Comment by ricardobeat

Comment by ricardobeat 2 months 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.

eastbound 2 months ago

Salespeople often misunderstand value-based pricing. If a product costing V dollars is made of N parts, then each part provider claims their value is V, so they deserve V-$1.

A PDF conversion may be required for the end-users, but it doesn’t make the entirety of the value of the product. It just doubles it, as well as the N features before that. But although each feature doubles the value of the product, the order of features doesn’t matter; A PDF export might have been added as the second feature, but the 10th feature still doubled it.

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WJW 2 months ago

It's uncanny how accurately this maps to departments claiming they contribute V-$1 of the total profits. Sales argues they bring all the money, engineering argues sales would have nothing to sell without the products being made, platform claims no products would run without the infra they provide, support claims everything would grind to a halt without their constant babysitting of the users, etc etc. Only HR and Facilities don't claim to be directly responsible for any revenue, but that's only because everyone needs them anyway.

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- stavros 2 months ago
  
  Well, it's all true. Without one of these, there would be no V.
  
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freedomben 2 months 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someone is getting from it), my biggest complaint was that the way they were trying to measure it was dumb and very outdated.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!)

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doctorpangloss 2 months ago

You sound like the worst possible customer. Don’t you see? Nobody is obligated to serve cheap people.

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- freedomben 2 months ago
  
  > You sound like the worst possible customer. Don’t you see? Nobody is obligated to serve cheap people.
  No, I don't see, but it's clear from your personal attack that you do see and that you can help me, so thank you in advance. Please, help me to see.
  Can you please point out to me where I'm being the "worst possible customer" ? Is it because I refuse to lie and/or make shit up to jam my extremely square peg into their round hole? (which I might add, would open me to legal liability down the road if I guessed wrong (lawsuit for underpaying license fees), or would mean I drastically overpay and even bankrupt the company if I guess way too high. What if I get one customer and use 500ms of a single vCPU all month, but I guessed 50 vCPU?).
  If they want to know things that I don't even know in order to price them, what else should I do? I have a theoretical product that doesn't exist yet, with 0 users, 0 vCPUs, and 0 vRAM because it isn't deployed yet. I have no idea if I'll get 10 users in the first year or 10,000,000. How many vCPUs and vRAM should I tell them so they can price it? Keep in mind this will be deployed in an AWS lambda function so it scales literally on-demand, demand that we have no idea of yet because the product doesn't exist. We also have no idea how much CPU and RAM it will even need, because again it doesn't exist so it can't be profiled or measured. If you can't answer that, I won't accuse you of being "the worst possible customer" ;-)
  Maybe a different approach. I have a PDF library that I want to sell you. I typically charge $10,000 per vCPU per month. You are thinking about building a product on top of my library and ask me for pricing (which I don't publish anywhere so you have absolutely no idea what to expect). You have no idea how many users (if any) you'll have, and you plan to deploy this as a lambda function that can scale from 0 to Infinity almost on-demand. I ask you how many vCPU per month you're going to use so I can quote you a price. What is your answer?
  
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Aeolun 2 months ago

> How do you price that “objectively” unless you’re given a breakdown of the company R&D expenses, operation costs and margins.

You ballpark how long it would take you to build something similar? You don’t need any breakdown for that, just a marginally competent engineer on staff.

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immibis 2 months ago

Software developers:
> we can't do estimates.
Software developers as soon as estimating something would be beneficial for them.
> all you need is one of us on staff, to do estimates.

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- Aeolun 2 months ago
  
  You can’t do estimates without specifications, which is what everyone wants. If you have a literal product to estimate, it becomes a lot easier.
  
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