Media
Wednesday, April 24, 2002Optimal Pricing
Reading about music costs yet again reminded me that there is a balance. Supply and demand achieve equilibrium at an optimal price, beyond which demand will drop, and below which demand will exceed supply.We've been looking at cars, and settled on a Honda CR-V. We decided on the CR-V for a number of reasons — the size, the slow depreciation, the quality of the design, the smooth ride, the sufficient engine power, and the number of features for the price. There's an odd thing about the CR-V and the Odyssey, which we were also considering: the dealers are asking, and receiving, the MSRP. Movement in the price only affects the accessories. I was able to bring that down through letting the dealer know that I was considering competing vehicles, such as the Subaru Forester. And I was able to bring the price down on competing vehicles, such as the Toyota Sienna, but the MSRP didn't budge.
Some may consider this evidence of collusion in price-fixing, but it's probably not: demand simply equals supply.
Our friends in the distribution business passed their optimal price some years ago. They need to increase demand for the product, or reduce the supply of the product, or both. But the product is not the medium; it's not compact discs: it's what's on the compact disc. To reduce the supply of this, you need to prevent people from singing with each other. There is no scarcity, so the industry's legal and technical gambits attempt to create scarcity. These attempts fail since they also reduce demand.
There is no need associated with these products, like there is with more tangible things such as food, clothing, and housing. Without packaged content, we make it ourselves. To increase demand, we must be persuaded to desire it, but there's another element: we must like it.
11:17:25 AM # Google It!
categories: Media
That's too bad. I guess I'll be watching even less TV than I already do. We were hoping to add a new show to our schedule, but it looks like The Court has gone buh-bye. That leaves us watching three shows: Survivor, The Sopranos, and Six Feet Under. We want to watch Frontier House. But will we remember to be home at that hour?
Remember, we want to watch. We do not need to watch. There is no such thing as a captive audience until we are locked in cells and strapped in our chairs with our eyelids propped up. You must persuade us to watch. Have you forgotten what your job is?