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Tom Hunter -> RE: Reduce the price of WitP to .01$ (11/29/2005 5:21:20 PM)
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quote:
ORIGINAL: Berkut
The problem is that cutting the price to a penny does not guarantee you sell it to any Chinese people anyway.
This is basic econ 101 stuff. When you have a product that has basically zero marginal costs, then your goal is to maximize revenue, pure and simple. You would rather sell 10 at $50 than 7 at $70. Ideally, you simply find the peak of the price/sales curve and price right there.
Of course, it is hard to know where that peak is, and what you REALLY want is for everyone who WILL pay $70 to pay $70, and everyone who will only pay $60 to pay that, and everyone who will only pay $50 to pay that, etc., etc. That is why there are things like "matinees" and "early bird specials" and sales. That is even MORE true for something like WitP. Which is why a graduated cost structure is a good idea, at least in theory. Of cours,e there are other factors involved (if people know it will get cheaper, they might wait and then end up not buying at all, value of continuing support, other products you are selling, perceptions, etc.)
So selling it for $.01 might get you lots of sales, but it is only worthwhile if it gets you enough to make up for the loss in per sales revenue, and at that price even the trivial marginal costs having to do with bandwidth and such becomes a factor.
So no, your suggestion is not really "just as clever". That doesn't mean a price cut is a good idea of course. But apparently it isn't a terrible one, since they just did exactly that...
"He was joking...[8|]" Terminus
NO! NO! I was not joking. I am completly serious[:'(] and Berkut has no idea what he is talking about [:-] my ideas are just better, and anyone with a differing opinion is just WRONG [sm=00000003.gif]
Going back into relatively serious mode, I am amazed at the response this got. Berkut, I am a very litteral guy, so I know what I am talking about when I say this: You are too litteral, you need to relax.
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