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Software doesn’t have an incremental cost. The cost of one unit of software is the same as the cost of 1 trillion units of software. That’s not the same as real
by master_crab 9mo ago
Software doesn’t have an incremental cost. The cost of one unit of software is the same as the cost of 1 trillion units of software. That’s not the same as real world items.
- moron4hire 9mo agoIt doesn't matter if software has no marginal cost of production. Production cost has nothing to do with what you can charge for something. What you can charge for something, minus what it cost you to make it, is of course your profit and will help you decide if the effort is worthwhile, but it doesn't change the fact that the input cost has nothing to do with the output price
- jrowen 9mo agoIt does matter though. It is definitely a factor. There are lots of other factors, and different types of businesses with different margins, but they are all definitely tracking and optimizing those figures. Consumers know that software can be reproduced cheaply and carpentry cannot.
- zharknado 9mo agoAgreed. Competitors will undercut a price that ignores the unit economics, because it’s super easy to do.
- bigstrat2003 9mo ago> Production cost has nothing to do with what you can charge for something. On the contrary, production cost has a great deal to do with what you can charge for something. In a perfectly efficient market, someone who charges more than what an item costs will sooner or later get outcompeted by someone who charges less. I think it's fair to say that production cost isn't the only factor in what you can charge, but to say "it has nothing to do with the price" is going way too far.
- an0malous 9mo agoThe transactional cost is also basically 0
- cryptica 9mo agoStill, the cost of production is not 0 and the problem space is huge with no silver bullets; especially once you factor in things like business, scalability, regulatory and efficiency requirements.