While this was an interesting discussion -- that may apply, in general, to
selling things -- there were a few problems with it based on what (I think)
Paul had said...
Sean Luke wrote:
> Moral reasons aside, Paul's economic goal is to find
> the high point on that curve. That is, he needs to find the price which
> will give him the highest net profit.
That is incorrect. You have left out the important factor of Paul's time for
support. Buy selling less of the product, but at a higher price, he has to do
less support. Granted, he might make some more cash in the original sale if
he lowers the price and therefore sells to more people -- but they he has
those extra people to have to support.
The value of time can be quite high -- at least I consider mine to be in many
cases. Therefore, it could be significantly valuable to Paul to make less
money up front if it meant less support needed to be given to people.
> And there is no support and no established
> track record in the product as well.
When did Paul say that there would be no support for his ATA product at the 40
Euros price? I got the impression that he fully planned to "support" it for
those that bought it. Meaning that if they needed help and/or there was a
significant bug, it would certainly "support" them. Which, again, goes back
to the whole argument that charging a bit more and getting a bit less people
may be a better way to go -- even if it does NOT maximize his profit when you
look at it purely from a sales standpoint.
> Paul's betting that $50 is the maximum profit point on the curve.
I don't think he is. I think Paul is well aware that he might sell more of
the product at a lower price -- and, in the end, gross more cash. But, again,
you have to factor in the value of Paul's time when it comes to how many
people he needs to deal with.
So, Sean, I agree with your analysis when it comes to a standard marketing
view. But there are other factors involved that I think significantly change
the situation, as explained above.
- John...
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