Why would you think entrepeneur compensation (often called more simply “profit”) is not a function of units sold? All of these variables are related to each other in the equation, and each of them is a function of the others, depending on which you model as controllable and which as dependent.
True profit starts only after the point in compensation that the enterpreneour would stop doing the activity. In this mode of selling we set the compensation to be constant by contract. Seller wants 10 000 and has 100 willing customers, sellers gets 10 000 and customers pay 100. Seller wants 10 000 and has 1000 willing customers, sellers gets 10 000 and customers pay 10. Thus it is impossible to make a profit or a loss. The uncertainty is only in whether the sell goes through or it ends up being pending indefinetely as not enough customers to pay enough are found.
What usually is the risk of capital turns into customers taking the risk of naming bigger prices in the hopes that other customers will also buy the same product and help lower the price (“retroactively”). Correspondingly success it not enrichment of the business runner but support for previous customers. As a side bonus you get “autocompetetion”. You don’t need a rival firm or product to drive down the price as the product becomes more succesfull. (Price drops to 10, new people afford to instabuy it, dropping the price further allowing even lower instabuy prices even in a monopoly).
Orthodox approach has leniency of competetion emerge from people racing to be most modest in their extraction. But this still includes a step and actor that tries to maximise extraction. But one can maximize for impact directly while keeping the boundary condition that people do not work for free. Sure the nice property does not come for free, a big scale product can not really get going with instabuys but preorders become more mandatory.
I’m not following. I’d assumed you were using “entrepreneur” to mean owner/operator to simplify the world by removing the distinction between wages and profit. Instead, you’re making some point about price theory and elasticity that I haven’t seen your underlying initial/average cost model for, nor any information about competition, all of which tend to be binding in such discussions.
Seller wants 10 000 and has 100 willing customers, sellers gets 10 000 and customers pay 100. Seller wants 10 000 and has 1000 willing customers, sellers gets 10 000 and customers pay 10.
This is a bit where glimpses can be seen. With usual stuff you would get
Seller wants 10 000 and has 100 willing customers, seller gets 10 000 and customer pay 100
Price is acceptable to more people. There are 1000 willing customers and customers pay 100. Seller gets 100 000 which has 90 000 that are not going toward production enablement.
Assume comparable product and producer A can make it happen for 10 000 and producer B can make it happen for 20 000. If there are 100 willing customers if A would cost 100 and B would cost 200. However if there are 100 A patrons and 200 B patrons then the cost of A would be 100 and cost of B would be 100. In this kind of situation if new people are undecided A patrons want them to buy A and B patrons want them to buy B. Producers A and B don’t really care.
Any old style constant price point offer will have some patron amount after which this dilution pool deal is better. Say that A projects that about 100 could want the product and starts collecting promises who wants the product for 100. Say that seller C that uses old style pricing has an outstanding offer for 25. If patron pool for A ever hits 400 the spot price for A is going to be 25. In case that A patron pool is 800 then C is likely to reprice at 12.5. However even if C keeps up with the spot price, A patrons get money everytime a new A patron joins (this is structurally so that you can not draw more than you initially put in, it can not enter “ponzi mode”). So “12.5 + promise of maybe later income” is somewhat better than 12.5. And because we kickstart this with assurance contracts, initial customers can name the currently best traditional price as their willingness to pay. So while people might not promise to pay 100 for a thing that is available for 25, entering into assurance contract of paying 25 on the condition that 400 other people pay makes you never regret the assurance contract triggering. If you can pull out of the assurance contract then you can even indulge in inpatience. Say that you have have given 25 and there are only 350 other such entries. If you lose hope in the arrangement you can ask for your 25 back and then there are 349 entries in the patron pool (no backsies once we hit 400 and product changes hands).
Alternatively if you are A producer and wanted 10 000 but there are only 350 signatories for 25, but you can’t collect the 10 000, you might be tempted to be more modest and “cut your losses” and say that you want only 8 750 which would make 350 signatories for 25 exactly meet it, the contract trigger and make you able to withdraw that (but forfeit ever collecting on that last 1 250). But no greedments after triggering. Sudden 800 signatories for 25, gives producer 10 000 and signatories pay 12.5 . But B running a similar business, sudden 800 signatories for 25 only exactly triggers the pact for producer payout of 20 000 and signatory pay of 25.
I have no clue what this model means—what parts are fixed and what are variable, and what does “want” mean (it seems to be different than “willing to transact one marginal unit @ specific price)? WTF is a patron and why are we introducing “maybe later income”?
I am not bothered. Cool to have interaction even if it is just reveals that inferential distance / mistepping is large.
Patron is a customer. Because they have a more vested interest how the product they bought is doing, it might make sense to use a word to remind of that.
We pay customers retroactively the difference they would have saved if they shopped later, so that they do not have reason to lie about their willingness to pay or have a race to shop last. All customers at all times have lost equal amount to have access to the product and this trends downwards as time / customer base goes on.
Seller wants 10 000
“wants” means “declares by own volition that the fair compensation for the project is”
A patrons want them to buy A
“wants” means “[subject] prefers an outcome in a choice another agent is doing”
about 100 could want the product
“wants” means “is ready to spend above average amount of resources to aquire”
starts collecting promises who wants the product for 100.
