This is what most companies seem to be aiming for these days as well, along with business-to-business sales as opposed to business-to-consumer sales.
For a long time now, many companies have stopped trying to increase profits by increasing the customer base, but rather are shrinking the customer base with intent to make up the difference and then some with increased costs.
I did some back of the napkin math on the price increases for Xbox Game Pass the last time around, and the numbers were basically that they could lose about a third of their customers for Game Pass and still break even, so as long as they lost less than a third of their customer base, they were still creating more profit than before. They would need to be pushing losing fully half of all subscribers for it to make a negative dent on their profits.
This is late stage capitalism. This is rent extraction where they are indeed happier to make $0 because their customer base was already so vast that they can afford to have a significant portion of those customers bail and they will still make money.
its pretty rampant these days. My dad had been using a web hosting company since the 90’s, and recently they got bought by some investment bank that just raised prices about 6x with barely any warning. He had to scramble to migrate the bulk of the stuff he had on there to somewhere more sane.
This is what most companies seem to be aiming for these days as well, along with business-to-business sales as opposed to business-to-consumer sales.
For a long time now, many companies have stopped trying to increase profits by increasing the customer base, but rather are shrinking the customer base with intent to make up the difference and then some with increased costs.
I did some back of the napkin math on the price increases for Xbox Game Pass the last time around, and the numbers were basically that they could lose about a third of their customers for Game Pass and still break even, so as long as they lost less than a third of their customer base, they were still creating more profit than before. They would need to be pushing losing fully half of all subscribers for it to make a negative dent on their profits.
This is late stage capitalism. This is rent extraction where they are indeed happier to make $0 because their customer base was already so vast that they can afford to have a significant portion of those customers bail and they will still make money.
its pretty rampant these days. My dad had been using a web hosting company since the 90’s, and recently they got bought by some investment bank that just raised prices about 6x with barely any warning. He had to scramble to migrate the bulk of the stuff he had on there to somewhere more sane.