6 ms·

I'm confused by this, why would sales team know in detail the vRAM contribution to sales price, and how is it relevant to your purchase decision? I've never hea

I'm confused by this, why would sales team know in detail the vRAM contribution to sales price, and how is it relevant to your purchase decision? I've never heard of enterprise/SAAS pricing to be based primarily using cost plus pricing.

adammarples 2y ago
Isn't that exactly how a lot of things are priced? Ie. Snowflake. Pay for compute, pay for storage, etc.
- malfist 2y ago
  Some things are sure. But not most. You wouldn't expect to go to McDonald's and they tell you (or even know) how much the fertilizer to grow the corn that feed the pigs that made the bacon contributed to the price you pay for a burger
  - atq2119 2y ago
    If McDonald's insisted on having a long sales phone call to sell me a burger, then yeah, I'd expect them to be able to provide me that information.
    - gitgud 2y ago
      Really? That means you basically want to know what profit margins they’re running at… which no business would want to (or should need to) reveal
      - squeaky-clean 2y ago
        That's exactly what's happening to you when you're the prospective buyer in one of those calls. I'm not in sales, but I've had a job once where I could see all the financials. And we would very often be charging one customer 10x what we charged another for exactly the same tier of service. Sometimes the huge corps would be paying more for a lower service tier than a small corp on a higher tier.
      - WJW 2y ago
        You can find that information in quarterly published information for all publicly traded companies, and for many non-public companies with only slightly more searching.
  - IanCal 2y ago
    But McDonalds absolutely can tell you an objective measure of what they charge you based on what you're getting. They charge you x per burger and y per fries and ... The examples contained CPU and ram but that's not what they say everything should be - just some objective measure. Snowflake charge by time, storage and size of machine - though they never tell you what the machine actually is underneath. I don't know what their "large" is. Maybe it's by concurrent users, maybe amount of hours of support, maybe API calls. I think the key thing was "we'd charge you X because you'd use Y" rather than "we'd charge you X because you look like you might pay it"
- freedomben 2y ago
  Yes especially enterprise software marketed toward platforms/infrastructure usually are priced this way. SaaS products aimed at consumers or high-level business (like HR, Accounting, etc) often don't, so depending on what people's experience is mostly they may think differently
freedomben 2y ago
Some products (especially infrastructure) still bill based on (outdated and often irrelevant) core counts and memory count. A few years ago I talked to a seller of a PDF library/toolkit who wanted to know my production and staging core count before they would quote me a price. Explaining to them that it runs in a serverless function on-demand was fun, especially because they would say things like, "well, what's your average?" I would often reply and say my average is defined by a function where you take the number of active users (which itself is highly elastic) and calculate for average runtime at 4 cores per user for approximately 50 ms per page (which page count is highly elastic too) and sum to get "average core use per month". Needless to say it was like pushing a rope. More common now with SaaS seems to be employee count or some other poor proxy measurement for usage. I love actual usage based billing, but some of the proxies people pick are ridiculous. Like, if I have 5 seats or 500 employees, but 2 users spend 6 hours a day in the software and then 10 others maybe look at it once a quarter, paying the same for those is absurd and is not usage-based billing at all.
- ricardobeat 2y ago
  Usage-based pricing makes sense when you’re buying infrastructure products. For (most?) other things, the price is based on value, not material cost. The cost of that PDF generation might as well round up to zero, but developing the tech cost multiple man-years of work. How do you price that “objectively” unless you’re given a breakdown of the company R&D expenses, operation costs and margins. That is not a reasonable request. Either you’re happy paying $X because it solves your problem and brings equivalent value to your business, or you’re not. I do agree seat-based pricing is often ridiculous, but that’s a problem for the free market to solve. Alternatives usually pop up given enough demand.
  - freedomben 2y ago
    I agree that in general usage-based pricing makes the most sense (particularly as that is a good proxy for measuring how much "value" someone is getting from it), my biggest complaint was that the way they were trying to measure it was dumb and very outdated. It really only made sense in a world where everyone was still running on physical servers or VMs. I would certainly concede that pricing is a very hard problem for a product like this, but whatever pricing they come up with should at least map onto the system it's being used in. Basing it off of number of pages of PDFs generated might would make sense, but they insisted on knowing how many CPU cores I would be allocating (which makes little sense when it's deployed as a highly elastic lambda function!)

