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I know a lot of people don't like POD, but Kevin Crawford at Sine Nomine Games has done quite well with backers getting a DTRPG discount code to get the POD version at cost. If you're not Wizards, Paizo, or a handful of others you don't have the cash flow to order print runs and warehouse them (even if you farm out distribution, you're paying that distributor rent for warehouse space somewhere in all your costs). Then, when you've established yourself, do offsets for later projects where you know probably number or even an offset of a prior POD books (which KC did with Stars Without Number's most recent edition.
I agree with your pricing concerns, I would go even farther down because you pay once to have the PDF made, after that everything else is profit. More so if it was a crowdfunded project, in those cases the art, formating, etc has been paid already.
It hasn't been paid until you've moved enough units to cover fixed costs. If your pricing is such that the physical offset print run is designed to cover fixed costs then, yes, PDF is nearly pure profit (there may be a handful of variable costs depending on your delivery method, although arguably most of those would be in business overhead).
However, if the pdf is not an afterthought and pricing is designed to cover the fixed costs after a specific number of units, pdf or print, are moved then, no, pdfs, at least early pdfs aren't pure profit.
Similarly, once fixed costs are covered print books are the same as pdfs in terms of all income over variable costs is profit (at least in a cost accounting sense...for both, company overhead comes out of that gross profit).
What intelligent PDF costing, such that your income from DTRPG/Geekstore (I think that's the name of the new one)/Warehouse 23 after their cut is identical to your income from a distributor for physical books minus the per book variable costs, is increase sales on both by lowering the cost on both.
A lower price reduces the incentive to sail the high seas to find the PDF.
But what I find more interesting is the tidbit about sine nomine giving discounts for the POD at cost, I might go that route when/if I publish my first game/gaming product.
Less hasle for me, less risk of some price going up and making me unable to fulfill.
That and having the fully indexed (not sure if hyperlinked haven't tried to do that yet) PDF without art ready to deliver to backers the moment they back the project.
This would mean every backer gets a 100% printer friendly (no art) PDF plus whatever they backed: No art PDF + Finished PDF or POD.
No disagreement. There are precisely two RPG people, Kevin and Greyhawk Grognard, who have to demonstrate to me why
not to buy into the their KS instead of just pledging follow pretty much that system: text done with a first draft art free available as soon as the KS closes (not when they back...there's a minor freeloader risk there and the 14-30 day it entails doesn't seem to cost a lot of backers) with the added benefit of providing crowd-sourced additional copy edit and access to at cost POD.
Oddly, the guys with well thought out business plans also seem to produce a higher average quality of product...funny that.