[japhyr]

> Price should be the maximum the market can afford while still beating ones competition.

This is such a frustrating perspective. I have so much respect for people who build projects and companies with a profit margin that lets them earn a comfortable living, without trying to extract as much as they possibly can from everyone around them.

[dougmwne]

This approach has an actual name in my industry. “The Nonprofit Starvation Cycle.”

The basic premise is that in a very resource constrained environment, there’s never enough money to invest in infrastructure and the continuous improvement of process and product. This affects most vendors that serve the nonprofit market exclusively. The price you can charge your customers lets you earn a modest profit and pay your employees, but eventually your chronic lack of resources to invest in your people and product kills your business when a fresh product with fresh funding comes onto the market. The cycle then repeats as that new vendor is unable to make the investments needed to keep up with the broader industry state of the art.

So file this under one of those things that sounds nice in theory but kills your business as competitors eat your lunch in practice.

[lotsofpulp]

Problem with this approach is your competitors who price higher will end up with a bigger pile of money which they can use to outcompete you for land, people, equipment, and other resources.

For example, you are bidding for a business, and buyer A models max profit/lowest costs, and buyer B models less profit/higher costs (such as paying employees more), buyer A is going to be able to offer more money and secure the asset.

[_lvbh]

Capitalism ensures that can’t happen (in most cases)