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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 202  
Subject: Re: DGX Recommendation Reasons Date: 4/30/2007 8:41 PM
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A friend recently pointed out that the incremental cost of producing one additional of a mass produced product like an auto fender can be miniscule. Most of the cost is in setting up to produce the first one. Once you have produced thousands (or millions), one more becomes almost free.

This baseload model also applies to DGX and the lab business. The incremental cost per sample can be very low. Hence, base load customers can be critical to competitors and extremely profitable to DGX if they manage to get them to pay anywhere near full price.
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