I have wondered for years if a business could set their prices low enough so that competitors would not be interested. This happens as soon as you have three or four well know competitors trying for market share, and one inevitably loses interest and bows out.
IMO this used to even be the value proposition for blue collar trade service companies.
They had expertise, they had advanced tools and equipment, they had some economy of scale buying in bulk... So they would give you prices for things that even a DIYer would look at and go "well geez, that price is so fair I don't even think I could compete doing it myself. Where do I sign??"
Now that is totally gone, partially I think to tradesman/small business owner social media influencers, and prices are set as high as the market will bear. Sure, they're so high way fewer people are installing new sliding doors, but hey when they find one they make an extra $3k in 7 hours. Why do three jobs a day and make $2k profit when you can wait for the wealthier or more desperate person and make it all at once and go home?
Yeah, I see billboards all over for fast same-day water heater replacement. I wondered WTF they were advertising such an easy job all of the time, every company. It's because they are charging people thousands of dollars to roll in a new water heater. Quick, easy, barely any skills required. Apparently no one can handle it.
Mine runs on gas and used to be soldered directly into the plumbing . Last time it went out I converted everything so that anyone with an adjustable wrench could do the job in 15 minutes. $500, new water heater done. The hard part is going to pick it up from the hardware store.
I got my AC swapped out for $3000. Single post to Facebook was all it took to save $7000. Being helpless is expensive.
Yes it’s usually called economies of scale. Classic example is building a big factory with investor money. The big factory can then outcompete competitors due to having bigger scale. Carnegie did this a century ago. Nowadays we see this a lot with Venture Capital. Companies just write some software and give the product away for free so that the competition has no chance. Microsoft also is great at this for example with giving away GitHub for free.
If you want to read more about “powers” like this I can recommend 7 Powers by Hamilton Helmer.
The counterbalance is that it takes a long time to steer a big ship, and economies of scale can actually hurt you. If you are building the wrong widget it doesn't really matter that you can make a billion of them. Even scaling down a big business might not work if most of your costs are fixed.
