5 ms·

I think the scale where it makes sense is at companies where paying $780/month to an existing provider is easier than all the paperwork and internal regulations

I think the scale where it makes sense is at companies where paying $780/month to an existing provider is easier than all the paperwork and internal regulations around allowing people to provision on prem equipment or use an untrusted provider. Consider the item from yesterday about AWS Outposts: https://ahl.medium.com/aws-outposts-2021-stories-for-folks-who-love-spreadsheets-72a2adcfb7b9 https://ahl.medium.com/aws-outposts-2021-stories-for-folks-w... .. the markup is absolutely mind boggling, but there are companies who pay it. AWS is the master of having a pricing model that feels nice to most indies and small/medium companies but that scales up extremely effectively to capture huge amounts of enterprise spend at the same time.

ksec 6y ago
>AWS is the master of having a pricing model that feels nice to most indies and small/medium companies but that scales up extremely effectively to capture huge amounts of enterprise spend at the same time. I wonder if there are any other industry that does the same. Most ( if not all ) of the time pricing dont scale to both ends. But AWS pricing seems to be the outliner here.
- petercooper 6y ago
  Taschen is a publisher that has somehow pulled this off in what you'd think would be a highly commoditized space: books. They sell normal sized versions of most of their books for $20-$80, some slightly premium ones for up to a few hundred dollars, but then have these large coffee table sized books in limited editions selling for $10k+: https://www.taschen.com/pages/en/catalogue/photography/all/02622/facts.sebastio_salgado_genesis_art_edition_no_1100_two_mursi_women_omo_valley_ethiopia.htm https://www.taschen.com/pages/en/catalogue/photography/all/0...
cryptoquick 6y ago
I mean, you're not wrong. For example, I know many furry artists who open their commissions and within an hour get 20 solid offers to pay them. They can't possibly do all the work, so they just lose business. That's, uh, not how capitalism works! Companies like Amazon know, all you have to do is charge 10x more to capture all of that value. Sure, it sucks for 18 other potential customers, but these furry artists have tens of thousands of fans who will enjoy the work regardless.
- dhosek 6y ago
  You're assuming that 2 of those 20 potential customers would pay 10x, when it could be that 20 of the 20 would balk at 1.1x.
  - dannyw 6y ago
    Not a furry artist but similar vein. There are genuinely a surprising number of people who are willing to pay 5 to 10x the market rate for commissions.
  - buran77 6y ago
    Of course that requires some market analysis not a straight up "let's charge 20x". But when talking about limited capacity in general it makes sense that you overcharge to capture as much value as possible. Some customers are always willing to pay more so if you somehow know or can guess the distribution of offers it makes sense to capture everything from the most valuable buyer group down to whatever your capacity can cover rather than a random collection in the middle. In the case of the M1 it might make sense to charge at these levels especially for customers that aren't interested in using anywhere near the full value of the product. So if a company or developer estimates it will only use the equivalent of 50% of the Mac's price it would be a better deal than purchasing the thing outright and also pay the associated operational costs. As always you have to know your market if you want to maximize the profit.
- michaelbuckbee 6y ago
  Here's a really interesting pricing model your friend might be able to use to capture more value (and not make the community mad). https://kevinlynagh.com/notes/pricing-niche-products/ https://kevinlynagh.com/notes/pricing-niche-products/
  - pbronez 6y ago
    Great example of the power of auctions! It's amazing to see the Vickrey Auction come off the blackboard and enable an indie creator to connect with their community sustainably. Markets really are all about moving information so we can coordinate activity. Wouldn't it be awesome for Kickstarter / Patreon to add this as a feature?
Uehreka 6y ago
Normally when I shop around for other cloud providers, I see AWS’s “pay us more but everything’s under one roof” strategy in action: Other cloud/infra providers may beat them on price, but IME it’s often like 10-20% at most. Maybe 2x in some cases. It could be that there are companies for whom a contract with MacStadium is too much to handle, but for anyone who isn’t a supergiant enterprise, I just can’t see how an 8x markup over the competition makes any sense. I’m sure at this point some enterprise customers are just hard-wired to reach for the AWS solution on everything. But I also wonder if this way of thinking has an actual hard limit somewhere.
- petercooper 6y ago
  I'm not particularly experienced at the enterprise level but I sometimes roleplay the conversations I expect they have in my head ;-) I can just picture a department needing to do some CI on a Mac, having access to a certain (high) budget on AWS, and going with Amazon's offering rather than put together the business case to authorize the MacStadium spend. Or if it's under their approval amount, figuring out who's responsible for the thing when inevitably staff change around, etc. If the company doesn't bat an eyelid at another $800/mo on the AWS bill, I can see why many people would be tempted to click the button and get on with their work day :-) I would appreciate people who live in this enterprisey world to fact check me on this as my experiences in this matter are rather limited..
  - bombcar 6y ago
    I can confirm that if you have a large contract already setup it is much easier to add to it than go through the approval process for outside spend. I can click a button that costs us $5k and nobody blinks an eye, but I have to request permission to spend $100 to do the same elsewhere.

