Eh I think this analysis is pretty shallow and misses some key points. A. Is the product/service something approximating a commodity? If the answer is yes, th

Eh I think this analysis is pretty shallow and misses some key points. A. Is the product/service something approximating a commodity? If the answer is yes, then certainly premium pricing is not sustainable. In the case of cloud services it's not quite a commodity, but ultimately if the [cloud] service meets the customers technical and service/support requirements the main differentiator is going to be price. B. How high are the switching costs? Once a customer has invested in a certain product or product ecosystem, how expensive is it for them to switch? With Apple vs Android the costs are not necessarily high, but it takes a decent amount of work to transfer media and adjust to new ways of doing things. For some customers that may not be worth it. C. How big of a factor is branding? See Apple, GoPro, Amazon, BMW, Mercedes, Coach, etc. With a physical product the brand is often a such large component of the buyer's decision that even if there is a cheaper similar product it[the cheaper item] doesn't even get consideration. A Hyundai Genesis has many of the same luxury features as a BMW 5 series but is much cheaper. But, probably 90% of the time, the person considering a 5 series is never going to even set foot in the Hyundai dealership. In the IT context, the choice might be between a well-known software vendor and a much-cheaper alternative. But enterprise customers typically are going to go with the name-brand option, even if they don't need all the bells and whistles it provides. Many shops don't need something like Salesforce but they pay the premium just the same. D. How price sensitive is the target customer? Depending on the customer and the market, sometimes the customer doesn't really care if there is a cheaper alternative. They're happy with what they're doing and the price difference might be a rounding error to them so they just stick with what they've always been doing. So yes, premium pricing can't last for some scenarios but that's hardly a rule.