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The problem (other than your inner hippie :P) is that it can be quite difficult to accurately value a software product. Most physical goods are valued based on
by mikeokner 9y ago
The problem (other than your inner hippie :P) is that it can be quite difficult to accurately value a software product. Most physical goods are valued based on the cost of materials/manufacturing. However software is an intangible good without those fixed costs. The closest thing is hosting.
For B2B solutions, value is more tied to how much it would cost a customer to implement your solution instead of buying yours. But even a startup founder who's been an engineer for many years might not have a clear picture of how much the previous projects they worked on cost their employer. They only see their own hourly rate or salary (which already might be low) and don't see the total cost of development, the cost of infrastructure, personnel for ongoing support, etc. Engineers notoriously under-price startup offerings because they lack the broader perspective to accurately value their creations.
- greggman 9y agomini aside but products are never based on the price of materials as if you follow the chain all materials start as free. They are all priced starting at what people are willing to pay for the labor to take/prepare/transport the free materials. maybe that helps see that enginering is no different
- mikeokner 9y agoI get where you're coming from, but my point was mostly that when a business develops a product, upfront engineering is often seen as somewhat of a sunk cost. The more important measure is the margin on the physical product. The cost of raw materials (and shipping, manufacturing, etc) is far easier to quantify.