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>>>> The marginal cost of software is (close enough to) zero I call this "the magic of software." The reason is that it triggers magical thinking on the part o

>>>> The marginal cost of software is (close enough to) zero I call this "the magic of software." The reason is that it triggers magical thinking on the part of managers. But I think the magic can be fleeting, depending on the business use for the software, for instance: * Software that's used internally within a business has a ceiling on volume. * Platform obsolescence sets a ceiling on the volume that can be sold before a product has to be maintained or re-written. * A bigger user base is more diverse, thus involving more "difficult" users, exposing more bugs, and discovering hidden features that become future maintenance requirements according to Hyrum's Law. * A software product that's attached to hardware sales rides on the sales volume of the hardware. * Higher volume attracts competitors, who force you to add features. If any business could get rich cranking out copies of software, they wouldn't be prioritizing every other possible revenue model such as data harvesting, advertising, subscriptions, and so forth.

ativzzz 4y ago
The way I look at is that each piece of software, lets call it a feature, has a non-zero operating cost associated with it. Maybe that's a team of engineers that build and maintain it, a team of marketers/salespeople who get it out to customers, a team of designers/product managers who decide what should get built and how, and a team of customer support that then supports this feature. AWS bills, etc I think with good management, this feature can be sold with a close enough marginal cost of zero. There are costs, yes, you can't just sell it to 500 users without support, but over time as the feature matures, there should be less support and less engineering power required to power that feature. You should be working towards being able to sell this feature without incurring (much) additional cost per unit sold Now in reality, we rarely sell individual features, and with every additional feature we add the overall complexity of the product increases and so development and support gets more expensive.

ativzzz 4y ago

The way I look at is that each piece of software, lets call it a feature, has a non-zero operating cost associated with it. Maybe that's a team of engineers that build and maintain it, a team of marketers/salespeople who get it out to customers, a team of designers/product managers who decide what should get built and how, and a team of customer support that then supports this feature. AWS bills, etc I think with good management, this feature can be sold with a close enough marginal cost of zero. There are costs, yes, you can't just sell it to 500 users without support, but over time as the feature matures, there should be less support and less engineering power required to power that feature. You should be working towards being able to sell this feature without incurring (much) additional cost per unit sold Now in reality, we rarely sell individual features, and with every additional feature we add the overall complexity of the product increases and so development and support gets more expensive.