E.g. I just bought a game 85% off on Steam (for a discounted series and I own all the previous titles). Assuming the publisher makes no profit from this sale, how do they make future revenue from me?
In: Economics
thought experiment for you:
You spend a year writing some software. You figure you spent $20,000 in outside costs, maybe you say your time is worth $100,000 salary if you’re generous. just making up numbers, doesn’t matter. So to cover your costs you need to sell the software and make at least $120,000… You think there’s maybe 250,000 people out there who’d be your ideal customer, but you’ll probably only get 10% of them if you’re lucky. But you want to make a little money too not just pay yourself back. So you price your software at $100. You do pretty good and sell 20,000 copies which nets you $200k…. It’s been a year or two and sales have started to dwindle… you could keep selling it for $100, or you could offer a discount, say 85%… so now you’re selling it for $25 and you sell another 2,000 copies which is another $50k.
Even though you offer a discount, it’s still profit for you because you’ve already recovered your costs, now you’re just trying to squeeze out as much money as you can.
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