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'Economics In One Lesson' Apparently Doesn't Include Pricing; Kindle Version Most Expensive

from the let's-try-that-again dept

Copycense, who has done a really bangup job in pointing out some ironic ebook pricing decisions, has another one. The book “Economics in One Lesson,” by Henry Hazilitt is available new from Amazon in paperback for $7.95… or at $9.99 for the Kindle. Apparently, “Economics In One Lesson” either doesn’t include a section on pricing… or whoever did the pricing on the book didn’t read that section…

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Comments on “'Economics In One Lesson' Apparently Doesn't Include Pricing; Kindle Version Most Expensive”

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66 Comments
Thanatos (profile) says:

I never have understood why e-books aren’t tremendously less expensive than they are. No production costs what-so-ever, no overhead, no damaged books to return……They should be at least half the price that they are! Until they are, I won’t be buying any e-books or e-book readers. I do have Kindle, Nook and Kobo on my Droid X, but I have never bought a book for them, I only download the free books from their stores.

sehlat (profile) says:

Re: Re:

I’m sorry to break up a widely-held myth, but there ARE production costs associated with eBooks. The incremental cost of each additional copy is, of course, minuscule, but…

Books still need to be written, edited, copyedited including fact and continuity checking, proofread, and, for eBooks, they need GOOD formatting control to keep from driving readers crazy, just as pBooks need good typesetting for the same reason.

And if you’re talking about reprints of older books, those books still need to be either scanned, OCRd and proofread, or typed-up and proofread. Even for a reasonably short piece of fiction, say a 350-page paperback, it takes me between 10-15 hours to do a good job, and I do scan-and-OCR to get source texts.

The above endeavors require people, and people like to eat hot food and sleep indoors. This is why I never quarrel with paperback-level pricing for eBooks.

However, I do agree that anything over about $8 for an eBook, particularly fiction, is ridiculous. I’ve never forgiven the idiots who insisted on $20 prices for eBooks years after the paperbacks had come out at $7.99.

IrishDaze (profile) says:

Re: Re: Re:3 Re:

I am pretty sure that the AC’s point was that content creation and presentation cost for older works (such as “Stranger in a Strange Land”) was covered long ago.

I think he’s trying to say that 15 hours of scanning/OCRing/proofing doesn’t equate to >$7 per negligible incremental cost for digital distribution in his mind. I tend to agree with the thought.

I think the AC was trying to ask the OP how 15 hours of additional work on an existing older piece justifies the >$7 retail on all-but-free-to-distribute copies.

I don’t think he was comparing SiaSL to the OP’s example of $20 e-books after paperpacks are available, I think he was asking why such older works aren’t, say, $3 if the additional production cost to transform an older book to an e-bokk is 15 hours of labor.

rangda (profile) says:

Re: Re: Re:

If you advocate paperback pricing for ebooks then you are in effect advocating that the fixed costs of prepping the ebook + the server/bandwidth costs for distribution equal the printing, storage, and distribution costs of the paperback. IMO that is insane as I cannot imaging those two costs are even close. This fails my basic reality test as a consumer and $8 ebooks make me feel like I’m being ripped off. If my choice was $8 for an ebook or nothing I’d stop reading.

Worse, as long as Borders remains in business (how long this lasts is debatable) paperbacks will be cheaper than $8. Borders 30% off coupons are common as dirt if you are a rewards club member (free to join) so if you have a local Borders still in business your paper cost is closer to $5.60 + tax. So I can buy a paperback for $6 then resell it or share it with friends or buy an ebook for $8 or more and be stuck with it. Pretty bad choice IMO. From my point of view ebooks of fiction paperbacks need to be in the $3 range to justify me buying a reader.

bigpicture says:

Re: Re: Re:

BIG WOOP!! I do all this in my job every day. Nothing special about it, there are now software tools for all that. Get real, how much of that e-book price gets back to the people “who eat hot food and sleep indoors”, and how much goes onto bottom lines, to make money for people who didn’t do a dammed thing? The economic/control landscape is changing, with respect to scarce/non-scarce commodities, NOW IF ONLY WE COULD HAVE E-OIL!!!

David Beagan says:

Re: Re: Re:

To sehlat,

Good points all.

A free market does allow people to make dumb decisions — that is, decisions not in their best interest. I am sure there are many cases where selling an ebook at a lower price would result in greater net profit.

And in the final analysis, neither the production cost nor the marginal cost determines price. In a marketplace, price is determined by what people are willing to pay.