adammarples 2y ago

Isn't that exactly how a lot of things are priced? Ie. Snowflake. Pay for compute, pay for storage, etc.

malfist 2y ago
Some things are sure. But not most. You wouldn't expect to go to McDonald's and they tell you (or even know) how much the fertilizer to grow the corn that feed the pigs that made the bacon contributed to the price you pay for a burger
- atq2119 2y ago
  If McDonald's insisted on having a long sales phone call to sell me a burger, then yeah, I'd expect them to be able to provide me that information.
  - gitgud 2y ago
    Really? That means you basically want to know what profit margins they’re running at… which no business would want to (or should need to) reveal
    - squeaky-clean 2y ago
      That's exactly what's happening to you when you're the prospective buyer in one of those calls. I'm not in sales, but I've had a job once where I could see all the financials. And we would very often be charging one customer 10x what we charged another for exactly the same tier of service. Sometimes the huge corps would be paying more for a lower service tier than a small corp on a higher tier.
    - WJW 2y ago
      You can find that information in quarterly published information for all publicly traded companies, and for many non-public companies with only slightly more searching.
- IanCal 2y ago
  But McDonalds absolutely can tell you an objective measure of what they charge you based on what you're getting. They charge you x per burger and y per fries and ... The examples contained CPU and ram but that's not what they say everything should be - just some objective measure. Snowflake charge by time, storage and size of machine - though they never tell you what the machine actually is underneath. I don't know what their "large" is. Maybe it's by concurrent users, maybe amount of hours of support, maybe API calls. I think the key thing was "we'd charge you X because you'd use Y" rather than "we'd charge you X because you look like you might pay it"
freedomben 2y ago
Yes especially enterprise software marketed toward platforms/infrastructure usually are priced this way. SaaS products aimed at consumers or high-level business (like HR, Accounting, etc) often don't, so depending on what people's experience is mostly they may think differently

freedomben 2y ago

Some products (especially infrastructure) still bill based on (outdated and often irrelevant) core counts and memory count. A few years ago I talked to a seller of a PDF library/toolkit who wanted to know my production and staging core count before they would quote me a price. Explaining to them that it runs in a serverless function on-demand was fun, especially because they would say things like, "well, what's your average?" I would often reply and say my average is defined by a function where you take the number of active users (which itself is highly elastic) and calculate for average runtime at 4 cores per user for approximately 50 ms per page (which page count is highly elastic too) and sum to get "average core use per month". Needless to say it was like pushing a rope. More common now with SaaS seems to be employee count or some other poor proxy measurement for usage. I love actual usage based billing, but some of the proxies people pick are ridiculous. Like, if I have 5 seats or 500 employees, but 2 users spend 6 hours a day in the software and then 10 others maybe look at it once a quarter, paying the same for those is absurd and is not usage-based billing at all.

ricardobeat 2y ago
Usage-based pricing makes sense when you’re buying infrastructure products. For (most?) other things, the price is based on value, not material cost. The cost of that PDF generation might as well round up to zero, but developing the tech cost multiple man-years of work. How do you price that “objectively” unless you’re given a breakdown of the company R&D expenses, operation costs and margins. That is not a reasonable request. Either you’re happy paying $X because it solves your problem and brings equivalent value to your business, or you’re not. I do agree seat-based pricing is often ridiculous, but that’s a problem for the free market to solve. Alternatives usually pop up given enough demand.
- freedomben 2y ago
  I agree that in general usage-based pricing makes the most sense (particularly as that is a good proxy for measuring how much "value" someone is getting from it), my biggest complaint was that the way they were trying to measure it was dumb and very outdated. It really only made sense in a world where everyone was still running on physical servers or VMs. I would certainly concede that pricing is a very hard problem for a product like this, but whatever pricing they come up with should at least map onto the system it's being used in. Basing it off of number of pages of PDFs generated might would make sense, but they insisted on knowing how many CPU cores I would be allocating (which makes little sense when it's deployed as a highly elastic lambda function!)