I’m not saying anyone should price gouge, but let’s say someone is selling these at $180 each and $60 is profit and they have 2,000 potential sales this year (which I doubt any of these will reach). The maximum they could make is $120,000 which is enough to support about 1-3 people in the US.
Now let’s say 9 other devices are released, and in addition to taking equal shares of the customers (200 each), a couple of them are made by people in countries with a lower cost of living and maybe lower manufacturing costs and they somehow price theirs at $120 (it only gets worse for other sellers if that number is even lower).
The first company lowers their prices to $135 to compete and still make something, but they still look like the expensive option and their profits are down to $15. Now their maximum profit for the year is $3,000. That’s enough for one person in most of the US to live on for a month or maybe two if they really stretch it.
Most of those businesses will fail, and the ones that survive will probably still struggle.
I’m no fan of corporations; I despise walmart, amazon, etc. and I believe every business should be owned by the people who do the work (not just one of them), but in the system we’re working with right now small businesses are about the best we’re going to get.
When too many small businesses produce similar products for what is still a niche market though, few if any of them will survive.
“More businessess operating helps everyone” sounds nice and if you look at specific aspects such as potential overall market growth or driving innovation it may have some truth to it, but overall I think it’s simply not the reality in cases like this.
Also, for anyone questioning my example, I know those numbers are pulled out of my ass and they’re probably not quite what’s going on in this market, but it’s probably not crazy far off and the general dynamics of the situation still hold.
If it is the niche market I see it as, and if margins are driven down on most of the products, even if the market grows to 5x its size this year it won’t sustain most of those businesses unless they are just someone’s side projects.