PaulT (profile) says:

Re: Re: Re:

Indeed, he was exaggerating about the being no costs at all. But, the costs are tiny compared to paper based media.

“And if you’re talking about reprints of older books, those books still need to be either scanned, OCRd and proofread, or typed-up and proofread.”

…and that needs to happen exactly once. While, again, Thanatos was overstating things a bit, once you have the master there’s virtually no costs involved beyond bandwidth and storage – and those are costs not usually borne by the publisher, and fairly trivial for a single title on a large retailer’s servers.

“The above endeavors require people, and people like to eat hot food and sleep indoors.”

…and they won’t get to do that on my dime if the eBook is overpriced. I’ll stick with a second hand paperback (new paperback are usually way too expensive for me to bother), or just not buy the book at all. I need to eat hot food as well, I don’t need to buy overpriced books.

However, I agree with you last paragraph. Lump in those idiots who insist on DRM as well.

Setho (user link) says:

Re: Response to: Thanatos on Apr 22nd, 2011 @ 6:54pm

The price is determined by how much people are willing to pay. Apparently enough people are willing to pay $9.99 for the kindle edition that they set the price at that amount evdntually, if sales taper off (demand drops), they’ll lower the price. I already bought it for Kindle do I’m one of those people who saw the value in having it instantly and was willing to pay the two dollars mire than the paperback.

Miko says:

Re: Re: Response to: Thanatos on Apr 22nd, 2011 @ 6:54pm

This is only a part of the calculation. Since the reproduction cost is (effectively) zero, it’s in their interest to sell a copy to anyone who is willing to pay more than zero, if they can do so in a way that won’t interfere with their ability to extract more from those willing to pay more. Obviously, this involves a knowledge problem. The ideal solution (from their perspective) is to lower the price gradually over time (to “sell” time preference) and to have larger sales at unpredictable intervals.

Casey Bouch (user link) says:

Re: Re:

The issue her isn’t that the books cost less to produce, as fellow readers are pointing out, it’s also about what people are willing to pay. There is a third issue however, and it’s owning the market. This problem could be solved if another company could rise up and sell the same books for less. However, I don’t see Amazon losing it’s hold on the e-book market anytime soon, so they can sell these books at whatever price they want.

Nicolas Martin (profile) says:

Even free

Setho is right, Marx was wrong. The economic value of an item is what people are willing to pay for it, not what it costs to produce. Economics in One Lesson is also available online for free, yet people are willing to pay infinitely more for other forms. Is this false economy? On the contrary, it is a fine example of consumer preference.

Economics in One Lesson is an excellent book. Read it for free here:

http://liten.be//hbtde

Drew (user link) says:

Come on TechDirt...

I’m a regular TechDirt reader, but Mike really missed the boat on this one.

First, the book is freaking free: http://www.fee.org/pdf/books/Economics_in_one_lesson.pdf. The digital copy is actually infinitely cheaper than the paperback if you know where to look.

Second, why wouldn’t a consumer potentially be interested in paying more for a book that is delivered instantly, is as light as a feather, and can be read in the dark, had the font changed, etc? I’m not saying I agree with their pricing but I am saying that it’s a reasonable hypothesis that a certain group of people would pay more for a digital copy than a physical one. Since the audience for this book as of late has been more technical people, it becomes even more reasonable.

Third, this is a really old book that’s been printed a lot. I’m sure they have paper copies lying around all over the place. Unlike a new book, where you have a text file on a computer somewhere, with an old book, you might have to pay someone to type it up, proofread it, etc. And 50 years after the book’s release, you’re towards the end of its sales life anyway. So the paper copies you printed in 1999 can be amortized over a higher number of customers than the ebook you formatted in 2011. Smaller market means higher price.

Fourth, why should the price of a good be pegged to its production cost? Mike is joking that the book’s publisher doesn’t understand pricing, but in reality it’s Mike who doesn’t get it. Pricing is always tied to what people are willing to pay. Oil is almost free to produce, just pump it out of the ground, but people are willing to pay a lot more for it. Cell phones cost much MORE than consumers want to pay, and hence the evil carrier subsidy. I spent a long time digging this ditch. Will you pay me for it? No? Because price is independent of effort.

Or, how about just read the book! (Do you take refunds on insults?)

> This process is the origin of the belief that prices are determined by costs of production. The doctrine, stated in this form, is not true. Prices are determined by supply and demand, and demand is determined by how intensely people want a commodity and what they have to offer in exchange for it. (p.111)

Anonymous Coward says:

Is an ebook edition really less valuable than a paperback?

