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Comment by JustSomeNobody | Hacker News Reader

Why is it not ok to disable some features on a device and sell it cheaper?

How is this anti-competitive? How is this customer-unfriendly?

Because giving something more to the customer would not cost them anything. There used to be this belief that things are worth as much as the cost to produce them + some margin for the maker. And things were made so they will benefit their consumers. Unfortunately more and more companies these days look for ways to get not what something is worth but to get from consumers as much as possible, to squeeze them like lemons.

It's a business decision which will make them more money.

In Universe A they sell only the most powerful version of the product for 1x price and them make some money.

In Universe B they sell the most powerful for 1x AND a slightly less powerful version for 0.9x price and they make MORE overall profit.

I'm not saying that's a bad thing. There are customers who will want to pay less and not need the most powerful product.

I fail to see how the company in Universe B is morally worse than those in Universe A. One could argue they are superior, in that they offer more choices.

If the less powerful costs the same to make and is just crippled full version, then for me it’s not ethical and calling it a choice is a farce.

Btw obviously I’m not talking about software. Im not talking about pricing things with no marginal cost.

"Moral" is a loaded word to throw in here. I wouldn't use that term. Customer-unfriendly etc. I think fit better. And if we're positing hypothetical universes, let's a Universe C: They give customers the faster version that doesn't cost them any more, and as a result they build more brand loyalty and good will, leading to more sales, market share, etc.

But profits are somewhat besides the point: I'm saying simply that some policies are not customer friendly. Whether or not you consider that to be good or bad may very well depend on whether you are a customer or a shareholder.

Exactly right. It is acceptable to argue that the pricing is too high and unfair. But to say the structure itself is wrong isn't correct.

Breaking up the total price of a product by it's component features and then creating variants of the sold product with certain features enabled vs disabled and hence having different total prices is one fair way of create products that are tailored to customers needs.

When pricing individual features, the prices may not correlate relative to each other. There may be factors like which features are most used by which segment of customers and how valuable the feature is to that segment customer and hence how much they are willing to pay.

Demanding that all the features should be sold at the lowest total cost doesn't make sense. We don't do this in any other domain.

Key error in your argument: "would not cost them anything."

Of course they would lose profit on the customers that would pay for X instead of .8X. "if i can buy the same hardware at 20% less cost why would I buy it at the full cost?"

This is not an error in my argument. You just do not understand what I mean by “customer-friendly(ethical)”.

> Because giving something more to the customer would not cost them anything.

Even if that were true, so what? Some customers are willing to trade less features for less money. It doesn't matter that other features are present but disabled. Those customers got exactly what they paid for. They're not getting cheaped out on.

One thing is trading features for money, the other is artificially crippling the product just so you can release a cheaper version. For what, to justify unreasonably high price for complete version?

The second part sounds kinda like “They don’t know they got screwed, so it’s completely fine”.

This is like the trolley problem of software licensing:

Scenario 1: Product has 3 features at x Price. New license is created with 4 features at price x+y

Scenario 2: Product has 3 features at x+y Price. Slimmed down license is created for a product 3 features at x price.

People applaud the former order, and cringe at the latter, but (at least in this artificial description, after the second option is available, the scenarios are equivalent. But something about loss aversion seems to trigger a moral sentiment.

They didn't get screwed. They paid for X features. That's not getting screwed. The fact that +Y features are turned off is of absolutely zero consequence.

The marginal cost is next to zero, but the cost is certainly not.

As to what something is worth, surely the cost of production is not the sole factor.

If you are pricing it at cost plus, yeah, it can be worth near-ish the cost of production. Not things with assosciated costs like rnd, but think some of spare parts, for example.

Cost of production is a big factor. Economic theory generally holds that in a competitive environment over a decent period of time, prices will fall to just about the marginal cost of production. Think of the commodification of the PC in the late 90's/early 00's. Highly competitive environment drove prices to just a hair over costs. However, at least one company, Apple, held a very customer-friendly stance (not to mention good marketing) and was able to charge a decent amount above that as a result. (In some ways the good marketing was spreading the message of their customer-friendly stance)

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