Akkam’s Razor

There’s a lot of wisdom in this. On the manufacturing side, when you have a lot of similar competitors, the only way to distinguish yourself is through differentiating yourself - usually by making your product or service special. Also, witness the paradigm shift for General Motors. Usually the business case for any new model requires a break even point in excess of 200,000 units prior to profitability. Achieving that volumn often requires discounting and incentives in order to reach it, lowering your profitability and often requiring additional units to “break-even”. The new, largely hand-built crafting that is going into GM’s new Kappa-platform Saturn Sky and Pontiac Solstice, as well as the buzz and anticipation, allows the platform to be profitable after only 50,000 units.

Furthermore, the expenses that come along with selling to mass markets are extremely high. In order to push that volumne of products often requires advertising across media, distribution, and high levels of other retail support. In contrast, niche products often have a defined and predictable customer set, lower acquisition costs, and customers who are agreeable to paying a premium for quality or exclusivity.