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.
Ulrich@feddit.org 1 week ago
What I’m saying is that competition is included in “what people are willing to pay”. Cost of production is not.
sugar_in_your_tea@sh.itjust.works 1 week ago
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.
Ulrich@feddit.org 1 week ago
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.
sugar_in_your_tea@sh.itjust.works 1 week ago
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.