6 ms·

Not necessarily. Sometimes you use profits from the high priced copy in a country with high purchasing power to cover up the losses from the lower priced copy i

Not necessarily. Sometimes you use profits from the high priced copy in a country with high purchasing power to cover up the losses from the lower priced copy in the country with lower purchasing power. In the case of games it makes sense especially if you rely on a large community of players for its success. You need more people to play it but you can't sell it at a loss everywhere in the world just to access all markets and gain the numbers.

mikeash 7y ago
How can you possibly sell software at a loss?
- saint_fiasco 7y ago
  Tech support and bandwidth, maybe? I'm pretty sure I costed Microsoft money when I was younger and poorer, because I knew how to download most security updates for my pirated Windows without getting caught, so I costed then bandwidth and payed nothing. Maybe they let that happen or did not work as hard as they could have to prevent it because they figured they'd recover their investment when I grew up and became a paying customer.
  - mikeash 7y ago
    Tech support is optional. Bandwidth is a possibility, but you'd have to work really hard to lose money that way, given how cheap it is. Sell your game for 10 cents a copy and you'll still make money.
    - close04 7y ago
      I may be missing something but what pays the developer salaries and rent? Or maintaining the infrastructure for your sprawling online game?
      - mikeash 7y ago
        Developer salaries and rent are the same no matter how many copies you sell. Each ten-cent copy sold brings you closer to covering those costs. If you don’t make enough to cover costs, you’re not selling at a loss, you’re just not selling enough. The marginal cost on infrastructure is like the marginal cost on bandwidth: really small.
        close04 7y ago
        > you’re not selling at a loss, you’re just not selling enough Ah, you could have just said it's a matter of wording. Yes, what I meant is you could sell, and make a loss. So in order to drive up sales hoping that it will actually start a positive feedback loop where the growing community attracts more buyers, you could sell your software at different prices. You probably noticed even some cloud services sell for different prices depending on country (MS gives you some cloud things 20% more expensive in Germany as opposed to US). And saying the infrastructure is just bandwidth is like saying you just a keyboard to code. Random example, I assume many big name games face similar challenges. [0] I think we can agree maintaining a setup that allows players all over the world to play in good conditions while preventing cheating, and many, many other services costs and involve quite a bit more than just the net link. [0] https://www.networkworld.com/article/2895129/big-data-and-battle-tanks-inside-world-of-tanks-powerful-infrastructure.html https://www.networkworld.com/article/2895129/big-data-and-ba...
        mikeash 7y ago
        Your previous comment referred to losses in a single country. It makes no sense to talk about total profit/loss including overhead in that context. How do you allocate your shared overhead between the two countries such that you can say you made a loss in one country but a profit in another? If you're "selling at a loss" in a single country then the only reasonable interpretation of that is to account for the additional costs involved in serving that country, but not any shared overhead. Yes, there are lots of other costs for running a network service besides bandwidth. But those are heavily if not completely independent of the number of users. Your anti-cheating effort costs about the same regardless of whether you have a million users or ten million users.
- svrtknst 7y ago
  Offices pay rent, developers need salaries, electrical bills need to be paid, contractors need to get paid, as well. Software isn't free to create.
  - mikeash 7y ago
    When talking about selling it at a loss in one region and making up for that by making a profit in a different region, the relevant figure is the marginal cost, which is approximately zero.
    - Goronmon 7y ago
      When talking about selling it at a loss in one region and making up for that by making a profit in a different region, the relevant figure is the marginal cost, which is approximately zero. It's easy to "win" an argument if you just label all information that would make you wrong as "irrelevant", isn't it?
      - mikeash 7y ago
        “Selling at a loss” is about the marginal cost versus the price. I’m not “labeling” anything. That’s just what it means. It’s perfectly valid to talk about overall profitability when accounting for non-marginal costs, but that’s not the phrase you use to talk about it, and saying that some units are sold at a loss while others are not is nonsensical in that context.
        lsaferite 7y ago
        Presumably the development costs and overhead costs are factored in along with a projected number of sold units to come up with a baseline 'cost' of each copy being sold. Selling a copy for less than this 'cost' would be selling it at a loss. Selling a copy for more than this 'cost' would be selling for a profit. Being obtuse and insisting that you can't sell software at a loss because of the marginal costs is not furthering the conversation at all, it's just being pedantic.
- close04 7y ago
  You still have to cover expenses (development + running costs - like maintaining your multiplayer network). The way you set the price combined with the projected sales should lead to profit. But you may very well decide to have markets with higher purchasing power to subsidize the ones with lower purchasing power so that you can cover those costs and make a profit. You could very well just have losses. If the answer to your question was "no way" then software would be the one guaranteed way to swim in money.
  - mikeash 7y ago
    You certainly can have losses overall, but there’s no way you can have losses in just certain regions, unless your per-unit price there is only a few cents.

