Why does a bottle of water at a ballgame cost $5, at a food truck $1, and at a supermarket $0.15?
Personally, I find the ballgame price exploitive, but the food truck has added a bunch of convenience (and a few pennies of refrigeration cost) and that's worth paying $0.85 extra to a lot of people.
Difficult to calculate that given lock-in. If you've outsourced everything infrastructure related, you aren't in the same market without substantial upfront investments being made.
Amazon/Google/Microsoft/IBM et al. all know this, it's why there are significant incentives if they know you can walk.
Comments
Why? What do you mean by "the market can afford"?
Why does a bottle of water at a ballgame cost $5, at a food truck $1, and at a supermarket $0.15?
Personally, I find the ballgame price exploitive, but the food truck has added a bunch of convenience (and a few pennies of refrigeration cost) and that's worth paying $0.85 extra to a lot of people.
Companies try to set prices to either maximize their profit or to bully out competitors at a net loss.
You can translate "the market can afford" to "customers are still paying".
Difficult to calculate that given lock-in. If you've outsourced everything infrastructure related, you aren't in the same market without substantial upfront investments being made.
Amazon/Google/Microsoft/IBM et al. all know this, it's why there are significant incentives if they know you can walk.