Again, take a deep breath and repeart after me:
RPG's are a luxury, not a necessity.
The car analogy is perfectly apt. The last time i checked, we live in a FREE MARKET society. Demand drives supply and price. A manufacturer, unless an Oligopoly or a monopoly is restricted in what they can do in regard to charging whatever they want for a product. Further, industries are regulated against in being a monopoly etc. I found the XBOX comparison to be funny since microsoft is one of the few monopolies and guess what? they undercut the "small guy" by maintaining a lower price point because they don't need an intially high profit margin for their secondary product lines due to the product positioning of Windowsand the tertierary products attached with it (MS Office). This is a good example of a company trying to create a "Barrier of Entry."
If someone here can highlight how Malhavok is an Oligopoly or Monopoly or have unique market positioning based on which they are pricing whatever they want to regardless of consumer preference please do so. Products have varying price elasticity. Here are several other analogies outside of cars.
Dinnerware: Mikasa/Corning/non brand name product
Bags: Prada/Gucci/ Kenneth Cole/ Krada (no name brad)
Cereal: Smart Start/Special K/ Corn Flakes (all put out by kellogs, just to highlight how a GOOD company creates market positioning in all the different price segments of the market).
Coffee (an oligopoly if not a monopoly): Starbucks/Dunkin Donuts (note the pricing model of Starbucks).
I could provide more examples if need be. As always, people have a CHOICE in the RPG market. You can easily pick up a Phil Reed (just trying to highlight an analogy Phil

product which is much cheaper or a Malhavoc product or a free product (there are plenty out there). Can Malhavoc charge what Phil charges and make a net profit or even break even? Does anyone have the Contribution Margin and Break even point for these products? Note that you NEED to exceed your fixed costs. So what are the fixed and variable costs on a product? Let us see and how do they compare?:
FIXED COST:
Employee pay
Distribution Cost.
incurred overhead (based on allocation methodology..i.e you can appropotion costs of utilities etc. to different product line or incurr them in a lump amount.
VARIABLE:
Material cost (net cost will vary based on units produced...more complex, you could have both fixed and variable elements here).
Printing expenses
I believe (purely a guess) that most costs in the industry are fixed. So how is Phil able to produce a product at such a low cost- less fixed cost. i.e very few "employees" (probably himself and a few freelancers where needed) and by producing the product in an inexpensive medium where he does not incur high manufacturing costs (print vs. pdf).
Does Malhavoc incurr the same costs for this product? or are his overheads higher? Just a meander through the artists' list, the credits listed, the production value, the "new binding used" etc. should give one a very good idea. Also, does this have the same cost element as a $40 book (which is common and hypotheticaly the medium price range). There are plenty of samples of this out there such as the previews for "Thieves World" or Arcania Unearthed etc. If one examines the samples for these, to that of Plotus, there is a distinct difference in both Quality and Quantity. Note, that the higher page count and all the "frills" also is making this a much more expensive product to produce.
So it is both practical and sensible -Malhavoc does need to remain solvent and be able to pay it's employees and give those in charge a decent living, unless of course the argument is to the contrary (i.e produce a product, charge an incorrect price, go belly up and not pay the freelancers), or that the product is "too expensive" from an individual point of view (This product is out or my price range and the company is at fault for that regardless of the economics involved). Note that no one is ripping "you" off or pricing anyone "out of the market" as the market pricing goes from free to $120.Are there products an individual cannot afford? of course (unless someone wants to consider communism or socialism as a viable living alternative). But do we have a choice? absolutely!!!!
As always, celebrate the fact that you have a choice and that there are so many different and variant products that cover all segments of the market (think back to the old TSR days).