mikeash 7y ago

How can you possibly sell software at a loss?

saint_fiasco 7y ago
Tech support and bandwidth, maybe? I'm pretty sure I costed Microsoft money when I was younger and poorer, because I knew how to download most security updates for my pirated Windows without getting caught, so I costed then bandwidth and payed nothing. Maybe they let that happen or did not work as hard as they could have to prevent it because they figured they'd recover their investment when I grew up and became a paying customer.
- mikeash 7y ago
  Tech support is optional. Bandwidth is a possibility, but you'd have to work really hard to lose money that way, given how cheap it is. Sell your game for 10 cents a copy and you'll still make money.
  - close04 7y ago
    I may be missing something but what pays the developer salaries and rent? Or maintaining the infrastructure for your sprawling online game?
    - mikeash 7y ago
      Developer salaries and rent are the same no matter how many copies you sell. Each ten-cent copy sold brings you closer to covering those costs. If you don’t make enough to cover costs, you’re not selling at a loss, you’re just not selling enough. The marginal cost on infrastructure is like the marginal cost on bandwidth: really small.
      - close04 7y ago
        > you’re not selling at a loss, you’re just not selling enough Ah, you could have just said it's a matter of wording. Yes, what I meant is you could sell, and make a loss. So in order to drive up sales hoping that it will actually start a positive feedback loop where the growing community attracts more buyers, you could sell your software at different prices. You probably noticed even some cloud services sell for different prices depending on country (MS gives you some cloud things 20% more expensive in Germany as opposed to US). And saying the infrastructure is just bandwidth is like saying you just a keyboard to code. Random example, I assume many big name games face similar challenges. [0] I think we can agree maintaining a setup that allows players all over the world to play in good conditions while preventing cheating, and many, many other services costs and involve quite a bit more than just the net link. [0] https://www.networkworld.com/article/2895129/big-data-and-battle-tanks-inside-world-of-tanks-powerful-infrastructure.html https://www.networkworld.com/article/2895129/big-data-and-ba...
        mikeash 7y ago
        Your previous comment referred to losses in a single country. It makes no sense to talk about total profit/loss including overhead in that context. How do you allocate your shared overhead between the two countries such that you can say you made a loss in one country but a profit in another? If you're "selling at a loss" in a single country then the only reasonable interpretation of that is to account for the additional costs involved in serving that country, but not any shared overhead. Yes, there are lots of other costs for running a network service besides bandwidth. But those are heavily if not completely independent of the number of users. Your anti-cheating effort costs about the same regardless of whether you have a million users or ten million users.
svrtknst 7y ago
Offices pay rent, developers need salaries, electrical bills need to be paid, contractors need to get paid, as well. Software isn't free to create.
- mikeash 7y ago
  When talking about selling it at a loss in one region and making up for that by making a profit in a different region, the relevant figure is the marginal cost, which is approximately zero.
  - Goronmon 7y ago
    When talking about selling it at a loss in one region and making up for that by making a profit in a different region, the relevant figure is the marginal cost, which is approximately zero. It's easy to "win" an argument if you just label all information that would make you wrong as "irrelevant", isn't it?
    - mikeash 7y ago
      “Selling at a loss” is about the marginal cost versus the price. I’m not “labeling” anything. That’s just what it means. It’s perfectly valid to talk about overall profitability when accounting for non-marginal costs, but that’s not the phrase you use to talk about it, and saying that some units are sold at a loss while others are not is nonsensical in that context.
      - lsaferite 7y ago
        Presumably the development costs and overhead costs are factored in along with a projected number of sold units to come up with a baseline 'cost' of each copy being sold. Selling a copy for less than this 'cost' would be selling it at a loss. Selling a copy for more than this 'cost' would be selling for a profit. Being obtuse and insisting that you can't sell software at a loss because of the marginal costs is not furthering the conversation at all, it's just being pedantic.
close04 7y ago
You still have to cover expenses (development + running costs - like maintaining your multiplayer network). The way you set the price combined with the projected sales should lead to profit. But you may very well decide to have markets with higher purchasing power to subsidize the ones with lower purchasing power so that you can cover those costs and make a profit. You could very well just have losses. If the answer to your question was "no way" then software would be the one guaranteed way to swim in money.
- mikeash 7y ago
  You certainly can have losses overall, but there’s no way you can have losses in just certain regions, unless your per-unit price there is only a few cents.