With enough competition, someone is going to compete on price to attract customers. They obviously can’t sell for less than their costs (again, sufficiently competitive so you don’t get monopolies starving their competition), so that’s the floor for what they can sustainably charge.
It doesn’t matter what the service is, if there are enough viable alternatives, at least one of them will go for the value play. Customers aren’t willing to pay more than they have to, so they’ll be attracted to lower cost options.
Sure. But if people aren’t willing to pay more than the cost of production, games wouldn’t be made. The cost of production is the floor, and the cost people are willing to pay is the ceiling, and competition finds a line somewhere in the middle. The more competition, the closer it is to the cost of production.
People would be willing to pay more if there wasn’t as much competition. People obviously want to pay less, and companies obviously want to charge more, so the real variable here is how competitive the market is. And the more competitive the market, the closer to production costs companies are able to pay.
The variable here isn’t how much people are willing to pay, that’s elastic and depends on competition. The real variable is competitiveness in the market, since that is what drives prices closer to production costs.
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In a sufficiently competitive market, the maximum is related to costs.
Proton is trying to get cheap marketing.
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With enough competition, someone is going to compete on price to attract customers. They obviously can’t sell for less than their costs (again, sufficiently competitive so you don’t get monopolies starving their competition), so that’s the floor for what they can sustainably charge.
It doesn’t matter what the service is, if there are enough viable alternatives, at least one of them will go for the value play. Customers aren’t willing to pay more than they have to, so they’ll be attracted to lower cost options.
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Sure. But if people aren’t willing to pay more than the cost of production, games wouldn’t be made. The cost of production is the floor, and the cost people are willing to pay is the ceiling, and competition finds a line somewhere in the middle. The more competition, the closer it is to the cost of production.
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People would be willing to pay more if there wasn’t as much competition. People obviously want to pay less, and companies obviously want to charge more, so the real variable here is how competitive the market is. And the more competitive the market, the closer to production costs companies are able to pay.
The variable here isn’t how much people are willing to pay, that’s elastic and depends on competition. The real variable is competitiveness in the market, since that is what drives prices closer to production costs.
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