I think people don’t understand the inherent value of having a digital edition that they can notate to their hearts content, carry the book with them along with quite possibly every book they’ve ever read, and can possess instantly through download. Good luck cramming your $7.95 paperback copy into your Kindle. Couldn’t it possibly be that at $9.99 an ebook edition is more valuable to our 2.0 culture, or at least those who read ebooks on a regular basis? I understand that it most likely does cost less to publish an ebook edition but we are also not taking into account predetermined publisher contracts with content distributors to sell them at a set price regardless of what the paperback edition costs.

cute article though, Mike

Frost (profile) says:

Economics in one lesson?

You don’t need a book for that. Heck, I can do it in quotations:

“Economics is extremely useful as a form of employment for economists.” John Kenneth Galbraith (1908 – 2006)

“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.” Laurence J. Peter (1919 – 1988)

“When the IMF and the World Bank force a country to cut wages, lay off workers, produce for export instead of their own people, and sell off public property to cronies for less than its value, that’s called “economic reform? “

And, of course, the reason the Republicans especially are so hot to nuke the US economy and are doing their best to destroy it:

?True individual freedom cannot exist without economic security and independence. People who are hungry and out of a job are the stuff of which dictatorships are made.? – Franklin D. Roosevelt

scwmd (profile) says:

ebook pricing

Maybe the high price would be more justified if the ebook cost a dollar or two less and it came with 10 reads and you could resell it like a used book! Until that happens, I can find plenty to download from my public library. To the person that prepares books for epublication/sale-the amount they pay you to prepare a book is very small number in the ebook pricing calculation. The publishers could pay you twice as much and it wouldn’t put a dent in their profits. Good luck with that idea! If you try to get more your work it will be contracted to China if you are not from there already!

Andrew D. Todd (user link) says:

Stuff For Phonies.

Reading takes time. You can’t buy being well-read. There are a lot of people who can’t face spending four hours a day reading books, for the rest of their lives, but who, nonetheless have an inferiority complex about how little they read. So there is a chronic market in tools for faking it. The Kindle is simply the latest such tool; along with the books on audiotape; the sets of the same books you read in high school, only bound in gilded leather at two or three hundred dollars each; and I don’t know what else. One of the things I remember learning in freshman economics, thirty-five years ago, is that objects of conspicuous consumption will sometimes have a reversed demand curve. Demand goes up as price increases. The buyer that Amazon has in mind for the Kindle is someone who feels validated by dropping a thousand bucks or so on it.

big al says:

middleman rip again

i’d like to make a few points as an avid reader…
1. as a new book is created today is is in digital form from it’s inception. in this form,it can be formatted,proofread,font set,etc. this is done by or for the author.

2. older books are converted to this digital format when reprinted.
this is done by the holder of the reprint rights.

3. hardback books are the most expensive to produce as cost are relatively high but the selling price and collect-ability is also very high..for this reason it also may have a high resale price,as in first editions…

4. paperback book are much cheaper to mass produce and sell for less than the hardback and in turn have less “value” as a collectable item,and a small resale or lending “value”.

5.ebooks cost almost nothing to produce as the “work”has been done for the tree books above.. and has no “value” as a collectable and no value as a resale item.

6. the publisher of the books may “force” the selling price through contracts (as was done to Amazon)to maximize profit
(to the publisher NOT to the author)

all of the above is done with “old school” thinking and we the readers and the author both suffer as the middleman rakes in the profits.

Michial Thompson (user link) says:

WOW Another little mikee moment

little mikee, your overlooking one thing here, the cost of production that you call meaningless is what makes companies that start pricing at cost of distrobution go bankrupt.

That meaningless number you talk about and claim noone should look at when pricing something for resale is usally the dominate part of long term cost, and if you don’t take it into account when pricing you might as well file for bankruptcy right now.

But then your business model has none of those costs, you just puke on the keyboard and surround it with advertising and your cornies do all the work.

Retail pricing may TREND towards the “marginal” cost, but you cannot price an initial release AT the Marginal cost or your going out of business pretty fast.

But then in your little world, if it’s not free, and it’s digital your being ripped off… maybe they should go sell coffee mugs and t-shirts and give the e-book away for free, but then you would be bitching that they didn’t fill the mug with free coffee and help you put the shirt on too.

abc gum says:

Re: WOW Another little mikee moment

Little condescending Michial Thompson
1) uses your where you’re belongs
2) misspells distribution as distrobution
3) misspells no one as noone
4) uses dominate where dominant belongs
5) cornies – wtf?

