prices way beyond what one would expect per economic theory. Little surprise then that various publishers are currently in trouble for price-fixing of ebooks. Courts work slowly though & in the mean time I'm still pissed about the price I'm paying for those (badly OCR'd) bits & bytes.

by T-hawk 14y ago

waterlesscloud 14y ago

Conditionally superior in convenience, pluses and minuses in capabilities, definite minus in terms of ownership. Ticketmaster is an effective monopoly, publishers are an effective oligopoly. Neither are exactly capitalism's finest examples.

cabalamat 14y ago

> If technology has enabled a new version of a product that is superior for the customer in convenience or capabilities, the customer will be willing to pay more This might be true if people were rational utility-maximisers. They're not, and people are quite capable of choosing not to buy something if they feel it's a rip off.

philwelch 14y ago
...at which point the price would fall, which it empirically hasn't, implying that customers are, indeed, willing to pay more after all.

Havoc 14y ago

You are quite right, in that prices are set to whatever the market will bear. You're viewing things from the perspective of an individual price setter though. I was talking more in terms of a bigger picture view: In a competitive market with high net profit margins more competitors should enter the market & undercut the existing prices. Mean that in the long run, the sales price of an item should approach the cost price. Now producing & delivering an additional ebook costs perhaps 1 cent, while producing an additional paper book costs perhaps a dollar. So ebooks should be sold at 1 cent + minor contribution to fixed cost + near zero profit, while paper books should be sold at 1 dollar + minor contribution to fixed cost + near zero profit. i.e. ebooks should be dirty cheap compared to paper books. Yet in practice ebooks are somehow maintaining their prices way beyond what one would expect per economic theory. Little surprise then that various publishers are currently in trouble for price-fixing of ebooks. Courts work slowly though & in the mean time I'm still pissed about the price I'm paying for those (badly OCR'd) bits & bytes.