I think it's useful to try to think about software development in economic terms. Metaphorically is it more like a call option or or is it more like a debt? In

I think it's useful to try to think about software development in economic terms. Metaphorically is it more like a call option or or is it more like a debt? In my mind they are both the same thing. Unless you want to be pedantic about it in which case, well it's neither, its software. But if not then Real Options is what we're talking about [1] Two fundamental themes in economic thought are the value of optionality (opportunity cost aka options pricing) and the value of something in hand vs having it later (cost of risk, aka interest rates on debt). Everyone determines this for themselves and behaves accordingly creating a market. One persons cost is another value, people see the world in different ways and have different desires so they come up with opposite positions and thus a deal is struck. Wait a tick, that sounds very similar. Thats because debt is an option. To the debtor it is a call option on the value of money now vs later. To the lender it is a put on the value of money now vs later. An interesting thing is that they are often both right. And it is the pricing of risk that rounds out the equasion. My home mortgage is debt, yes, but ostensibly I did not go into that financial arrangement for the privilege of making payments and doing maintenance for 30 years. I did so because the optionality it provided was more valuable in my mind than the alternatives. I was bullish on home ownership as a benefit to me vs the cost of the debt long term. Inversely the bank had few other options with as-desirable a risk/reward profile aka yield. They were bullish on my ability to pay the debt or recoup it via reselling the asset if I defaulted. They were placing a put on their money in-hand seeing it's value going down over time. If they did not invest it or lend it out to gain yield it would lose value via inflation. Both of us are making assessments of value and risk and both of us are happy because both of us have different time horizons and different needs. I’ts actually a beutiful thing. The loan is a Real Option. From wikipedia: A real option itself, is the right—but not the obligation—to undertake certain business initiatives, such as deferring, abandoning, expanding, staging, or contracting a capital investment project. For example, the opportunity to invest in the expansion of a firm's factory, or alternatively to sell the factory, is a real call or put option, respectively. I think the decisions we make every day are all Real Options. We all make resk reward tradeoff decisions all the time involving how we value our limited time and our limited ability to predict the future. Software development is no different. [1] https://en.wikipedia.org/wiki/Real_options_valuation https://en.wikipedia.org/wiki/Real_options_valuation