3 ms·
> Absolutely, but that is fixed cost not unit cost. Isn't your unit cost = Cost of Goods Sold / Units Sold? Wouldn't the fixed cost producing the music be amo
by slantyyz 11y ago
> Absolutely, but that is fixed cost not unit cost.
Isn't your unit cost = Cost of Goods Sold / Units Sold?
Wouldn't the fixed cost producing the music be amortized (over some arbitrary number of years) into the Cost of Goods Sold to produce an accurate picture of unit cost?
> A better analogy to giving away iPhones would be to play a live gig for free.
Or how about this analogy: 3 months of free wireless service with every iPhone?
- fauigerzigerk 11y agoWhatever you may call it, I think the distinction between fixed cost and whatever each unit costs you on top of that is very important when we're talking freebies. The correct term is probably marginal cost.
- slantyyz 11y agoThat really depends. If you recover your fixed costs, sure. What to the top artists represent in terms of percentage of sales? It's probably more than 90 percent of the sales from less than 10% of the artists. For them, your argument is probably true. I would imagine it takes significantly longer for independent artists, especially niche artists, to recover their fixed costs, especially since music sales are basically a popularity contest.