this post was submitted on 01 May 2025
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Selling more could mean lower profits over all. If you have to build out extra production capacity (new fixed costs) to create more product that you're receiving a lower price on, then it could have been more profitable to sell fewer units but at a higher cost creating more profit.
Example: If you're at 90% capacity on your $1 billion factory selling your product for high price/high profit, and you lower your price which increase sales by 20%, you now have to another $1 billion factory to product the 8% of product not producible at your first factory. You've now lost nearly $1 billon from your larger sales.