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Message: <blockquote data-quote="Mistwell" data-source="post: 188686" data-attributes="member: 2525">I really think some of the people posting in this thread are unrealistic about the relationships between number of units sold, price, and profits in this industry.  I think the major error might be in an assumption that everything is exactly linear.  For example, I think a somewhat common belief here that, if a book sells for $20 now and sells 1000 copies, and instead it sold for $10 and sold 4000 copies, that the creators would make twice as much money.  That isn't how it works.  Let's use an example of a new splat book called "Elitists and Peasants, A Guidebook to Aristocrats and Commoners" ("E&P" for short).  E&P costs $8 to produce.  Example 1: Not wanting to experiment with pricing, the creators of E&P decide to price the book at the same price as other splat books, and mark it ay $20.  The book ends up selling to 1000 people.  Net Profit: $12,000.  Example 2: The creators, wanting to reach a wider audience, decide to mark E&P to $10.  The book sells to 4000 people (four times as many as the $20 book).  Net Profit: $8000.Example 3: The creators only want to reach their hard-core fans, and decide to mark the book at $25, which is $5 more than other splat books.  The book sells to 500 people (half as many as the $20 book).  Net Profit: $8500.In these examples, the $20 price makes the most amount of money, the $10 version the least, and the $25 version somewhat in-between the two (showing that there are diminishing returns to increasing prices).  There are a few flaws with the results of course, since production costs do go down a bit as print runs increase.  However, because this is a niche market, print runs will not reach materially large quantities to make a big difference in the results.  And, of course, production costs vary for companies and products.  But, I think this is a fair example.The point of this whole exercise is to demonstrate that lower prices do not necessarily equate to higher profits, even if a LOT more people buy the product.  Generally speaking, in this market, it is not a smart economic move to lower prices and try to make up for it with larger volumne.  Production costs are simply too high, and the potential market too small, to make this pricing tactic work in this field.  It's a better bet that raising prices by about 25% will ultimately result in higher profits.  Even if you lose 25% - 30% of your customers, you still make more money.  And, it is rather unlikely that you will lose that many people, if your product is high quality.  There will be a highest possible price, beyond which you start to lose money.  I just don't think we have hit that perfectly balanced price yet (and persoanally think it is about 25% more than the current pricing on WOTC books).</blockquote>

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