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In general, software has zero marginal cost, so in theory, it's price should fall near zero due to competition. So why is the subscription market behave so diff
by petra 9y ago
In general, software has zero marginal cost, so in theory, it's price should fall near zero due to competition. So why is the subscription market behave so different ?
And what can be done about that ?
- jgmjgm 9y agoIt's almost like the industry is not perfectly competitive...
- exolymph 9y agoEven with zero marginal cost, you can still have substantial fixed costs. And actually costs don't define prices — what the market will bear defines prices.
- chii 9y ago> what the market will bear defines prices. only if there's no competition, or there are substantial barriers to entry (such as regulation).
- beefield 9y agoWell, one could argue that the price is near zero. It is very rare software product that does not have somehow usable open source competitor. Then what you are paying for is something else than the zero marginal cost basic functionality. Like support, branding, network effect rents or something else.
- wowtip 9y agoBasically user's time invested. They know how to use the current software "I NEED Photoshop to do my job!!!". Even if some other software has the same or even slightly better abilities at a lower cost, the overall cost of switching is much greater. Especially if someone else is paying for the tools. Until some software appear that make user's competition more efficient and they are forced to learn new ways to not get out competed. Then the cycle starts all over again.