No one is perfect, but when belittling others it behooves you to reduce your own shortcomings.

big al says:

here we go again....

“What we have here is a failure to communicate”

the discussion IS about the price of a kindle ebook being HIGHER than a printed book.. which has almost no cost to produce and no residual “value”.
no said to give it away free..
as i said before this is NOT a money grab by the author (usually) but by the publisher to maximize HIS profit!!!

Memyself says:

I wonder if this is a repeat of the widely misunderstood Marvel Comics instance – Where a digital copy was priced at the standard industry price but the physical copy was priced at a lower than normal rate as a retailer incentive. Some people just about lost their minds over that one, assuming that the price of the digital copy was being inflated as opposed to the physical copy price being reduced to remain competitive against a more convenient product.

Lower price incentives for less desirable products are a good thing. At least, it is much better than an increased price per unit to make the less desirable product more profitable with fewer sales.

Justin Olbrantz (Quantam) (user link) says:

Re: Re:

Ahahaha. That’s an entirely plausible explanation, and the implications are humorous. Namely, that the publishers may be shooting themselves in the foot with the price-fixing arrangements they have with retailers, encouraging people to buy the low-margin versions over high-margin ones. Though I guess if it’s true that they’re actively discouraging e-book sales to preserve their dead tree business it makes sense.

sehlat (profile) says:

Re: Re: Re:

The problem with this sort of “active discouragement” is that it’s also seriously customer-hostile. We all know that the marginal cost of an additional eBook copy is effectively zero, so the tactic comes across as a deliberate rip-off, particularly to those of us who have gone almost 100% eBook.

That has a very negative effect on the customer’s willingness to give them ANY money for eBooks, since it encourages an attitude of “They don’t respect me, why should I respect them?”

It would be really bad for books and book publishers to be seen with the same contemptuous derision the MAFIAA have earned.

Memyself says:

Re: Re: Re: Re:

I’m not convinced this (or the other example I cited) are instances of “active discouragement”. An item that is not heavily in demand can be subsidized in a number of different ways, one of which is pricing it higher so you need to sell less another is selling lower and trying to encourage volume.

I personally prefer to see the lower “incentive” cost.

Print is falling behind in terms of demand, some publishers leaving print behind entirely. If it’s going to remain, we will see more and more instances of it’s cost going way up or way down with little concern for what digital customers believe is fair.

Really, this is just a glass is half empty or full scenario. As easy as it is to point and say that whoever priced this is thinking backwards, you could also say that whoever priced this is thinking forwards. By attempting to increase the demand so that the overall costs of print (remember, cheaper by voucher to produce) can be met, a larger base of readers can be reached. Which is a reasonable goal of any publisher.

But we’re not in the heads for whoever made these price decisions and we don’t have the data they used to make said decisions. Any assumption is speculation.

However, I will say that I fail to see why publishers should be overly concerned with digital customers while pricing their physical copies. (In most cases) Digital customers are not going to buy the physical copy anyway, and those that will pirate will pirate. A fraction might be pushed either way by pricing decisions (and I do favor cheaper ebooks), but I’m not sure I see that fraction being mathematically substantial enough to cause concern.

ashforma (profile) says:

Both arguments are right, both are wrong

Both sides are right, both are wrong.

eBooks should be cheaper than the print version, there is no requirement to print and distribute a physical object and of you are not buying in person, there are no packing and shipping costs. There are no costs associated with operating a store i.e. heating, lighting, delivery costs, property taxes, and staff costs which typically add 30% to 40% to the cost of a product, if not more.

Pick up an magazine and a card will fall out offering a subscription at 40% or more discount, where do you think that 40% goes, it goes to the store.

The argument that books still have to be written and the author compensated is true and we are not debating that.

The scale of the compensation doesn’t change whether it is an eBook or physical product. the fact is the work to author a book is the same, it all starts on pen and paper and MS Word. The final version is delivered to the publisher in the same format, an editable Word document. After it has arrived at the publisher editing and preparation for market is basically the same.

If a physical book is to be produced the files go to the presses, if it is an eBook, the files are PDFd and uploaded to the eCommerce engine.

I hate to say it but so long as people are prepared to buy into the argument that cheap eBook prices some how degrade the value of the author and how they are compensated they will remain more than the paper and publishers will take a bigger slice of the pie than they do with a paper book… eBooks priced they way this one is nothing more than a quick win for the publisher and lack of attention by the shopper.

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