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Comment by stornetn | Hacker News Reader

> a wise businessperson would see this as a signal that their product offering doesn't actually match demand, and work to fill that demand

This is not necessarily true. It depends entirely on the shape of demand. By way of simplified example, imagine that there are two types of consumers equally distributed: those willing to pay $1000 and those willing to pay $100. Unless you can distinguish at time of payment between these users and charge them different prices (without possibility of resale), you will always be better off forgoing half of the market and charging only the higher price.

It's possible that the business has estimated things incorrectly and is acting suboptimally, but I think it's as least as likely that they are maximizing profits the way we'd expect a rational business operator to do.

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> but I think it's as least as likely that they are maximizing profits the way we'd expect a rational business operator to do

I think you grossly overestimate the ability of most large businesses to behave rationally form an organizational profit maximization perspective. It would just as likely or even more likely be something like personal wealth maximization by an employee or group of employees, personal relationship improvement, ego gratification, maintaining/improving social standing, effort minimization, etc.

This is even more so for a monopoly rights holder like La Liga.

> It would just as likely or even more likely be something like personal wealth maximization by an employee or group of employees, personal relationship improvement, ego gratification, maintaining/improving social standing, effort minimization, etc.

Do you have any evidence for this?

> I think you grossly overestimate the ability of most large businesses to behave rationally form an organizational profit maximization perspective.

You're free to think this but it doesn't really square with common sense. Profit maximization is a stated goal of large orgs, and by definition they're doing ok at it.

In any case, your comment does nothing to diminish OP's point: that the shape of the demand matters. What the shape of the demand is in this case is an empirical question and you haven't provided any evidence.

People and businesses don't behave rationally. They behave with bounded rationality [0]. That is, they make the most rational decisions with information available to them. No one is working with perfect information. This leaves plenty of room for them to leave money on the table.

With that said, I have no guarantee that these companies are leaving money on the table. We also have no guarantee that they aren't. The best you are going to be able to do is create a model. Models are not reality. Models use assumptions. You're making two huge assumptions. One, that the models assumptions are correct. Two, the people interpreting the model are doing it correctly. Humans are imperfect, we make imperfect models, those models are interpreted by other imperfect humans. Making concrete statements either way is silly in my opinion.

[0] https://en.wikipedia.org/wiki/Bounded_rationality

To go further, in your example it continues to pay out even if the $100 crowd outnumbers by 8 to 1. So it seems they could forego nearly 90% of the population and still profit more at a $1000 price, unless I’m missing something.

Indeed, this is called inelastic and elastic demand.

Edit: Hacker News, plz, it's not that complex guys :-) one person willing to pay $1000000000000000 is better than 100 people willing to pay $1

Isn't that basically why some f2p games that are p2w can alienate a ton of people as long as they have a few "whales"?

Yes, until they alienate too many cause these games depend on a big player base. Then the whales leave too and having alienated all the non-whales the business is usually dead.

Then some of the art and assets are rotated, and the new Battle Slime Kings 2 gets released and featured in the App Store.

Everyone would be willing to buy a Laptop for $5 but pricing one at $500 doesn’t mean demand isn’t matched or the business model is flawed. It costs more than $5 to make a laptop. This is an extreme case but often I see the argument that it’s ok to pirate because it’s too expensive is a flawed argument. Lots of people want things that are cheaper but it isn’t always possible. That being said some companies abuse this and over charge a lot, but nonetheless the argument that free is because it’s too over priced is a flawed argument. Otherwise I could use the same logic and steal a laptop and say it’s he business fault for selling it at $500 instead of $55

The piracy argument is different to stealing because of the simple fact that there is an infinite supply of digital goods. If I steal a laptop, there is a real cost to the supplier, because they have 1 less laptop to sell. If I pirate a piece of software, they only lose out if I would have bought the software had piracy not been an option. "lost sales" are hard to quantify.

Disclaimer: I don't pirate, and I sure as hell don't steal.

There is a virtually (that bandwidth and storage aren't infinite) infinite supply of any digital good.

If nobody pays but everything else keeps costing money, there won't be any new digital goods. So you can't say there's an infinite supply of digital goods.

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