Companies reduce the price of things all the times when their initial investment has been returned or they can source cheap materials to produce the same product. Most commonly you see this in the electronics sector. They are keeping the same profit, a company is designed to make money, but they're reducing the cost be it through manufacturing efficiency, reduction of costs through new material contracts, etc. The lower they can get their cost while retaining their same profit the better. If they can cut a $100 item by $50 while still retaining the same profit margin, they're going to do it, because more people are going to buy at $50 vs $100. That's just basic stuff. If you can sell a 1000 units at $100, or 10000 Units at $50 with the same profit margin, which one are you going to do?
They would sell 10,000 units at $100 if they could. The only reason they sell for $50 is not because of any reduction in the manufacturing cost but because of competition.
Companies reduce the price of things all the times when their initial investment has been returned or they can source cheap materials to produce the same product. Most commonly you see this in the electronics sector. They are keeping the same profit, a company is designed to make money, but they're reducing the cost be it through manufacturing efficiency, reduction of costs through new material contracts, etc. The lower they can get their cost while retaining their same profit the better. If they can cut a $100 item by $50 while still retaining the same profit margin, they're going to do it, because more people are going to buy at $50 vs $100. That's just basic stuff. If you can sell a 1000 units at $100, or 10000 Units at $50 with the same profit margin, which one are you going to do?
They would sell 10,000 units at $100 if they could. The only reason they sell for $50 is not because of any reduction in the manufacturing cost but because of competition.