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> They should justify price increases. I think the justification for most AI price increases should go without saying - they were losing money at the old price
by jsheard 1y ago
> They should justify price increases.
I think the justification for most AI price increases should go without saying - they were losing money at the old price, and they're probably still losing money at the new price, but it's creeping up towards the break-even point.
- brookst 1y agoCustomers don’t decide the acceptable price based on the company’s cost structure. If two equivalent cars were priced $30k apart, you wouldn’t say “well, it seems like a lot but they did have unusual losses last year and stupidly locked themselves in to that steel agreement”. You’d just buy the less expensive one that meets the same needs. (Almost) all producing is based I value. If the customer perceives the price fair for the value received, they’ll pay. If not, not. There are only “justifications” for a price increase: 1) it was an incredibly good deal at the lower price and remains a good deal at the higher price, and 2) substantially more value has been added, making it worth the higher price. Cost structure and company economics may dictate price increases, but customers do not and should not care one whit about that stuff. All that matters is if the value is there at the new price.
- fragmede 1y agoThat's not how pricing works on anything.