I like GOG and have bought a fair amount of content from here but am very puzzled by this games pricing particularly for the Hero Edition.

The exact same game is available on DVD from Ozgameshop for just A$39.99 as opposed to A$51.99.... a A$12 difference for no discernible difference in the game, in fact the DVD version doesn't have to be downloaded though I do have to wait for it to be delivered.

Admittedly you're about A$8 or A$9 cheaper than Steam but the Ozgameshop price is very attractive.

It's the price set by the publisher/developer. From what I also know, the retail version requires Steam and there has been a day-one patch (unsure as to its size), so you won't avoid the download completely.

Publishers always set the price, never the distributors.

I think the patch was about 100mb. If you don't mind that it isn't DRM-free or the delivery time, go with the cheaper one.

You could buy a whole other game with the extra money.

Yeah the pricing is very annoying. When I spent just a few minutes looking around there's a ~$15 CDN difference between GOG and other vendors. I know GOG doesn't set the price, but it's probably going to just make me wait a few months to a year for a sale so I can get the version I want to own.

Paradox pricing - no comments...After the success with CK2, they went insane....

its all supply and demand even with digital distribution.
Back when digital game sales started they were typically priced significantly cheaper than physical right from the start, and its because it was assumed less people would buy it that way for the normal price, so incentive was needed to get into that new market.Once digital sales became the norm the prices snapped back up.
Its the same reason why pc counterparts of cross-platform games used to be cheaper, because it was thought that pc gamers were dwindling to consoles, and people needed a lower price to be encouraged not to pirate. But lately pc gaming is "back" and so are the higher prices.
So in some areas you have cases where people are less likely to buy physical, and then they'll charge less for dvds. They charge what people will pay. (or what they think people will pay....)

I'd ve wary with most of these shops, but if you find a trusty deal, go with it. I purchased HM2 at nuveem at almost half the retail price. I'd have prefered to support GOG, but that was a too juiciy deal (besides, HM is one of the strange cases I preferred a Steam key).