3 ms·

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.
      - nybble41 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. Yes, and that is the error. The number of copies is not static, and might as well be considered infinite. With digital goods there is effectively no limit on the number of copies which can be produced at near-zero marginal cost, so cost per copy is a meaningless metric. Unlike physical goods where you need to recoup your variable costs for materials, labor, and capital on each item sold before you can even think about offsetting the fixed cost of R&D, every sale of a digital good contributes to the bottom line regardless of the price. The single most expensive game to develop to date was apparently Star Wars: The Old Republic at $200 million[1]. If each of the 7.7 billion people on the planet had a copy, however, the development cost per copy would only be about $0.026, affordable even for the most limited budgets. Say that 5% of the population would be interested in trying it out at a price of just $0.25 per copy: that's $481M in revenues, or $281M profit. Or they could choose to make it a monthly subscription service at prices attractive to just 1-2 million players and lose money overall while charging subscribers $100 apiece. Same development cost, different distribution models. There is no predetermined cost per copy below which they are selling at a loss and above which they are selling for a profit. [1] https://en.wikipedia.org/wiki/List_of_most_expensive_video_games_to_develop https://en.wikipedia.org/wiki/List_of_most_expensive_video_g...
      - mikeash 7y ago
        The specific example was selling at a loss in poor countries because you need more people using your software to bolster the network effect. This makes no sense: each copy sold in a poor country at a low price is still making you money, it just isn't making as much money as the copies you sell at a higher price. This isn't pedantry, this is discussing the actual topic of the conversation.
        lsaferite 7y ago
        But it is pedantry because the person you were having a conversation with was using imprecise terminology and you were disagreeing with the words as written instead of the words as intended. Fine, they used the wrong words. Their meaning was clear. I think having the conversation is good as long as we can extend a little leeway to people that don't always have the correct terminology for a particular discussion.

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.
    - nybble41 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. Yes, and that is the error. The number of copies is not static, and might as well be considered infinite. With digital goods there is effectively no limit on the number of copies which can be produced at near-zero marginal cost, so cost per copy is a meaningless metric. Unlike physical goods where you need to recoup your variable costs for materials, labor, and capital on each item sold before you can even think about offsetting the fixed cost of R&D, every sale of a digital good contributes to the bottom line regardless of the price. The single most expensive game to develop to date was apparently Star Wars: The Old Republic at $200 million[1]. If each of the 7.7 billion people on the planet had a copy, however, the development cost per copy would only be about $0.026, affordable even for the most limited budgets. Say that 5% of the population would be interested in trying it out at a price of just $0.25 per copy: that's $481M in revenues, or $281M profit. Or they could choose to make it a monthly subscription service at prices attractive to just 1-2 million players and lose money overall while charging subscribers $100 apiece. Same development cost, different distribution models. There is no predetermined cost per copy below which they are selling at a loss and above which they are selling for a profit. [1] https://en.wikipedia.org/wiki/List_of_most_expensive_video_games_to_develop https://en.wikipedia.org/wiki/List_of_most_expensive_video_g...
    - mikeash 7y ago
      The specific example was selling at a loss in poor countries because you need more people using your software to bolster the network effect. This makes no sense: each copy sold in a poor country at a low price is still making you money, it just isn't making as much money as the copies you sell at a higher price. This isn't pedantry, this is discussing the actual topic of the conversation.
      - lsaferite 7y ago
        But it is pedantry because the person you were having a conversation with was using imprecise terminology and you were disagreeing with the words as written instead of the words as intended. Fine, they used the wrong words. Their meaning was clear. I think having the conversation is good as long as we can extend a little leeway to people that don't always have the correct terminology for a particular discussion.