OS costs

[Piercarlo Grandi]

On 31 Aug 90 20:24:33 GMT I wrote:

pcg> On 30 Aug 90 03:23:04 GMT, richard at pegasus.com (Richard Foulk) said:

richard> Guessing the optimal price is perhaps a marketeers most
richard> difficult job.  But there's always the possibility that if you
richard> reduce your price by 50% you'll increase your sales by 200%.
richard> With no way to prove it except to try it.

pcg> It is my impression is that they are trying very hard to limit
pcg> sales, and thus will strive to keep the price as high as they can.

pcg> In case this sounds crazy to you, sales must be backed by capital;
pcg> if you are short of capital, the best way to increase absolute net
pcg> income is not to increase sales, but price; this will reduce sales
pcg> and thus the demand for capital.

Just to make sure that everybody understands (somebody that wrote me
somewhat obnoxiously by e-mail did not): this is about *UNIT* sales.
This was _very_ clear from Richard Foulk's comments, that indicated a
tradeoff between unit sales and price (in his example sales revenue
would grow 50% -- units sales grow to 3 times the original at half the
price).

richard> It is my distinct impression that ISC and SCO are erroring on
richard> the high side.

Given that it may be possible to get the same sales *revenue* selling
many units at a low price (higher market share) or less units at a high
price (lower market share) this implies that the former is always
preferable -- this is not so, if you are constrained by capital. There
may be other reasons, but I have (let me repeat myself) the impression
that ISC are already badly strained by market growth...
--
Piercarlo "Peter" Grandi           | ARPA: pcg%uk.ac.aber.cs at nsfnet-relay.ac.uk
Dept of CS, UCW Aberystwyth        | UUCP: ...!mcsun!ukc!aber-cs!pcg
Penglais, Aberystwyth SY23 3BZ, UK | INET: pcg at cs.aber.ac.uk