ksec 6y ago

>AWS is the master of having a pricing model that feels nice to most indies and small/medium companies but that scales up extremely effectively to capture huge amounts of enterprise spend at the same time. I wonder if there are any other industry that does the same. Most ( if not all ) of the time pricing dont scale to both ends. But AWS pricing seems to be the outliner here.

petercooper 6y ago
Taschen is a publisher that has somehow pulled this off in what you'd think would be a highly commoditized space: books. They sell normal sized versions of most of their books for $20-$80, some slightly premium ones for up to a few hundred dollars, but then have these large coffee table sized books in limited editions selling for $10k+: https://www.taschen.com/pages/en/catalogue/photography/all/02622/facts.sebastio_salgado_genesis_art_edition_no_1100_two_mursi_women_omo_valley_ethiopia.htm https://www.taschen.com/pages/en/catalogue/photography/all/0...

cryptoquick 6y ago

I mean, you're not wrong. For example, I know many furry artists who open their commissions and within an hour get 20 solid offers to pay them. They can't possibly do all the work, so they just lose business. That's, uh, not how capitalism works! Companies like Amazon know, all you have to do is charge 10x more to capture all of that value. Sure, it sucks for 18 other potential customers, but these furry artists have tens of thousands of fans who will enjoy the work regardless.

dhosek 6y ago
You're assuming that 2 of those 20 potential customers would pay 10x, when it could be that 20 of the 20 would balk at 1.1x.
- dannyw 6y ago
  Not a furry artist but similar vein. There are genuinely a surprising number of people who are willing to pay 5 to 10x the market rate for commissions.
- buran77 6y ago
  Of course that requires some market analysis not a straight up "let's charge 20x". But when talking about limited capacity in general it makes sense that you overcharge to capture as much value as possible. Some customers are always willing to pay more so if you somehow know or can guess the distribution of offers it makes sense to capture everything from the most valuable buyer group down to whatever your capacity can cover rather than a random collection in the middle. In the case of the M1 it might make sense to charge at these levels especially for customers that aren't interested in using anywhere near the full value of the product. So if a company or developer estimates it will only use the equivalent of 50% of the Mac's price it would be a better deal than purchasing the thing outright and also pay the associated operational costs. As always you have to know your market if you want to maximize the profit.
michaelbuckbee 6y ago
Here's a really interesting pricing model your friend might be able to use to capture more value (and not make the community mad). https://kevinlynagh.com/notes/pricing-niche-products/ https://kevinlynagh.com/notes/pricing-niche-products/
- pbronez 6y ago
  Great example of the power of auctions! It's amazing to see the Vickrey Auction come off the blackboard and enable an indie creator to connect with their community sustainably. Markets really are all about moving information so we can coordinate activity. Wouldn't it be awesome for Kickstarter / Patreon to add this as a feature?

Uehreka 6y ago

Normally when I shop around for other cloud providers, I see AWS’s “pay us more but everything’s under one roof” strategy in action: Other cloud/infra providers may beat them on price, but IME it’s often like 10-20% at most. Maybe 2x in some cases. It could be that there are companies for whom a contract with MacStadium is too much to handle, but for anyone who isn’t a supergiant enterprise, I just can’t see how an 8x markup over the competition makes any sense. I’m sure at this point some enterprise customers are just hard-wired to reach for the AWS solution on everything. But I also wonder if this way of thinking has an actual hard limit somewhere.

petercooper 6y ago
I'm not particularly experienced at the enterprise level but I sometimes roleplay the conversations I expect they have in my head ;-) I can just picture a department needing to do some CI on a Mac, having access to a certain (high) budget on AWS, and going with Amazon's offering rather than put together the business case to authorize the MacStadium spend. Or if it's under their approval amount, figuring out who's responsible for the thing when inevitably staff change around, etc. If the company doesn't bat an eyelid at another $800/mo on the AWS bill, I can see why many people would be tempted to click the button and get on with their work day :-) I would appreciate people who live in this enterprisey world to fact check me on this as my experiences in this matter are rather limited..
- bombcar 6y ago
  I can confirm that if you have a large contract already setup it is much easier to add to it than go through the approval process for outside spend. I can click a button that costs us $5k and nobody blinks an eye, but I have to request permission to spend $100 to do the same elsewhere.