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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About janaknmistry

Janak is a 1984 born, MSc and MBA educated from Mumbai, India. He is an avid traveller by choice and a solopreneur by luck. He has clocked many thousands of kilometres on a motorcycle. It was his journey to the Leh-Ladakh, which motivated him to write about his experiences throughout the journey in enjoying the beauty, pain and hardships. He has successful authored and published his book called “Journey in Time with Timeless Memories” which is released and published in Germany and available all over the world besides Asia and the Middle East. Apart from being an author he is an active book reviewer too and have reviewed books by some of the established authors in USA. Janak runs a motorcycle expedition co. called Jack n Jill-The Moto Expedition Co. He is passionate about travelling and photography, which helps him find a beauty and meaning in this wide busy world. It was his journey to the Leh-Ladakh which motivated him to write about his experiences throughout the journey in enjoying the beauty, pain and hardships. He is passionate about travelling and photography which helps him find a beauty and meaning in this wide busy world.
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