Digital Marketing

Negative Marginal Cost | Seth’s Blog

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Marginal cost is the extra cost you need to spend to serve one more customer.

The marginal cost of a hot dog is quite low-if you don’t have to consider other factors such as rent, labor, and insurance, an extra hot dog may only cost 15 cents.

On the other hand, the marginal cost of customized shoes is quite high because labor and materials are expensive.

The Internet is transformative because the marginal cost of many things is zero. WordPress does not require any fees to add a user. It does not cost me anything to let more people read this blog.

but…

When we consider the magic of network effects (effective things better one When more people use them) it turns out that the marginal cost is not zero. It’s actually negative.This means that the cost of online services is high less user.

From expensive to cheap to free, to “adding one more person is a reward”, this will change our economy and culture forever.



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