3 ms·

It's not hill climbing. Gradient descent has some severe limitations. Also, I have mentioned it before but if you are charged 1% and someone makes you 2%, I

by ljd 14y ago

It's not hill climbing. Gradient descent has some severe limitations. Also, I have mentioned it before but if you are charged 1% and someone makes you 2%, I don't understand why you wouldn't buy from them. (On a side note: we earn our sellers more than 2% on average)

saurik 14y ago
Rereading what I said, I am not certain of the confusion, but I will expand: you can't evalulate the price of your product using the gross value it provides in isolation, you have to evalulate the price of your product using the net value it provides in comparison to competitors. If I ended up in the situation where I was paying you hundreds, certainly if I was paying you thousands, of dollars a month, I find it impossibly difficult to believe that I couldn't get more "bang for the buck" by spending the time to reimplement the features I am getting from you. (As an entirely unrelated argument, the optimal margin might not even be 1%: to charge a percentage of revenue for something that doesn't have any scaling terms in proportion to the dollars being moved is, to put it lightly, "bold"; my business, for example, probably couldn't afford 1%, yet I routinely move tens of millions of dollars... and I certainly, at the price of hundreds of thousands of dollars a year, would have no trouble reimplementing your setup, and in fact have done similar things as side projects on various occasions.)
- ljd 14y ago
  Customers that do tens of millions of dollars a year tend to call us and get a lower price from us. They don't use the signup box. It's common for enterprise companies to self select by calling for special pricing and in most cases we oblige. We want to make a fair deal for all parties. On the other hand, I get it - You would never use us, you would try to build it yourself. I can respect that. I get like that for a lot of stuff I see. The founding team's past experience is in algorithmic asset valuation, commodity trading and machine learning. We are life long learners and are dedicating our time to find better ways of helping ecommerce stores pick better prices. We have several years of experience in workflow automation and we apply that to our current business to make our product as cheap as humanly possible and pass those prices along. Our closest neighbor in the pricing game charges hundreds of thousands of dollars in fees because they use so much human labor to do things. Saurik, if you ever want to do one less thing and want us to do your price testing. Please give us call, I would love to find a price that makes it worth your time. After all, I am fond of dynamic pricing. :)
  - saurik 14y ago
    You seem to have missed the point of me providing that number (something I take some of the blame for, as I was explicitly mixing two arguments; I did go out of my way to attempt to differentiate them, however): I was demonstrating that even at an incredibly large extreme with regards to absolute revenue, the percentage margin doesn't really become affected; when I was moving tens of thousands (as opposed to millions) of dollars, the answer would have been the same: you can double my revenue, but at 1% you are talking about most of the magin that I'm currently playing with for my not-entirely-uncommon business model (where my upstream obligations, fees, and taxes, scale nearly linearly within my plausible target price range, with respect to the ticket price of the item being sold). It isn't because I would be an "enterprise company" that I would need special pricing, it is because your pricing model makes a fundamental assumption about the kind of business model that the other person might be engaged in: if you had a "percentage of profit" model--even though you would still be in the "this is too expensive: I could hire a full time developer and a CS grad student at less than this price to get 90% of the benefit" regime--you would no longer de-facto price yourself out of various markets. (FWIW, my experience on this is that I was a CS person with an algorithms fetish who was recently working with a long-time machine-learning specialist in a weirdly-related-but-not-even-remotely-competing area to your company. The result was lots of conversations both internally and with various of our clients with regards to how to price such a service: the result is that I have seen both a lot of failure modes of advertising and of asking for "percentage of revenue". This is, of course, in addition to running most of my current business on a "percentage of revenue" basis, and seeing the kinds of problems and misunderstandings it can cause.)
    - ljd 14y ago
      I understand where you are going now. To be fair, your point about certain people selling on low margins comes up with us and we usually start those companies at $1/product/month on our pricing and go down from there depending on how many products they want to price with us. We have been testing this pricing model to see if we will earn more revenue doing this. I appreciate your continued feedback and your clarification.

by ljd 14y ago

saurik 14y ago

Rereading what I said, I am not certain of the confusion, but I will expand: you can't evalulate the price of your product using the gross value it provides in isolation, you have to evalulate the price of your product using the net value it provides in comparison to competitors. If I ended up in the situation where I was paying you hundreds, certainly if I was paying you thousands, of dollars a month, I find it impossibly difficult to believe that I couldn't get more "bang for the buck" by spending the time to reimplement the features I am getting from you. (As an entirely unrelated argument, the optimal margin might not even be 1%: to charge a percentage of revenue for something that doesn't have any scaling terms in proportion to the dollars being moved is, to put it lightly, "bold"; my business, for example, probably couldn't afford 1%, yet I routinely move tens of millions of dollars... and I certainly, at the price of hundreds of thousands of dollars a year, would have no trouble reimplementing your setup, and in fact have done similar things as side projects on various occasions.)

ljd 14y ago
Customers that do tens of millions of dollars a year tend to call us and get a lower price from us. They don't use the signup box. It's common for enterprise companies to self select by calling for special pricing and in most cases we oblige. We want to make a fair deal for all parties. On the other hand, I get it - You would never use us, you would try to build it yourself. I can respect that. I get like that for a lot of stuff I see. The founding team's past experience is in algorithmic asset valuation, commodity trading and machine learning. We are life long learners and are dedicating our time to find better ways of helping ecommerce stores pick better prices. We have several years of experience in workflow automation and we apply that to our current business to make our product as cheap as humanly possible and pass those prices along. Our closest neighbor in the pricing game charges hundreds of thousands of dollars in fees because they use so much human labor to do things. Saurik, if you ever want to do one less thing and want us to do your price testing. Please give us call, I would love to find a price that makes it worth your time. After all, I am fond of dynamic pricing. :)
- saurik 14y ago
  You seem to have missed the point of me providing that number (something I take some of the blame for, as I was explicitly mixing two arguments; I did go out of my way to attempt to differentiate them, however): I was demonstrating that even at an incredibly large extreme with regards to absolute revenue, the percentage margin doesn't really become affected; when I was moving tens of thousands (as opposed to millions) of dollars, the answer would have been the same: you can double my revenue, but at 1% you are talking about most of the magin that I'm currently playing with for my not-entirely-uncommon business model (where my upstream obligations, fees, and taxes, scale nearly linearly within my plausible target price range, with respect to the ticket price of the item being sold). It isn't because I would be an "enterprise company" that I would need special pricing, it is because your pricing model makes a fundamental assumption about the kind of business model that the other person might be engaged in: if you had a "percentage of profit" model--even though you would still be in the "this is too expensive: I could hire a full time developer and a CS grad student at less than this price to get 90% of the benefit" regime--you would no longer de-facto price yourself out of various markets. (FWIW, my experience on this is that I was a CS person with an algorithms fetish who was recently working with a long-time machine-learning specialist in a weirdly-related-but-not-even-remotely-competing area to your company. The result was lots of conversations both internally and with various of our clients with regards to how to price such a service: the result is that I have seen both a lot of failure modes of advertising and of asking for "percentage of revenue". This is, of course, in addition to running most of my current business on a "percentage of revenue" basis, and seeing the kinds of problems and misunderstandings it can cause.)
  - ljd 14y ago
    I understand where you are going now. To be fair, your point about certain people selling on low margins comes up with us and we usually start those companies at $1/product/month on our pricing and go down from there depending on how many products they want to price with us. We have been testing this pricing model to see if we will earn more revenue doing this. I appreciate your continued feedback and your clarification.