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Comment by cochne | Hacker News Reader

I think as soon as you start looking at this as a spectrum question and not a binary question, this argument falls apart.

Lets say console charges 30% to increase profit from -a% to +b%

Lets say Apple charges 30% to increase profit from +x% to +y%

The argument boils down to "One should be allowed to charge if it makes something unprofitable profitable. Therefore consoles should be allowed to charge but Apple should not."

But wouldn't this argument imply it is also wrong for consoles to charge in excess of what makes their profit greater than 0%? Or is there some fixed small amount of profit for which this is ok, say 5%, and Apple's profit from phones alone already exceeds this small number?

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Extreme sustained profit margins are usually a signal that something fishy is going on.

> … profit margins …

… are completely dependent on what expenses are attributed to the revenue by the cost accountant. Is producing WWDC an App Store cost?

It's certainly accounted as a cost by Apple when it calculates its 37.8% gross profit margin.

A lot of brands have extreme profit margins on what they sell, but this is not considered illegal. Hell, a lot of brands are just reselling the same cheap goods as everyone else and charging more simply for having their name on it, but this is considered a perfectly valid business model.

>reselling the same cheap goods as everyone else and charging more simply for having their name on it

I've always seen this as slightly shady even if it is considered a valid business model.

It's often unclear if consumers are fooled about the true quality of goods, whether they are Veblen goods.

If it's a Veblen good or if they genuinely do value the brand name alone then I guess it's fine but it's not too exactly ethical to fool consumers about the quality of your products or what the brand actually represents (which is what consumers always say they value about brands - not the name itself).

I'm likewise not very sympathetic to the idea that these brands deserve government protection from knock offs. If consumers genuinely aren't bothered about whether their Nike shirt is "real" why does the government need to be?

I think it is the Extreme "Net Profits Margin" that is fishy.

Extreme Gross profits margin is entirely what enables marketing and funding for luxury brands.

Since when are the Courts in the business of determining which business models are valid and how much profit is justifiable? How about whether it’s justifiable because one of the party’s is taking a loss somewhere? I would say those sound like political questions, but in this case, it’s not really the government’s business either.

Profit margin can be an indicator of monopolistic behavior, ie if you have a monopoly, you may be able to charge unusually high profit margins and maintain customers.

It's not absolute PROOF though, because maybe you can charge high profit margins because you make really good stuff and people and are willing to pay more.

But in general, in normal competitive markets, if you have a high markup people will tend to seek\buy cheaper alternatives.

That is not an answer to my questions within the context of the comment I was replying to.

> But in general, in normal competitive markets, if you have a high markup people will tend to seek\buy cheaper alternatives.

That is in fact what happens. Apple rarely dominates in market share, and they do not have dominant phone market share. I can’t recall a time where they ever did have dominant phone market share.

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