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Actually, if they charged fifty dollars for it then they'd probably make more money because more people would view the price as being something they were willing to pay.
As it is they're charging an incredibly high price because they know some people will pay for it (as Photoshop has a reputation as THE graphics program, which is why "Photoshop" (as a verb) has become a synonym for "digital image editing") but people who only want to touch up some photos they take, or do some other thing with PS for fun more than anything are just downloading it illegally or using GIMP/a cheaper alternative graphics program. So... whether or not Adobe's profits from the few that are willing to buy at their artificially high price are greater or less than the profits they'd make by selling to a wider range of people at an affordable price is difficult to say. But I think they would make more money by making PS appear more affordable, although some people would still download it just because they can.
As I said to a friend once... "PS is slightly better than GIMP, but is it $699 better?" (Their response was "Hell no.")
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