Self-Realisation

Features and marginal cost in the digital age

Good, better and best were the three price points.

Organizations had an easy way to distinguish between their various products. Adding more features cost more money, and so the Cadillac cost more than the Chevy.

Customers learned to associate more features with more expense with more luxury and exclusivity. And manufacturers were always on the lookout to add a feature that consumers valued more than the marginal cost of adding that feature.

In the digital age, all of this thinking goes out the window.

How much does it cost a car company to display the temperature outside? Well, it used to mean wiring a circuit, adding a sensor, creating a display. Now, it might cost them $1 (if that) to add that feature to a $40,000 car.

Even more radically, the marginal cost of just about every feature on a website or an app is precisely zero. Program it once and you can give it to everyone. The ‘good’ version is merely the ‘best’ version with some software turned off, which is fine if you don’t have any competition.

Good, better, best is going to have to start being based on something else.

Reblogged from: here

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