“wants” means “commits to a conditional transaction”
say that you want only 8 750
“wants” means “is willing to compromise by consenting to receive less than previous arrangements would entitle them to”
Why would you think entrepeneur compensation (often called more simply “profit”) is not a function of units sold? All of these variables are related to each other in the equation, and each of them is a function of the others, depending on which you model as controllable and which as dependent.
True profit starts only after the point in compensation that the enterpreneour would stop doing the activity. In this mode of selling we set the compensation to be constant by contract. Seller wants 10 000 and has 100 willing customers, sellers gets 10 000 and customers pay 100. Seller wants 10 000 and has 1000 willing customers, sellers gets 10 000 and customers pay 10. Thus it is impossible to make a profit or a loss. The uncertainty is only in whether the sell goes through or it ends up being pending indefinetely as not enough customers to pay enough are found.
What usually is the risk of capital turns into customers taking the risk of naming bigger prices in the hopes that other customers will also buy the same product and help lower the price (“retroactively”). Correspondingly success it not enrichment of the business runner but support for previous customers. As a side bonus you get “autocompetetion”. You don’t need a rival firm or product to drive down the price as the product becomes more succesfull. (Price drops to 10, new people afford to instabuy it, dropping the price further allowing even lower instabuy prices even in a monopoly).
Orthodox approach has leniency of competetion emerge from people racing to be most modest in their extraction. But this still includes a step and actor that tries to maximise extraction. But one can maximize for impact directly while keeping the boundary condition that people do not work for free. Sure the nice property does not come for free, a big scale product can not really get going with instabuys but preorders become more mandatory.
I’m not following. I’d assumed you were using “entrepreneur” to mean owner/operator to simplify the world by removing the distinction between wages and profit. Instead, you’re making some point about price theory and elasticity that I haven’t seen your underlying initial/average cost model for, nor any information about competition, all of which tend to be binding in such discussions.
This is a bit where glimpses can be seen. With usual stuff you would get
Assume comparable product and producer A can make it happen for 10 000 and producer B can make it happen for 20 000. If there are 100 willing customers if A would cost 100 and B would cost 200. However if there are 100 A patrons and 200 B patrons then the cost of A would be 100 and cost of B would be 100. In this kind of situation if new people are undecided A patrons want them to buy A and B patrons want them to buy B. Producers A and B don’t really care.
Any old style constant price point offer will have some patron amount after which this dilution pool deal is better. Say that A projects that about 100 could want the product and starts collecting promises who wants the product for 100. Say that seller C that uses old style pricing has an outstanding offer for 25. If patron pool for A ever hits 400 the spot price for A is going to be 25. In case that A patron pool is 800 then C is likely to reprice at 12.5. However even if C keeps up with the spot price, A patrons get money everytime a new A patron joins (this is structurally so that you can not draw more than you initially put in, it can not enter “ponzi mode”). So “12.5 + promise of maybe later income” is somewhat better than 12.5. And because we kickstart this with assurance contracts, initial customers can name the currently best traditional price as their willingness to pay. So while people might not promise to pay 100 for a thing that is available for 25, entering into assurance contract of paying 25 on the condition that 400 other people pay makes you never regret the assurance contract triggering. If you can pull out of the assurance contract then you can even indulge in inpatience. Say that you have have given 25 and there are only 350 other such entries. If you lose hope in the arrangement you can ask for your 25 back and then there are 349 entries in the patron pool (no backsies once we hit 400 and product changes hands).
Alternatively if you are A producer and wanted 10 000 but there are only 350 signatories for 25, but you can’t collect the 10 000, you might be tempted to be more modest and “cut your losses” and say that you want only 8 750 which would make 350 signatories for 25 exactly meet it, the contract trigger and make you able to withdraw that (but forfeit ever collecting on that last 1 250). But no greedments after triggering. Sudden 800 signatories for 25, gives producer 10 000 and signatories pay 12.5 . But B running a similar business, sudden 800 signatories for 25 only exactly triggers the pact for producer payout of 20 000 and signatory pay of 25.
I have no clue what this model means—what parts are fixed and what are variable, and what does “want” mean (it seems to be different than “willing to transact one marginal unit @ specific price)? WTF is a patron and why are we introducing “maybe later income”?
Sorry to have bothered you—I’m bowing out.
I am not bothered. Cool to have interaction even if it is just reveals that inferential distance / mistepping is large.
Patron is a customer. Because they have a more vested interest how the product they bought is doing, it might make sense to use a word to remind of that.
We pay customers retroactively the difference they would have saved if they shopped later, so that they do not have reason to lie about their willingness to pay or have a race to shop last. All customers at all times have lost equal amount to have access to the product and this trends downwards as time / customer base goes on.
“wants” means “declares by own volition that the fair compensation for the project is”
“wants” means “[subject] prefers an outcome in a choice another agent is doing”
“wants” means “is ready to spend above average amount of resources to aquire”
“wants” means “commits to a conditional transaction”
“wants” means “is willing to compromise by consenting to receive less than previous arrangements would entitle them to”