🚀 go-pugleaf

In article <1992Aug6.141753.18854@Happy-Man.com> irving@Happy-Man.com  
(Irving_Wolfe) writes:

>  Glenn really has a blind spot here.  Piracy is still high
>  because of improperly high prices.
>  
>  Ah, but books cost $5 to $50, because the publishers want
>  to sell a lot of copies.  The inconvenience of copying
>  a book, together with almost everyone's desire to obey
>  the law (even when it's of such dubious public value as
>  our anti-consumer copyright and patent laws), ensure that
>  few books are copied -- because of fair pricing.
>  
>  Software typically costs $50 to $2,500 (or more).  This
>  10 to 50-fold excess over other publications' pricing is
>  much more responsible for piracy than ease of copying
>  is.  The typical software consumer, unlike the typical
>  book-buyer, feels that "the system" is victimizing him.
>  Whether or not that feeling is justified, it is real,
>  and the typical user feels that because he was charged
>  10 times a fair price, he has the right to make copies
>  for all his friends, whatever the law may say.
[more drivel deleted]

I posted something like this about nine months ago.  I guess it's time
again.

Imagine a typical small NeXT development company.  4 people, two are
programmers.  Here would be a 'typical' month's expenses:

	Rent		$1,500	(assuming rock-bottom small office in
				Houston - Bay Area would probably be more)
	Utilites	$500	(AC is expensive - got to keep those hackers
				cool! not to mention long-distance and (800) 
				charges)
	Salaries	$8,000	(extremely modest start-up style salaries)
	Computers	$700	(Lease with unrealistic interest rate for two 
				usuable developer systems)
	Supplies	$250	(paper, toner, Coke, etc...)
	Advertising	$2,666	(1 full page ad per issue of NeXTWorld
				(at $8k an issue)
----------------------------------------
	total		$13,616

Now, lets say that this campany sells a realtively high-ticket item,
like a word-processor.  And lets assume that it is a good product and
has been out for several months.

OK, lets guess and say that this company is going to do pretty darn
well and sell 2000 units this next fiscal year (5% market penetration
out of about 40k NeXTs).

That's 166 units a month.  $13,616 / $166 = $82 per unit to break even
as far as overhead. and I'm not even counting packaging, duplication,
postage, taxes, legal counsel, accounting, janitorial or misc.
professional fees, travel, a booth for trade shows, e-mail, etc...
Heck, I'm not even including $291.66 a month for this company's yearly
NeXT-Edge subscription.  (big smiley)

With this in mind, I would say that this product would have to sell
for at _least_ $250 if this company expects to stay alive and keep
the venture capitalists happy much less grow or develop new products.

BTW, I think these numbers are totally unrealistic.  It costs a hell
lot of money to run a company, deliver a product, sell it, and support
it.  It costs a lot more to maintain and update software than a book.
A couple of mispellings in a book isn't a big-deal.  One extra or
missing ampersand could doom a piece of software.

If anyone thinks my hypothetical expenses are too high, or my sales
expectations are too low, go ahead and flame me and remain ignorant.
However, I expect the many professional developers on this group to
back me up.


thanks,
andrew
-- 
andrew@cubetech.com     | "We shall not cease from exploration
Andrew Loewenstern      |  And the end of our exploring
Cube Technologies, Inc. |  Will be to arrive where we started
                        |  And know the place for the first time." -T.S. Eliot