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This isn't even the mistake. Price has very little relation to costs - except that most products can't be sold below cost, at least not for long. The price of

This isn't even the mistake. Price has very little relation to costs - except that most products can't be sold below cost, at least not for long. The price of the iphone is a good example. All the costs that you name exist, but they are completely irrelevant. Apple sells the iPhone for a thousand dollars because enough people still buy them at that price.

brookst 3y ago
Yes. Commodities are priced at cost plus. Differentiated goods are priced based on value delivered.
- lotsofpulp 3y ago
  >Differentiated goods are priced based on value delivered. I prefer “perceived utility” rather than “value delivered”.
  - brookst 3y ago
    Sure, I enjoy semantic rhetoric as much as anyone does.
  - homarp 3y ago
    hence the cost of linux centos (before being killed) “value delivered”: same as RHEL “perceived utility”: a path to RHEL subscription Since the second is not true anymore for IBM, centos was converted to be less of a threat to RHEL by decreasing its delivered value, and offering a 'new' utility: kind of work like RHEL but please pay to get the full RHEL experience.
mlhpdx 3y ago
Understanding the cost of a product to a vendor is important to me as a consumer. If I’m having my house painted I will have many vendors willing to do the work at very different prices. It’s not a commodity since I have quality expectations and vendors have different levels of experience, skill and diligence. I know how much the paint, other consumables and equipment costs, so if they quote low or high on that I can take it into account. I can figure out what portion is labor, and conclude what level of skilled folks they’ll use. I can ballpark their profit and make sure it is in line with my values (I want them to have a successful business if they do good work, I don’t want to pay for a shiny new lifted F-350 4x4 dually Cummins diesel crime against humanity). Maybe it’s just me.

brookst 3y ago

Yes. Commodities are priced at cost plus. Differentiated goods are priced based on value delivered.

lotsofpulp 3y ago
>Differentiated goods are priced based on value delivered. I prefer “perceived utility” rather than “value delivered”.
- brookst 3y ago
  Sure, I enjoy semantic rhetoric as much as anyone does.
- homarp 3y ago
  hence the cost of linux centos (before being killed) “value delivered”: same as RHEL “perceived utility”: a path to RHEL subscription Since the second is not true anymore for IBM, centos was converted to be less of a threat to RHEL by decreasing its delivered value, and offering a 'new' utility: kind of work like RHEL but please pay to get the full RHEL experience.

mlhpdx 3y ago

Understanding the cost of a product to a vendor is important to me as a consumer. If I’m having my house painted I will have many vendors willing to do the work at very different prices. It’s not a commodity since I have quality expectations and vendors have different levels of experience, skill and diligence. I know how much the paint, other consumables and equipment costs, so if they quote low or high on that I can take it into account. I can figure out what portion is labor, and conclude what level of skilled folks they’ll use. I can ballpark their profit and make sure it is in line with my values (I want them to have a successful business if they do good work, I don’t want to pay for a shiny new lifted F-350 4x4 dually Cummins diesel crime against humanity). Maybe it’s just me.