In most occurrences, lower production costs translate into lower sales costs. Obviously there are other factors that influence price, including perceived value (affected by advertising), monopolies, and so on.

However there are many companies that produce films that vary greatly in budget. For instance, the Blair Witch Project came out in 1999 with a budget of \$60,000. The same year, Starwars Episode 1 came out with a budget of \$115 million. That's almost 2000 times more expensive. Yet the two films sat side by side in the box office charging the same amount of money per viewing.

Why don't the makers of super-low-budget films undercut the big budget films?

In most occurrences, lower production costs translate into lower sales costs. Obviously there are other factors that influence price, including perceived value (affected by advertising), monopolies, and so on.

However there are many companies that produce films that vary greatly in budget. For instance, the Blair Witch Project came out in 1999 with a budget of \$60,000. The same year, Star Wars Episode 1 came out with a budget of \$115 million. That's almost 2000 times more expensive. Yet the two films sat side by side in the box office charging the same amount of money per viewing.

Why don't the makers of super-low-budget films undercut the big budget films?