A rule in a contract, generally one with a commodity

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Create the Value Net for your own business or a business with which you are familiar. Take special care in thinking about complementors; they are often overlooked A rule in a contract, generally one with a commodity supplier, is the take-or-pay provision. It is usually used with commodity suppliers that have high fixed costs. As an example, you agree to buy 100 units from a supplier at $80 per unit. If you buy less, you still have to pay $60 for each unit not bought. How does this provision, which essentially turns $60 of variable costs into a fixed cost for you, discourage a supplier's competition from stealing business?

Reference no: EM13879108

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