[helsinkiandrew]

> Intel, like any other succesful company, prices its goods based on what the market will pay, not what it costs to make

That may be true for Intel's CPUs but when products aren't produced by monopolies, those that have the cheapest costs and are in competition with others, often lower their prices to compete where the competitor can't. For example: AMD, graphics and motherboard parts

[prerok]

Well, I take it that it's always true and is a good lesson for anyone trying to set the price for their own product (like a hacked together side project one of us might be working on :) ).

My understanding is that the price should never be set based on production cost but on the value it brings to the customer. Thereby, a simple program you or I could hack together in a month, might have a cost of 10k in labor only cost, but if it would save the customer millions each year, they would pay a million for it.

So, you set the cost based on how much they are willing to pay, based on how much they would profit/save.

If another competitor offers a similar solution, you just undercut them by 10%, or invest another 10k for superior features.