Firms that make gaming systems typically charge a price close to average cost on the game system itself, and do not change that price even when the systems are scarce or demand increases. Why is this a profit maximizing strategy?© BrainMass Inc. brainmass.com October 4, 2022, 4:20 pm ad1c9bdddf
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Also seen in certain quarters as the current profit maximization, this strategy mostly seeks to take advantage and fully utilize current profits by taking into consideration both the game's revenue and costs. Gaming systems are highly seasonal and fads in nature, meaning that gaming firms attempt to cash in as much as possible once they release a new one. With short term profit maximization as the main objective, charging near the average cost stimulates sales and turnover, which in essence are quick profits. This strategy is however not the best alternative if the gaming firm gets lower and long term profits.© BrainMass Inc. brainmass.com October 4, 2022, 4:20 pm ad1c9bdddf>