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Cost of production is a big factor. Economic theory generally holds that in a competitive environment over a decent period of time, prices will fall to just about the marginal cost of production. Think of the commodification of the PC in the late 90's/early 00's. Highly competitive environment drove prices to just a hair over costs. However, at least one company, Apple, held a very customer-friendly stance (not to mention good marketing) and was able to charge a decent amount above that as a result. (In some ways the good marketing was spreading the message of their customer-friendly stance)



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