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I wonder how does one put a price on a product like this. For example, if I am paying for a cloud VM instance, I could calculate the energy per CPU, hardware co

I wonder how does one put a price on a product like this. For example, if I am paying for a cloud VM instance, I could calculate the energy per CPU, hardware costs, etc. and ultimately come to a reasonable price. What would be the thought process for reaching a certain price for this specific product?

justusthane 6y ago
That's not really how pricing of anything works though. If you buy a cloud VM instance, you're not just paying for cost of energy and hardware costs—you're paying for the service and the R&D that goes into it. If you buy a $300 Japanese chef's knife, you're certainly not just paying for the cost of materials. Everything is priced based on what people are willing to pay. Supply and demand.