3 ms·
The marginal cost is next to zero, but the cost is certainly not. As to what something is worth, surely the cost of production is not the sole factor.
by FPGAhacker 7y ago
The marginal cost is next to zero, but the cost is certainly not.
As to what something is worth, surely the cost of production is not the sole factor.
- drucik 7y agoIf you are pricing it at cost plus, yeah, it can be worth near-ish the cost of production. Not things with assosciated costs like rnd, but think some of spare parts, for example.
- ineedasername 7y agoCost of production is a big factor. Economic theory generally holds that in a competitive environment over a decent period of time, prices will fall to just about the marginal cost of production. Think of the commodification of the PC in the late 90's/early 00's. Highly competitive environment drove prices to just a hair over costs. However, at least one company, Apple, held a very customer-friendly stance (not to mention good marketing) and was able to charge a decent amount above that as a result. (In some ways the good marketing was spreading the message of their customer-friendly stance)