Posted by
Tony Estep on
Jul 14, 2011; 3:46am
URL: http://elecraft.85.s1.nabble.com/KPA500-and-KAT500-Ports-tp6574422p6581780.html
Suppose you really wanted to decide the best design strategy for a maker of
antenna tuners. You might think as follows:
All potential buyers have at least one antenna. Some have two, some three,
etc. As you add more outputs on the back of the tuner, you increase
potential sales, but you also increase costs. Note importantly that adding,
for example, a third output increases the cost of units sold to hams who
have only one or two antennas. Therefore, adding outputs may add some
customers among hams with many antennas, but will also lose some sales to
hams who don't want to pay for unused outputs. Moreover, adding outputs
lowers profit margin.
The number of units sold is some function of this increment to unit cost.
And of course, total revenues is unit cost * number of units.
The problem is to optimize profit: quantity * (price - unit cost). Recalling
that quantity depends in part on unit cost, we can write this out and
differentiate with respect to the cost of the added outputs. The point at
which that derivative = 0 is the optimum amount to spend on extra outputs.
In order to do this exercise with real numbers, one would have to have some
idea of the elasticity of demand with respect to price, a number that may
not necessarily be easy to pin down. Nonetheless, the point is to provide a
better framework for decision-making.
Tony KT0NY
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