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Old 22nd November 2005, 16:15   #7 (permalink)
Samurai
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Location: Manipal
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It all depends on the company strategy. For example, HP sells their color inkjet printer below cost, incurring losses. Why? Because the money is in the repeat sales of inkjet cartridges and not in one time sale of printer.

After buying color inkjet printers, most people will start printing color pages and exhaust the cartridge in a month. One pair of cartridge (BW&CO) can cost as much as half the price of a low-end printer. This repeat purchase will ensure steady inflow of revenue.

Therefore, you must understand the earning model adopted by a company. If a company plans to make steady revenue via spare parts and service, they may sell the car at lower profits. Companies with huge market share like Maruti and Hyundai can use this strategy, but not Fiat.
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