With enough competition, someone is going to compete on price to attract customers. They obviously can’t sell for less than their costs (again, sufficiently competitive so you don’t get monopolies starving their competition), so that’s the floor for what they can sustainably charge.
It doesn’t matter what the service is, if there are enough viable alternatives, at least one of them will go for the value play. Customers aren’t willing to pay more than they have to, so they’ll be attracted to lower cost options.
Sure. But if people aren’t willing to pay more than the cost of production, games wouldn’t be made. The cost of production is the floor, and the cost people are willing to pay is the ceiling, and competition finds a line somewhere in the middle. The more competition, the closer it is to the cost of production.
if people aren’t willing to pay more than the cost of production, games wouldn’t be made.
Then that unmade game wouldn’t be relevant to this discussion.
The cost of production is the floor, and the cost people are willing to pay is the ceiling, and competition finds a line somewhere in the middle
Again, no it doesn’t. “What people are willing to pay” includes the competition. If one company undercuts another with a comparable product, consumers won’t pay for the more expensive one.
People would be willing to pay more if there wasn’t as much competition. People obviously want to pay less, and companies obviously want to charge more, so the real variable here is how competitive the market is. And the more competitive the market, the closer to production costs companies are able to pay.
The variable here isn’t how much people are willing to pay, that’s elastic and depends on competition. The real variable is competitiveness in the market, since that is what drives prices closer to production costs.
With enough competition, someone is going to compete on price to attract customers. They obviously can’t sell for less than their costs (again, sufficiently competitive so you don’t get monopolies starving their competition), so that’s the floor for what they can sustainably charge.
It doesn’t matter what the service is, if there are enough viable alternatives, at least one of them will go for the value play. Customers aren’t willing to pay more than they have to, so they’ll be attracted to lower cost options.
What I’m saying is that competition is included in “what people are willing to pay”. Cost of production is not.
Sure. But if people aren’t willing to pay more than the cost of production, games wouldn’t be made. The cost of production is the floor, and the cost people are willing to pay is the ceiling, and competition finds a line somewhere in the middle. The more competition, the closer it is to the cost of production.
Then that unmade game wouldn’t be relevant to this discussion.
Again, no it doesn’t. “What people are willing to pay” includes the competition. If one company undercuts another with a comparable product, consumers won’t pay for the more expensive one.
People would be willing to pay more if there wasn’t as much competition. People obviously want to pay less, and companies obviously want to charge more, so the real variable here is how competitive the market is. And the more competitive the market, the closer to production costs companies are able to pay.
The variable here isn’t how much people are willing to pay, that’s elastic and depends on competition. The real variable is competitiveness in the market, since that is what drives prices closer to production costs.
I don’t know how many different ways I can say the same thing and help you understand. It’s a trivial semantic argument anyway. Have a nice day.
We’ve certainly gone in circles. Hope your day is excellent as well.