Tried, tested, and true: Max Stul Oppenheimer

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PROFILES By Chris Husted For most people, graduating from either Harvard Law School with a Juris Doctor (J.D.) degree or from Princeton University in
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“The breakthrough in pharmaceutical law is usually the discussion of how to run a company where the first product off the assembly line costs $1 billion and the next one costs pennies. Similar issues arise with software: the nth copy of Windows 11 costs next to nothing to produce and deliver.”

This comment made me smile.  I have long used the same examples in writing about pricing controversies in economic history.  The real pioneer in this respect was the railroad industry, which found that as soon as rail lines had been built, the additional cost of moving freight and passengers was relatively small, and competition often drove rates down to just above marginal cost, or when managers lost their heads, below it.  The nation’s development benefited enormously from this, but the process was often chaotic and inspired a lot of unrest.  Regulation was introduced to stop it, generating a vast literature over the next century.

When business schools taught students how to budget for total expense forty or fifty years ago, they used examples that showed a relatively modest floor of fixed expense and perhaps interest on the capital investment, on top of which was piled variable expense, which grew as production increased.  Conversely, pricing was supposed to be mainly an exercise of adding up the costs of production, then topping it all off with a percentage “burden” representing an allocation of fixed expense and capital recovery.  These models no longer represent much of the economy.

Industries with heavy capital investment up front and relatively low cost of production are examples of what used to be called the substitution of capital for labor, often equated with human progress.  As the process advances, these industries must wrestle with pricing problems like those that 19th century railroads faced.  They take shelter behind patents and lawsuits as long as they can.  They try to extract what revenue they can while the product is new, and to target customers with greater willingness and ability to pay.  They try to replace one-and-done sales with subscription arrangements.  They merge and buy other companies in order to corral enough customers to recover their development cost.  Sort of like the way railroads cut rates to build traffic so could recoup the cost of construction.

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OscarCP, Steve S.

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So is this a eulogy? Did Max die??

Just because you don't know where you are going doesn't mean any road will get you there.

1 user thanked author for this post.

OscarCP

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My question too.

Ex-Windows user (Win. 98, XP, 7); since mid-2017 using also macOS. Presently on Monterey 12.15 & sometimes running also Linux (Mint).

MacBook Pro circa mid-2015, 15" display, with 16GB 1600 GHz DDR3 RAM, 1 TB SSD, a Haswell architecture Intel CPU with 4 Cores and 8 Threads model i7-4870HQ @ 2.50GHz.
Intel Iris Pro GPU with Built-in Bus, VRAM 1.5 GB, Display 2880 x 1800 Retina, 24-Bit color.
macOS Monterey; browsers: Waterfox "Current", Vivaldi and (now and then) Chrome; security apps. Intego AV

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Rumors of his untethering from the real world are being greatly exaggerated:

“Max still devotes a significant amount of his time to consulting, mostly with entrepreneurial companies, preserving a tether to real-world legal issues involving technology.”
[4th para. of the profile]

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