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Isn't this pretty average business? Amazon (and the others) are bringing more business and get a discount. AWS does this. So does monoprice (volume pricing).

Isn't this pretty average business? Amazon (and the others) are bringing more business and get a discount. AWS does this. So does monoprice (volume pricing). My local landscaping place does this (contractors buying more tons of rock get a better price). Home depot has "contractor pricing" when you buy multiples of things.

clusterfish 6y ago
The examples you give are driven by competition forcing the suppliers to share their economies of scale. Those deals are available to everyone and the pricing is also upfront. This Apple-Amazon situation on the other hand is a secret deal between two monopolistic powers, that's why it's coming up in hearings on anticompetitive behaviour. Such a deal is not available to everyone equally, it's not at all similar to Monoline / homedepot pricing.
ryanisnan 6y ago
I think it definitely is pretty standard. What's not standard is, when you are buying physical goods like that, you have competition. You can source better rates. With Apple, you have no competition. It is accept the pricing model, or leave.
- CubsFan1060 6y ago
  You leave as in going to Lowes? Or going to Android?
  - ryanisnan 6y ago
    Talking about mobile devices, you can't simply "go to Android". What you are purchasing when you pay Apple's fees are access to a userbase (among other things like the ecosystem). If you switch to Android, you are no longer buying the same product. Talking about things like bricks, it would be more like if Home Depot was the only brick seller, and if you didn't like their brick terms, you could leave and buy instead 2x4s elsewhere.
    - AnthonyMouse 6y ago
      The analogy that seems to make the most sense is a regional monopoly. You want to sell your bricks, Home Depot is the only retailer in the state of California but Lowes has a store in New York. Somebody says "just sell them to Lowes" but in fact you already sell them to Lowes and Home Depot and Lowes is not going to buy any more than they already do if you stop selling to Home Depot, because the customers who can no longer find your bricks at Home Depot would have to move house to another state in order to buy them from Lowes.
      - ryanisnan 6y ago
        I like that analogy.
thephyber 6y ago
Yes, but it's relevant because Steve Jobs seemed to claim otherwise in his testimony yesterday: > During a hearing before the House antitrust subcommittee on Wednesday, Apple CEO Tim Cook testified that “we apply the rules to all developers evenly” when it comes to the App Store. But documents revealed by the subcommittee’s investigation show Apple senior vice president Eddy Cue offered Amazon a unique deal in 2016: Apple would only take a 15 percent fee on subscriptions that signed up through the app, compared to the standard 30 percent that most developers must hand over.[1] [1] https://www.theverge.com/2020/7/30/21348108/apple-amazon-prime-video-app-store-special-treatment-fee-subscriptions https://www.theverge.com/2020/7/30/21348108/apple-amazon-pri...
- philwelch 6y ago
  Steve Jobs passed away nine years ago.
  - gumby 6y ago
    But from that booth in the basement he dictated the testimony last week. (To make this marginally relevant: apparently Amazon prime is producing a Foundation series)
- roywiggins 6y ago
  Steve Jobs rose from the grave to attend a Congressional committee hearing?
  - gumby 6y ago
    He taught Hari Seldon how!
  - tbonepickens 6y ago
    He has risen!...after ten years..
- nickpeterson 6y ago
  I think you mean Tim Apple.
gumby 6y ago
Makes sense when monoprice can use one box, probably the same box, for 15 cables rather than one. Or drop ship you a case. Hard to see the real economy of scale in this case though.
- hombre_fatal 6y ago
  Passing savings onto the customer because someone got to use fewer packaging peanuts isn't the right way to look at bulk/scale/term pricing. You don't get a better deal from AWS by committing to yearly billing over monthly billing because you saving them transaction fees. You get a better deal because they benefit more from enticing a bigger commitment.
- gowld 6y ago
  Value based pricing isn't based on cost, so discounts aren't either.

clusterfish 6y ago

The examples you give are driven by competition forcing the suppliers to share their economies of scale. Those deals are available to everyone and the pricing is also upfront. This Apple-Amazon situation on the other hand is a secret deal between two monopolistic powers, that's why it's coming up in hearings on anticompetitive behaviour. Such a deal is not available to everyone equally, it's not at all similar to Monoline / homedepot pricing.

ryanisnan 6y ago

I think it definitely is pretty standard. What's not standard is, when you are buying physical goods like that, you have competition. You can source better rates. With Apple, you have no competition. It is accept the pricing model, or leave.

CubsFan1060 6y ago
You leave as in going to Lowes? Or going to Android?
- ryanisnan 6y ago
  Talking about mobile devices, you can't simply "go to Android". What you are purchasing when you pay Apple's fees are access to a userbase (among other things like the ecosystem). If you switch to Android, you are no longer buying the same product. Talking about things like bricks, it would be more like if Home Depot was the only brick seller, and if you didn't like their brick terms, you could leave and buy instead 2x4s elsewhere.
  - AnthonyMouse 6y ago
    The analogy that seems to make the most sense is a regional monopoly. You want to sell your bricks, Home Depot is the only retailer in the state of California but Lowes has a store in New York. Somebody says "just sell them to Lowes" but in fact you already sell them to Lowes and Home Depot and Lowes is not going to buy any more than they already do if you stop selling to Home Depot, because the customers who can no longer find your bricks at Home Depot would have to move house to another state in order to buy them from Lowes.
    - ryanisnan 6y ago
      I like that analogy.

thephyber 6y ago

Yes, but it's relevant because Steve Jobs seemed to claim otherwise in his testimony yesterday: > During a hearing before the House antitrust subcommittee on Wednesday, Apple CEO Tim Cook testified that “we apply the rules to all developers evenly” when it comes to the App Store. But documents revealed by the subcommittee’s investigation show Apple senior vice president Eddy Cue offered Amazon a unique deal in 2016: Apple would only take a 15 percent fee on subscriptions that signed up through the app, compared to the standard 30 percent that most developers must hand over.[1] [1] https://www.theverge.com/2020/7/30/21348108/apple-amazon-prime-video-app-store-special-treatment-fee-subscriptions https://www.theverge.com/2020/7/30/21348108/apple-amazon-pri...

philwelch 6y ago
Steve Jobs passed away nine years ago.
- gumby 6y ago
  But from that booth in the basement he dictated the testimony last week. (To make this marginally relevant: apparently Amazon prime is producing a Foundation series)
roywiggins 6y ago
Steve Jobs rose from the grave to attend a Congressional committee hearing?
- gumby 6y ago
  He taught Hari Seldon how!
- tbonepickens 6y ago
  He has risen!...after ten years..
nickpeterson 6y ago
I think you mean Tim Apple.

gumby 6y ago

Makes sense when monoprice can use one box, probably the same box, for 15 cables rather than one. Or drop ship you a case. Hard to see the real economy of scale in this case though.

hombre_fatal 6y ago
Passing savings onto the customer because someone got to use fewer packaging peanuts isn't the right way to look at bulk/scale/term pricing. You don't get a better deal from AWS by committing to yearly billing over monthly billing because you saving them transaction fees. You get a better deal because they benefit more from enticing a bigger commitment.
gowld 6y ago
Value based pricing isn't based on cost, so discounts aren't either.