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Message: <blockquote data-quote="Sholari" data-source="post: 920535" data-attributes="member: 6059">My guess is what Paizo is trying to do by combining Dungeon to Poly is to employ a bundling strategy, where the products are negtively correlated.  Theoretically, by employing a bundling strategy they can increase sales while decrease their distribution costs.  By choosing two magazines that have very different audiences the value each of the "two" audiences' places on the magazine is negatively correlated, which under some conditions is supposed have a bigger impact.  My guess would be this is why eliminating bundling is not an option.  Because, they figure some of the original Dungeon audience will be upset by the bundling but there will be enough extra revenue to make up for this.Here is an explanation of this technique I found off the Internet so I can not take credit for it myself..."Consider two magazines, A and B, say "Dungeon Magazine" and "Polyhedron Magazine." Suppose that among one million potential customers, book A is valued at $1 by 100,000, at $2 by another 100,000, and so on, up to $10 by 100,000, and suppose the same distribution of valuations applies to book B. Suppose further that the valuations of the two books are independent.  Thus there are about 10,000 customers who value book A at $3 and simultaneously book B at $5, and similarly about 10,000 customers who place values $9 and $2 on A and B, respectively.  Under these conditions, if the publisher is to sell these books separately, revenue will be maximized when the price of each is set at $5.  About 600,000 people will purchase each book, for total revenue from sales of both books of $6,000,000.  (This maximum is not unique, as the same revenue can be achieved by pricing each book at $6, in which case about 500,000 people will buy each.) However, if the two books are sold together, revenue can be made much higher.  Since there are 10,000 people who value the bundle at $2 (exactly the 10,000 who value each book at $1), while there are 90,000 who value it at $10, a short calculation shows that the revenue-maximizing price is $9.  At the price of $9 per bundle, 720,000 people will purchase it, for total revenue of $6,480,000, exactly 8% higher than if the books were sold separately.  Since profits would be the revenues minus the fixed costs of producing the books, they would increase much more dramatically."My argument is there is probably enough of the Dungeon audience who place no value on the Poly magazine that the bundling strategy is no longer effective.  This second example would be more applicable and is the reason why so many people are disatisfied."What weakens the case for bundling is that most people have nointerest in most goods.  In the example of the books "Dungeon Magazine" and "Polyhedron Magazine," a more realistic assessment might be that in a population of 1,000,000, each book would be valued at zero by 90% of the population, with 10,000 valuing it at $1, 10,000 at $2, and so on.  If the 100,000 people who do place a positive value on book A are distributed independently of those who value book B at $1 or more, then there would be only 10,000 people who place positive values on both A and B. Bundling under these conditions would not produce much benefit."Dungeon is for game master who needs to save time and Polyhedron is for gamers that like to experiment with different d20 game, two very different audiences.  Even looking at real world examples why don’t publishers force bundle Scientific American with Seventeen magazine or Boy’s Life with Modern Maturity?  Theoretically, the strong negative correlation between the two examples would mean that that bundling would increase sales yet I don’t think these audiences would stand for this.  Imagine kids being forced to buy magazines articles for the 50+ crowd.   Why does bundling work so well for bundling Microsoft Word with Microsoft Excel?  The big difference is most of the initial cost is in development.  There is very little cost after the software has been developed.  In other words, you do not have to sacrifice on the quality of Microsoft Word to include Microsoft Excel, because most of the money has been spent regardless of whether you bundle or not.  Unfortunately, in bundling Dungeon and Polyhedron this is not the case or we would have more than just one adventure per issue.  Anyway, I think my tab is up to 4 cents at this point, so I will end here.  Source: The bumpy road of electronic commerce, Andrew Odlyzko, AT&T Labs - Research, Preliminary version, August 9, 1996</blockquote>

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