Heard about something different today, I don’t think I will consider it smart, but rather I will consider it different from the norm. So a TikToker made a video of Xbox and how they make profit and losses, typically, it cost about $700 to produce an Xbox console, but will get sold for $400, this is because they want to make it affordable for everyone. So how do they make their profit if they are already at -$300 loss, it’s simple, they make it affordable to everyone, and charge them to use it. You want to play an Xbox game, you need to buy the game and it will cost you $60, you want to access the game you need a pass that will cost you money, if you want to access some certain things you will need to buy some Xbox hardware.
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Now here is the psychological play on your mind, because it’s cheap, anyone can afford it, because anyone can afford it, and it’s great, it makes no sense to buy a gaming console and not play it. So you will over look those minor tens of dollars it will cost you to play it because you got it cheap. But what you don’t understand is that, that is where they make their profit from. Little drops of dollars every second make a huge pile of money later on. Some of the billionaires we have today got that amount of wealth because more people were willing to buy their product because of how affordable it is.
That is the demand, you can sell at a loss to make profit by selling a complimentary integral part of the product that is inevitable to have so you can always have a reason to get patronized by the same people who bought the primary product.