Hacker News Reader

Comment by Shinkei | Hacker News Reader

Are you trolling? In an industry that is not regulated as a utility due to monopoly issues, profit margins are irrelevant. But in an industry that activity stiffles local competition with monopoly powers, this is all the info I need:

http://finance.yahoo.com/q/ks?s=CMCSA+Key+Statistics

The serious answer to your question is that the price a consumer pays should reflect the value of the service they are receiving and should be proportional to the cost of providing this product/service. If the business is subsidizing loses in one area by overcharging in other areas, then the model is broken... especially if you are punishing your customers that are looking for better value and have no other options because you lack competition. That is the very reason that we have protections from price-fixing schemes. It's the same issue as the Banks' overdraft charges. They are making huge profit off the most vulnerable of their customers.

View on HN

>should be proportional to the cost of providing this product/service.

I'm sorry, but I can't agree with that as a general principle. In this specific instance, with Comcast et al who benefit from monopolies, sure. But as a general principle, the 'value' of a product or service is whatever people are willing to pay for it. If I buy widgets in Asia for $1 each, and Americans are willing to buy them for $1,000,000 each, than that's their value.

Threads like this always bring out people on HN and elsewhere that simply don't think like business people.

You can choose "value" as your strategy and sometimes that can work in your favor. But many times the public is easily duped by your competition and what they have advertised as "value" and it's not that simple.

Laughing at 'don't think like business people.' If you believe that the primary goal of business is supposed to be 'make profit at any cost,' then yes, I don't think like those people and you should take some time to re-evaluate the purpose of business. If you believe that the primary goal of business is supposd to be, 'make a product or provide a service that is valuable,' then I think our humane values are in-line with our work.

Cases in point: Ponzi schemes, monopolies and cartels, price-fixing schemes, 'pump and dump' securities fraud, insider trading... need I go on? All of these things are illegal in the US--the supposed mecca of free market capitalism. Do you think these should be legal? Or you are simply arguing that everything that is legal is ethical? If you believe that, then I think you put too much faith in our legislature.

Edited to remove an inflammatory statement.

Well nothing in my statement says 'as a general principle.' In fact, I specifically said that in a genuinely free market, profit margin is irrelevant (it could be 2% or 100%). I agree, but they aren't working in a free market.

In a functioning competitive market, though, prices should trend towards some function of risk-adjusted costs, unless there is a barrier to competition like a patent, legal cap on supply, or other monopoly-type situation. That's supposed to be the whole advantage of capitalism, the invisible hand reallocating resources optimally to meet demand and everything. A large profit margin is just a market inefficiency, and should be rare and fleeting.

Reply on news.ycombinator.com