Hacker News Reader

It doesn't matter if software has no marginal cost of production. Production cost has nothing to do with what you can charge for something. What you can charge for something, minus what it cost you to make it, is of course your profit and will help you decide if the effort is worthwhile, but it doesn't change the fact that the input cost has nothing to do with the output price

View on HN

> Production cost has nothing to do with what you can charge for something.

On the contrary, production cost has a great deal to do with what you can charge for something. In a perfectly efficient market, someone who charges more than what an item costs will sooner or later get outcompeted by someone who charges less. I think it's fair to say that production cost isn't the only factor in what you can charge, but to say "it has nothing to do with the price" is going way too far.

It does matter though. It is definitely a factor. There are lots of other factors, and different types of businesses with different margins, but they are all definitely tracking and optimizing those figures.

Consumers know that software can be reproduced cheaply and carpentry cannot.

Agreed. Competitors will undercut a price that ignores the unit economics, because it’s super easy to do.

Reply on news.ycombinator.com