Re: "Bill makes all the important decisions here."

Mike Masnick (
Sun, 18 Jan 1998 22:00:54 -0500

At 08:48 PM 1/18/98 -0500, Robert S. Thau wrote:
>Mike Masnick writes:
> > Which brings up the problem I didn't address, but you have brought up
> > inadvertantly: How the fuck do companies make money if they should be
> > giving away their product?
>Hmmm... I can't recall when the marginal cost of even large software
>products, in terms of media, was anywhere near $100.00, but software
>is routinely sold for far more. Some of this is the cost of support
>services --- but then again, it isn't hard to find software packages
>distributed over the net for four-figure sums for which support will
>set you back even more.
>I suppose one could argue that the market simply hasn't had time to

Sorta. I would say that, indeed, there isn't real competition there, and
there may never be (if a producer can't figure out some other way to make
the money from the product). It actually, somewhat, ties into Brian
Arthur's theory (the guy mentioned and dis-mentioned in TBTF). If you get
there first, and no one else can figure out a way to get the initial outlay
needed to make a product that will take away the market, you win. But you
damn well better be watching out for that possible competitor or you're toast.

If there is real competition, and MC=0, you're screwed. I have a friend
who used to work for a software company making tools that ran ~
$65,000/seat. Then someone came along and offered a similar, almost as
good product for ~ $800/seat and the first company thought "What
bastards!". But, hey, they had economics on their side.

As for the thing with support, it is often okay to charge for support,
since support (in most cases) does cost extra per marginal usage.