A new lawsuit was filed earlier this month in the UK that alleges Valve, owner of Steam, has been overcharging 14 million PC gamers and abusing its dominant position in the UK.
Well no shit they’ll look at the highest price on the market and use the same price everywhere, but the highest price is based on the fact that the distributor takes a 30% cut!
Again, you are very naive. What you’re describe is cost-up pricing which hasn’t been a generally used method of pricing goods and services for decades at this point. The reason is that doing cost-up pricing is a really good way to go out of business.
The way pricing works today is that sellers set pricing based on what they believe the customer is willing to pay. From there you work backwards accounting for retailer margin, cost of goods, transport, discounts, etc… To find your maximum cost per unit. If you can’t produce the product for less than the maximum cost, you either need to scale back your features, add a feature that would justify a higher sell price, or abandon the project.
Your notion that companies would lower prices if they had to give retailers a small cut is not borne out by theory or by observed real world outcomes.
You’re wrong. Doubling down won’t make you less wrong.
Well no shit they’ll look at the highest price on the market and use the same price everywhere, but the highest price is based on the fact that the distributor takes a 30% cut!
Again, you are very naive. What you’re describe is cost-up pricing which hasn’t been a generally used method of pricing goods and services for decades at this point. The reason is that doing cost-up pricing is a really good way to go out of business.
The way pricing works today is that sellers set pricing based on what they believe the customer is willing to pay. From there you work backwards accounting for retailer margin, cost of goods, transport, discounts, etc… To find your maximum cost per unit. If you can’t produce the product for less than the maximum cost, you either need to scale back your features, add a feature that would justify a higher sell price, or abandon the project.
Your notion that companies would lower prices if they had to give retailers a small cut is not borne out by theory or by observed real world outcomes.
You’re wrong. Doubling down won’t make you less wrong.