The Virtual Commodity
Posted 22nd October 2009 at 01:49 AM by pawsplay
Why do electronic downloads need to be cheap? To sell someone a book, you need merely convince someone it is worth the money for the convenience of being able able to read it at any time. To sell someone a PDF, you must convince someone that your book is good enough that its creator deserves to be rewarded for their labors. While there is certainly an ethical argument to be made there, this point is mainly important because of casual infringement. You will never dissuade premeditated crime, and you can ask any reasonable thing of your loyalists. But to sell to a disinterested stranger, you must show them, "This book has value and should be preserved in this world." The legalistic argument is but one, and has limited persuasive power to some. That is why the price point of the digital product is lower than for a physical product.
A PDF must compete against a number of other options: illegal piracy, a different PDF that costs less, other free things on the Internet worth reading, their own labors and activities, etc. The price point of a physical book remains higher than than that of a PDF as long as a book remains of superior value to the typical customer.
A PDF must compete against a number of other options: illegal piracy, a different PDF that costs less, other free things on the Internet worth reading, their own labors and activities, etc. The price point of a physical book remains higher than than that of a PDF as long as a book remains of superior value to the typical customer.
Tags: publishing
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Comments
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One reason the price should be lower on a PDF is the production cost is lower. Part of the cost of a book is printing it and distributing it. Once you're past the editing and layout, PDF has minimal expense to publish.
Charging me "as much as print" for a PDF runs counter to fair pricing. Now it may be that print books are under-priced, but most consumers are smart enough to know that if this variant mode of publishing costs you less, you can afford to charge me less and make the same amount of money.
Seperate from any other issue, this is why people insist that e-books must be sold for less than their print counterparts.Posted 26th October 2009 at 04:28 PM by Janx
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Setting a higher price for PDFs because they have smaller runs can be a self-fulfilling prophecy. At least in theory, you should be able to set the price fairly low and get the same profit you would on a print book.Posted 26th October 2009 at 06:30 PM by pawsplay 
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There's no "rule" on how much a PDF should cost compared to print. It has to be judged on its own merits and profitability - i.e. at what price will it make a profit within a given time period.
For example, we spend a few thousand on each WotBS adventure. Sure, that's small change compared to the development costs of some books, but it's not an insignificant amount - and the PDF must be priced so that it recoups that money and then makes a profit.
We don't sell thousands of copies of PDFs any more. Pricing them too low is a fast route to bankruptcy (as is pricing them too high). Market forces determine the price point and the viability of the product, but comparing it to a print book isn't part of the equation at all.Posted 1st November 2009 at 08:04 PM by Morrus - Customers will certainly compare it to a print book. Certainly, the publisher will need to recoup the cost. I think this can become a trap, though. Some products have their prices defined by their production cost and are sold to pre-existing market who it is hoped will appreciate the product. Others are priced according to projected low sales in the PDF market in general. Finally, some just follow suit.
I think high PDF prices can become a self-fulfilling prophecy. If PDFs sold a thousand copies for a few dollars, they would be as profitable if not more than print products that sold thousands of copies. Currently, PDFs are at a premium because the target market are "early adopters," not the mass market.
I think in many cases, a better strategy for publishes is to scale their production costs according to a lower final price point while still aiming for realistic sales. Certainly, I won't tell you how to run your business, since EN Publishing appears to be quite successful, and a few thousand in development for a product that will see wide distribution seems quite reasonable. I wonder, though, about the small publishers who publish individual classes and want $5 for them, or publishers of rulebooks and larger sourcebooks that have already sunk the majority of their costs into a print version and want nearly cover price for a PDF... a file that ultimately will take seconds to download once the user is granted permission.
I don't want to fight for a piece of the pie for the 300 buyer PDF market. It's not even worth fighting for. Naturally, I have to scale my costs against that if I am going to be conservative, but ultimately, I want to create new buyers.Posted 1st November 2009 at 11:43 PM by pawsplay - Sure, customers will compare the purchase to a print book - or to a movie ticket, or a meal, or any other alternative recipient of their money. And they'll ultimately make a value decision: "Is X worth Y to me?"
