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by sokoloff 2170 days ago
Are producers obligated to only sell at cost-plus, or are they permitted to sell based on value to the buyer?

Do I cost an airline more money to transport me out on a Monday and back on a Friday than the converse? (I suspect not, but not staying Saturday night makes the former ticket more expensive on many carriers.) Does SSO really cost as much to provide as the “enterprise pricing” tier suggests?

Those higher priced business flights or enterprise tier purchases help subsidize the lower cost options, making it possible to sell a base version and a deluxe and get enough revenue to make the economics attractive.

I remember years ago shopping for a Jeep Wrangler. There was a ~$175 option for a larger gas tank (22 vs 18 gallons or so). If you bought the option, you got the same physical tank and a shorter pipe from the filler into the top of the tank (so more fuel would go in before the pump clicked off). To the buyer of the Jeep, that option was worth something. I’m OK with Jeep offering it. (I wouldn’t buy it, since you could easily install the “larger tank” with a hacksaw, but I’m sure many did.)

2 comments

Those higher priced business flights or enterprise tier purchases help subsidize the lower cost options, making it possible to sell a base version and a deluxe and get enough revenue to make the economics attractive.

The purpose isn't to subsidise poorer customers though. Rather it's to maximise revenue.

That's not what's happening here. People are complaining that functionality that is considered to be default is now being based on recurring fees.

Your analogy of the gas tank is exactly what is not happening. It would only make sense if you had to pay a monthly fee for the extra 4 gallons, and failure to do so would cause your tank to fill up earlier.