4 ms·

In this sort of case my needs would be something like 'at least 100HP'. Then someone says we have this 150HP engine here that costs $X and we are going to charg

In this sort of case my needs would be something like 'at least 100HP'. Then someone says we have this 150HP engine here that costs $X and we are going to charge you $X+markup for it (if they sold less than $X they would go out of business so for sure I will be paying for the full cost of the engine plus a mark-up). I say that's great, its better than my minimum requirements. Then they say, 'well actually, we are willfully sabotaging this engine with software so that it will never ever give you more than the minimum, but are still charging you for the full cost of its manufacture plus markup'. And I say, why would you deliberately make my engine worse. Just let me use it the way I want. And they say, because by sabotaging your engine we can make other people pay even more markup for the same engine. It's the philosophy that instead of charging more for making something better, we charge more for not making it worse. Like the mafia would charge you money to not bomb your small business.

pythonaut_16 1y ago
It seems you're thinking of the "full cost of the engine" as like material + labor to produce 1 engine. So profit vs loss is equivalent to whether you pay more or less than the unit cost of 1 engine. Car manufacturer thinks of the cost of the engine as something like research + development + testing + sourcing + manufacturing lines + materials for all engines produced + labor for all engines produced. So for the manufacturer profits are total revenue of units sold minus total costs. To maximize profits they need to identify market segments and figure out the best way to sell into them, in some cases by selling one physical model at different price points. If a manufacturer only targeted your market segment with a model you wouldn't get a cheaper car, you'd most likely get roughly the same car for the same price. (Ignoring design/feature compromises made to try to address one model to multiple market segments) Not that I agree with VW or holding features behind a subscription. Just that we can understand the unit economics of why. And anyway subscriptions for hardware features are a different matter entirely.
- Eddy_Viscosity2 1y ago
  Although I didn't say it, I was treating the 'full cost' as being all of the development etc also. It doesn't change the situation, the car company still needs to set the price to recover everything else they go under. In very special cases, companies do sometimes sell at a loss but even in this situation, purposefully making any part of the car worse is still wrong and bad. I see limiting HP with software as no different than charging extra to NOT take a hammer to windshield. 'Do you want to pay extra for the non-cracked windsheild? 'But the cars on the lot all look fine, no cracks' 'Unless you pay us $100, we will smash your windshield with a hammer before giving it to you. You also have to pay that $100 every month from now on, else the TOS says we can come to your house and smash your windshield. This has been shown to maximize our profits.'
  - ImPostingOnHN 1y ago
    > I see limiting HP with software as no different than charging extra to NOT take a hammer to windshield. The example seems a bit contrived and exaggerated. I don't think many people see things that way. A car with a suboptimally-tuned engine isn't equivalent to a car with a smashed windshield. The latter isn't even legal to drive. Also, thanks to the internet, you can know exactly the power output of the specific model and trim (perhaps even the specific vehicle) you'll be buying before you even step foot onto a lot.
    - Eddy_Viscosity2 1y ago
      The example was of course exaggerated as it was intended to showcase the absurdity of the situation. You could of course replace the smashed windshield, with them ripping up the seats or spraying the interior with skunk smell. The point is they are making something worse about the car. And yes you can know these things before you buy, though with modern TOS, there's no saying they can't change the terms and further downgrade your performance unless you pay up. My point is they shouldn't be allowed to do any of this in the first place. If its in the car you bought, you should have access to it.
      - ImPostingOnHN 1y ago

pythonaut_16 1y ago

It seems you're thinking of the "full cost of the engine" as like material + labor to produce 1 engine. So profit vs loss is equivalent to whether you pay more or less than the unit cost of 1 engine. Car manufacturer thinks of the cost of the engine as something like research + development + testing + sourcing + manufacturing lines + materials for all engines produced + labor for all engines produced. So for the manufacturer profits are total revenue of units sold minus total costs. To maximize profits they need to identify market segments and figure out the best way to sell into them, in some cases by selling one physical model at different price points. If a manufacturer only targeted your market segment with a model you wouldn't get a cheaper car, you'd most likely get roughly the same car for the same price. (Ignoring design/feature compromises made to try to address one model to multiple market segments) Not that I agree with VW or holding features behind a subscription. Just that we can understand the unit economics of why. And anyway subscriptions for hardware features are a different matter entirely.

Eddy_Viscosity2 1y ago
Although I didn't say it, I was treating the 'full cost' as being all of the development etc also. It doesn't change the situation, the car company still needs to set the price to recover everything else they go under. In very special cases, companies do sometimes sell at a loss but even in this situation, purposefully making any part of the car worse is still wrong and bad. I see limiting HP with software as no different than charging extra to NOT take a hammer to windshield. 'Do you want to pay extra for the non-cracked windsheild? 'But the cars on the lot all look fine, no cracks' 'Unless you pay us $100, we will smash your windshield with a hammer before giving it to you. You also have to pay that $100 every month from now on, else the TOS says we can come to your house and smash your windshield. This has been shown to maximize our profits.'
- ImPostingOnHN 1y ago
  > I see limiting HP with software as no different than charging extra to NOT take a hammer to windshield. The example seems a bit contrived and exaggerated. I don't think many people see things that way. A car with a suboptimally-tuned engine isn't equivalent to a car with a smashed windshield. The latter isn't even legal to drive. Also, thanks to the internet, you can know exactly the power output of the specific model and trim (perhaps even the specific vehicle) you'll be buying before you even step foot onto a lot.
  - Eddy_Viscosity2 1y ago
    The example was of course exaggerated as it was intended to showcase the absurdity of the situation. You could of course replace the smashed windshield, with them ripping up the seats or spraying the interior with skunk smell. The point is they are making something worse about the car. And yes you can know these things before you buy, though with modern TOS, there's no saying they can't change the terms and further downgrade your performance unless you pay up. My point is they shouldn't be allowed to do any of this in the first place. If its in the car you bought, you should have access to it.
    - ImPostingOnHN 1y ago