The publisher's job is to pitch the price at which X is worth Y to the largest number of people. So his part of the process doesn't compare it to a print book or anything else; his pricing strategy is based on historical data and projections from his past sales.
The claim that there are no distribution costs, by the way, is untrue. RPGNow takes 40% of the cover price of a PDF (nearly half). You could avoid this by selling it yourself, but you're unlikely to make a tiny fraction of the sales.
The problem with the PDF market is it's size. It's now too big - there are so many publishers out there that, as you point out, we're fighting for increasingly smaller slices of a pie. When ENP first launched years ago, our first product (Wild Spellcraft) was a PDF that sold thousands of copies in the first week. Now we consider 50 to be a good start; the number of customers per product has dropped to under 10% of what it was.
The question arises, then - is PDF publishing really viable? For 99% of people, no. At least, it's not going to make them more than a little beer money. For a few, a living can be made, but to be one of those few is no easy task.Posted 2nd November 2009 at 04:05 AM by Morrus - RPGNow's 40% is a consignment, not a distribution cost, in a certain way of looking at things, because it doesn't cost you much up front and costs in proportion to your sales. Not so with a book inventory.
I'm wondering if perhaps the value of a PDF has relatively decreased, but the publishers have been reluctant to move the price point. Not because people are not interested in new material, but because people are more educated about various free, low cost, similarly costed, and higher cost alternatives. Certainly, the swelling of the Wiki world and class compendiums has affected the garage industry for the 3e pamphlet type class book and thinly disguised older monster manual conversions.Posted 2nd November 2009 at 05:33 AM by pawsplay - "RPGNow's 40% is a consignment, not a distribution cost, in a certain way of looking at things, because it doesn't cost you much up front and costs in proportion to your sales. Not so with a book inventory."
Well, with all due respect, that's a pretty much semantic-only point. It's a real (and not small) cost, and on a successful PDF can add up to thousands of dollars. One has to take into account that for any given PDF, you're only going to see half of the sales revenue. It's a factor which *must* go into the pricing strategy.
Of course, I'm now experimenting with exactly what you're musing over - reducing the cost. I'm doing so, though, via the EN World subscription method. The PDFs work out at about half the cost or less to the consumer, but I get to keep *all* of the sales revenue. It's only been going a month, but I think it's a model which will work.Posted 2nd November 2009 at 03:49 PM by Morrus - I wasn't trying to make a semantic point. Pricing comes down to (sales X profit per sale). Every sale you make at a given price you would not have otherwise is more profit. Thus, in the PDF market, you are free to game S times P without worrying about incurring inventory costs.Posted 2nd November 2009 at 04:10 PM by pawsplay
- Yes, but your point was related to the price at which the product was sold, and the customer's valuation of that price. What I was trying to say is that the customer's valuation is not the same as the publishers; market forces either determine a viable price point in the middle, or they determine that the product is not viable.
There's only so low you can price a product before you're making so little money that it's simply not worth it. If I sell a product for $5, I get about $3 of that. If I manage to sell 300 copies of that product (and I don't), I make only $900 on a product which may have cost me $2000 to produce.
So what to do? We can lower the price further in the hopes that more people will buy it, but at that point we're only making, say $1.50 per sale, which means we now have to sell 1300 PDFs just to break even. An unrealistically high target. Or we can increase the price and need to sell fewer copies.
In general, I've found that lowering the price does *not* notably increase sales, and that increasing the price - to a point - does *not* notably decrease them. We're best selling at a price point of around $7, at which point we need to sell about 500 copies to break even. That's a tough sale - it takes months to sell that many, and in the meantime you need to find $2000 for your next product, and your next. So does one price it even higher? $10? $15?
My point is that I think that the costs of producing a PDF are underestimated by the consumer. I think they almost see it as something produced for free in many cases. But there are underlying solid business realities behind selling them.Posted 2nd November 2009 at 04:30 PM by Morrus
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