Will Bury's Price Elastisity


May 27, 2010

Kelvin Pryear

Eco/561 – Economics

      Will Bury will encounter some difficulties when trying to establish his digitized audio books company to the market.   Starting it up from a garage operation and now ready to take it to a more mainstream, Will Bury has put in some time in research on digital e-books and how his breakthrough will make it have a less automated sound when using. Mr. Bury must make decisions on how to increase revenue for the company, as well as achieving ideal production levels to keep the company propelled forward.   Other situations that will have to be addressed are determining how fixed and variable cost should be adjusted to maximize profit, along with identifying methods to reduce costs. He has also had conversations with a friend who has had experience selling on line which could have an impact on his pricing and sustainability. Choosing how to address the up and coming issues will be the key in Will Bury’s success as an entrepreneur.


How to Increase Revenue
      Will Bury must first take into consideration of supply and demand of the product he is manufacturing.   There are already e-books available which costs about $20 for a 500-page book.   This was considered a good substitute for his audio files which probed him to conduct further research that suggested that he could apply his digitizing process to more copyright-protected books for a royalty fee of $5 per book, plus a labor charge of scanning the book.   His first experience with Web site sales showed the small catalog of books was set at $10 for a title which copyright had lapsed, and $15 for a title that included a royalty fee.   In a 6 month time frame he sold 1,000 of the older books with a lapsed copyright and 2,000 of the newer books.  
      In going forward, Will Bury would like to know whether he should raise his prices because of the niche he is carving in the industry or lower prices...