A Fair Price Indicates A Valuable Product

I usually don't disagree with Umair Haque, he's a real sharp economic/entrepreneurial thinker. But it drives me crazy when someone, even someone I like, tweets something like: "another publisher breaks with amazon, wants $15 for ebooks. strategic suicide."

Strategic suicide? Uh, no. No it is not. There is an irrefutable economic rule that has been in existence since the beginning of civilization. Here it is: People will pay a fair price for a good product.

Let me repeat that: People will pay a fair price for a good product. A good book is a good product. Is a good book worth $15? Hell yes! Of course it is.

The problem with our economy is that we overpay for products of lesser value and underpay for products of greater value. We will pay $3 for $.25 worth of brown laxative water that we drink once. (Confession: I'm a coffee drinker.) But we gripe if we have to pay $1.29 instead of $.99 for a song that makes us cry every time we listen to it, which we do hundreds of times, because it reminds us of the first time we fell in love.

A good product is worth a fair price whether it is delivered at a store, over the web, or even by owl post. There is a major economic and cultural danger in believing that because a product is digitized, it is worth less money. Such thinking creates an economics of selfishness and a culture of shallowness. It engenders businesses that get us to pay real money for products and services of little-to-no value: like ATM service fees and fake money in virtual games. And it turns thoughtful human beings into mindless consumers: people who will gripe about paying an author $15 for a book that enriched their mind (random pick), but who will pay 50% (or a lot more!) of their yearly income for a sports car that is marketed to make them feel more sexually vigorous (random not very racy example).

A fair price indicates a valuable product. But it does more than that. A fair price indicates an economy which places a reasonable value on a good product. A fair price is the only way for an economy and the humans who participate in it to thrive.

Comments

[Glanotte]

Thank you for being a voice of reason and being able to put into words what I was feeling. I would like to add that the market determines the price. If the price is too high, then people won't pay it and the price will come down. The only reason that Amazon was able to set the price was because they held a monopoly on e-book readers (sorry Sony, your early models didn't measure up), but that is no longer the case and the publishers actually have an alternative if they so choose.

[Martin]

Amazon believe the best way to convince people to buy a kindle is by offering books at a price advantage.
If the kindle has to compete with printed books at the same price why would you invest in a kindle?

[Matt]

The ebook market is still struggling to establish itself, what amazon was trying is to repeat apple's success with the 99cent songs on itunes, when itunes changed its policy to allow some songs at 1.29 it created a psychological barrier to purchase, they are forced to think about the price each time they click to purchase instead of just click buy.

I think alot of people are quite willing to pay a fair price for an ebook however price /= value. with digital distribution the cost of each copy is near zero. I do object to the distributors artificially keeping the price of an ebook high so as to avoid ebook sales cannibalizing hardcover sales. for example lets say the distributor made $3 per hardcover and the author $1, and the costs to produce the book(printing binding shipping etc) costs $15. a hardcover costs $19.
the ebook equivalent costs given a .01cent per copy cost.... $4.01
why should the distributor by changing formats get charge us for production costs that no longer exist?