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Generally the goal there is to equal out by increasing volume. Decreasing prices and not making up for it is kinda an oops. And "less than expected" - I mean,
by FireBeyond 3y ago
Generally the goal there is to equal out by increasing volume.
Decreasing prices and not making up for it is kinda an oops. And "less than expected" - I mean, people are not unaware of the price reductions, so that says there was some failure along the way.
- wolverine876 3y ago> Generally the goal there is to equal out by increasing volume. The economics are a bit trickier: For any good or service, the demand curve is curved; it's not x * y = R, where R is some fixed revenue number. If you think about it, of course you can affect revenue by changing the price. Otherwise Tesla could charge $1 or $1,000,000 per car and bring in the same revenue and profit. On the curve there's an optimal point where volume * price = maximum marginal profit. The Tesla VP of sales chose the best point that they thought was possible, and it turned out to not work. Now they have shifted to a less potentially profitable point. To sum up: Tesla probably is less profitable at this price point than they planned on for the former price point.