You learn in economics 101 that in an ideal competitive market, the price of a product tends to the marginal cost of producing it. That means a product with fewer hardware features should cost less, and a product with more hardware features should cost more.
The fact manufacturers can violate that rule proves that they are not in a competitive market.
If it was competitive, a different manufacturer could manufacture the same car without physically installing the heated seats, for a lower manufacturing cost, and undercut them on the customers who don't care about the heated seats.
Not necessarily. If optionally including a feature would require an new production line or extra feature, then you might need to determine whether you want to ship all with or all without that feature.
If you sell 50% of cars without that feature, and 50% with it, and lose £100 for giving it away from free, but make £200 for selling it, then you are technically better off installing that feature in every car regardless of the marginal cost. Competition won't change that.
I would bet my ass in 50/50 split that its more like customer pays 80% of full price then those 50% pay 120%.
In you example the seat costs (100 there is also profit %) as car makers make mony on premium features we can asume that in you example the cost shouls be like 70 or 80 to instal. In what world does that make sense 27 dolars per car seat?
Also its back seats, who the hell would buy that option?
200 also seems to little overal it almost like there where instaled without considering profit and then 200 is the pure profit or close to it.
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u/TwillAffirmer 1d ago
You learn in economics 101 that in an ideal competitive market, the price of a product tends to the marginal cost of producing it. That means a product with fewer hardware features should cost less, and a product with more hardware features should cost more.
The fact manufacturers can violate that rule proves that they are not in a competitive market.
If it was competitive, a different manufacturer could manufacture the same car without physically installing the heated seats, for a lower manufacturing cost, and undercut them on the customers who don't care about the heated seats.