Eli5: Why is the purchase price of e-books basically the same as print.

Question

I would expect e-books to be considerably cheaper than printed books, since there are reduced distribution and production costs. Yet the retail price often doesn’t match those savings versus an e-book. I would hope that the authors royalties would reflect some of the savings in production costs.

In: Economics

Answer 1

The price of anything is determined by what the market will bear, and not by the costs of its production. The only time the costs become relevant to pricing are where the profit margin is so small that it is not worth continuing to make it even to hold their position in the market.