Just a comment on the pdf versus print issues - it's not just the physical costs that are reduced by selling e-books rather than the dead tree.
They are also cutting out at least two layers of mark up: the distributor who takes the finished book and sells it to local gaming stores, and the gaming store themselves. Both of these have expenses which they cover by paying less than they charge for the books. The actual fraction of the amount paid for a dead tree copy received by CGL probably isn't that much and while some of that difference is represented by the cheaper retail price of a pdf, it's quite possible that there is still an greater profit margin as a result.
Not quite drakensis.
Typically, mark up costs are included in the final production tally under the produced product heading, and PDFs still suffer from some of these mark up costs if there is a legal distributor on the block (and the company's taking some risks.) As a customer you may not notice the markup for competition's sake, but the publisher sure does. For example, (and a reverse of the print norm) DriveThruRPG has to provide a percentage of every PDF sold back to the authoring company. (Assuming they do indeed do this, which seems to be the industry standard for music and all other forms of digital product - like apps!)
This system works for a couple of reasons. One, the cost of production for the PDF is covered by the organic in-house distribution network (in this case BattleCorps.) Meaning, in the final analysis typical sales on BC will have covered the cost of producing the product and then some - leaving this option the highest profit margin and a main drive behind using PDFs.
As a result, this leaves DriveThruRPG with the capacity to maintain a competitive product cost (say 2-5% below CGL's BC value), while still making a profit for themselves (having either - as some companies do - bought/leased rights to distribute the title, or simply paid a sold percentage), and provide the publisher (CGL) with additional return on the investment. It's a lower profit margin, but does illustrate exactly how flexible the profit margin of PDFs can be.
Alternatively, CGL forecasts a total number or total sold number (which is harder to do with sold percentage payments through distributors - but does happen) as a base number in their possible future product production costs. So if CGL believed they would sell X amount of products through DriveThruRPG and X amount through BC, they'd have a decent idea of what they could spend here, there, etc.
Print Products do work the same way, but include additional markup for materials, transport, storage, etc. - basically the whole infrastructure or system that supports it since you're moving physical product. Surprisingly enough, for the most part - the percentages are close to the same. Meaning, retail markup for a PDF through a distributor and retail markup for a print product through a distributor is roughly analogous to one another - profit margins usually remain consistent, taking into account lower retail price for a PDF, etc.
I'm not saying you'll make a ton of money with PDF only products or print only products, just that you can squeeze a few more pennies out of PDF if you've worked your production costs a little leaner and plan on physically printing it. (Why you ask? It has everything to do with retail price - but that's another discussion entirely!)
In general retail distributors get product at somewhere between 50-60% off of the cover price, while retailers usually get a discount of 30-40% off the retail price. (and they usually also have to pay the shipping costs to get the product.) The discounts generally depend on the volume that is purchased- buy more and you get a bigger a discount.
Spot on right here. Unless it has changed drastically, GW accounts received their product at exactly those percentages (50-60%), however they're not based on volume and the company ate shipping - part of their good company policy. It's easy to imagine then, what the actual cost of the product is when the markup is 50% over what the retailer purchased. (GW could be a bad example, being a monster company in excess of - if I remember correctly - 300 million USD.) Buying direct only widens the profit margin on product sold - making even better on the return. When retailers sell their product below retail value, they're banking on the principle that volume will account for the margin cut. This system works great for the publisher -
assuming people want to buy their product and they haven't produced more than they have sold - and places all of the "end" risk on the retailer. Remember, the publisher has already made their money - all the while affording the customer the notion of a reduce price.
Another reason why smaller publishers want to work with smaller print runs.
If PDF worked along the exact system it would run even better for both the publisher and the retailer, but doesn't if it's a digital only product.
