Tiered pricing

["Reeve Fritchman" <reeve@xxxxxxxxxx>]

1.  Besides the fact that it's the "norm", what reasons are
given for the need to price software on a tiered level?  It's about the
economics of recovering your investment.  Do you think IBM would have sold
all those AS/400's if the OS/400 charge was = ((development cost + support
cost) / machines produced)?  Lots of vendors take advantage of this
technique; it helps balance the price paid to the value received.  OS/400 is
an extremely expensive product with a relatively small market; it's not like
gasoline or any process product.  Once the refineries are paid for, gasoline
is cheap to produce but it doesn't get any better...and we'll leave V5R1
editorial comments out!  OS/400, on the other handle, requires constant
"building" by expensive people.  _You have to have tiered pricing to allow
the low-end guys in_.  And I'd suspect OS/400 is more complex (read "more
expensive") than most other OS'es because so much of the iSeries identity is
software-based.

2.  Does the software for a larger machine require more
coding, support etc. to make up for the difference?  Yes, theoretically:
large users will use more of OS/400's capabilities and IBM's resources to
support all that nasty stuff.  If you don't like that answer, see #1!

3.  What other industries tier their pricing for the SAME
product?  (ie gas costs the same for a ferrari and a tempo).  This question
isn't relevant; the implication is that tiered pricing is bad or wrong.
College students and senior citizens pay less for tickets and drivers'
licenses; we have welfare and a regressive income tax system.  Oops..sysop
politics alert!  I'll be nuked fer sure...Same services, different
prices....shrieking telephones....