Wednesday, March 09, 2011

An Elastic Demand

When demand is elastic, lowering the price increases revenue. In this case, a lot.

...when he lowered the price of his book The List from $2.99 to 99 cents, he started selling 20 times as many copies — about 800 a day, turning his loss lead into his biggest earner.

It helps that the marginal cost is essentially zero.

HT: Instapundit

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