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The market doesn't really dictate your sales price. The market may dictate the price vs sales curve.

If you raise prices, usually unit sales will fall (although, not always) and sometimes there's a big cliff as you approach (or surpass) competitors' prices.



Try and increase prices by 1,000,000,000x and say the market doesn’t set prices. Markets give you wiggle room, but maximum profit is the goal not simply moving some units.


For those to don’t understand.

Your unit cost is some function based on the number of units produced. f(x)

The market will buy some number of units at any price point. S(P). Now you have two functions and you want the maximum of [ S(P) * (P - f( S(P) )) ]. Thus the market determines both the number of units sold and the price.

Of course that’s assuming you’re not selling a finite supply of something like say oil etc. And of course advertising and segmenting the market can further boost profits etc.




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