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So this looks to be a tool for yield management. Simply put, you manage a fixed production capacity to maximize income: sport and concert tickets, museums, airl
by ovi256 15y ago
So this looks to be a tool for yield management. Simply put, you manage a fixed production capacity to maximize income: sport and concert tickets, museums, airlines, cinemas, all work like this. The unsold places are "wasted". I could take out the quotes, because in comparison with a storable product, you cannot warehouse cinema or museum hours, so they're really wasted. A really smart tool would know your costs and work to increase profit, not just income.
One could argue web apps could work like this as well. There is fixed capacity (how many users could your server farm handle) that is wasted if underused. This fixed capacity is fuzzy, of course, so defining it is the first difficulty, Then, it's much harder to apply price discrimination for software. People feel cheated if they find out someone paid less for the same thing. There are obvious differentiation mechanisms in real estate that prevent this. These are missing in software. One could try to increase price variation by using time-limited rebates, for example around a holiday, in addition to the classic multi-tier pricing.
Interested in hearing what patio11 has to say about this.
- deleted 15y ago[deleted]
- drox 15y agoA major difference is that cinema owners, airlines, sports teams etc. aim to maximize their users, and each additional user doesn't diminish the experience of other users (well to some extent, but not enough to make a huge difference to the demand). A lot of spare capacity in server farms seems to be due to the need to cater for demand spikes, so that the experience doesn't degrade. Each additional user will, after a certain point, harm the experience of the previous users. A stronger analogy would be a power utility. It would be quite difficult, I think, to do what you propose without being able to predict demand spikes well in advance and with a high degree of accuracy. Even if we could do that there's another issue: a power utlility can sell power to certain types of consumers at off peak times to soak up spare capacity, but electricity has many uses. A web-app isn't likely to have many non-core uses that would appeal to specific users at off-peak times. Cloud providers can use this sort of strategy, but I don't think it would be useful for individual web apps, unless you are selling something very generic. The best way to deal with this issue, from the perspective of an individual web app, if it bothers one, would probably be simply to use a cloud solution, and let them deal with the excess capacity issues.