3 ms·

> Look at pricing of Google workspaces or Office. This is a common mistake in understanding pricing. The reason Office (or consumer apps like Spotify & Netflix

by runako 3y ago

> Look at pricing of Google workspaces or Office. This is a common mistake in understanding pricing. The reason Office (or consumer apps like Spotify & Netflix) are able to be relatively cheaper is because their addressable market is vastly larger. Larger markets support lower prices, where the winners still end up earning more revenue. By contrast, smaller niche markets have fewer potential customers over which to amortize their wares. This means that all things equal, those applications will tend to cost more. As a reductio thought experiment, consider that anyone can buy Microsoft's newest OS, the product of many tens of billions of dollars of R&D, for less than the cost of a tailored suit. But suppose you needed to buy an OS that would only ever run on 50 devices worldwide, how much do you think that would cost?

Terretta 3y ago
And yet, your theory is clearly falsified when priced as a one time sale. The larger companies' software costs more, across the board. Your explanation ought to be true either way, but it isn't. And it doesn't have to be a thought experiment, there remains just enough single purchase software around to check. That's because except for "artisanal", "boutique", or "Veblen" products, the user doesn't care about your costs, they care about their utility (and for Veblen, the cost is its utility). Goes back to my initial comment: there are a misleading number of buyers willing to pay too much to "support the artist", as I do in software. But that is a very small addressable market relative to those who will pay for their utility, but not for your failure to scale.
- runako 3y ago
  > And yet, your theory is clearly falsified when priced as a one time sale. I don't understand what you're saying here. Could you provide some examples? Also I should have added the caveat that I'm talking about sustainable pricing models. Yes, there are lots of small companies that don't yet understand how much they need to charge in order to thrive long-term. Those are not great counter-examples, because they represent a creator subsidizing her customers. That can only last so long.

by runako 3y ago

Terretta 3y ago

And yet, your theory is clearly falsified when priced as a one time sale. The larger companies' software costs more, across the board. Your explanation ought to be true either way, but it isn't. And it doesn't have to be a thought experiment, there remains just enough single purchase software around to check. That's because except for "artisanal", "boutique", or "Veblen" products, the user doesn't care about your costs, they care about their utility (and for Veblen, the cost is its utility). Goes back to my initial comment: there are a misleading number of buyers willing to pay too much to "support the artist", as I do in software. But that is a very small addressable market relative to those who will pay for their utility, but not for your failure to scale.

runako 3y ago
> And yet, your theory is clearly falsified when priced as a one time sale. I don't understand what you're saying here. Could you provide some examples? Also I should have added the caveat that I'm talking about sustainable pricing models. Yes, there are lots of small companies that don't yet understand how much they need to charge in order to thrive long-term. Those are not great counter-examples, because they represent a creator subsidizing her customers. That can only last so long.