If you start from the overall pricing, including overhead and other fixed costs, then you’re not basing the price on what the consumer values — and, more importantly, you’re taking away your own incentives to become more efficient and decrease costs.
(Via Hacker News)
Something is worth what you can get for it. On both sides. Your house is worth what someone will pay you for it, not the cost to build it or what YOU bought it for. A wage for a job is what you can get someone to do the work for, not what your neighbour is making. And, a book is worth that people will pay for without a greater number finding a way to get it for free! Price and costs only relation are that price has to be more then the cost. Profit comes from making the cost side more efficient. Also note it really screws things up when the cost is subsidized. Let things be.