Re: [RE: Tierred pricing ...]

["Mike Naughton" <mnaughton@xxxxxxxxxxxx>]

I've been thinking about this, and I believe a reasonable case can be made
for selling the "same" machine for different prices, with the lower-priced
models being somehow geared down so that they can do less work.

Let's say I can make a machine that is capable of 1000 units of work. But
maybe most people don't need something that big -- maybe they are only
looking for 500 or 100 or 50. I could produce separate machines for each
level, but maybe it's easier for me to produce the one machine and simply
put a governor in that controls how many units it will actually produce.

What's wrong with my saying that if you want a machine that only does 50
units, you pay $50, but if you want one that does 1000 you pay $1000?
Maybe if I sold them all for $50, I wouldn't make any money, but if I
tried to sell only $1000 machines I wouldn't sell enough to cover my
development costs. Tiered pricing means I get to sell more machines, but
the smaller customers (i.e. those with smaller needs) get to pay less (and
actually, everyone is paying $1 per unit).

Maybe the big problem generally (and with the AS/400 in particular) is how
best to define "units". Using processor group or number of sign-ons may
work on average, but there are always exceptions that don't fit the
pattern. As someone pointed out, ideally these would be negotiated
individually (I once worked for a company that did that), but it's
time-consuming and it assumes good faith on both sides.

I don't think many of us object to the general idea that if you want more,
you should pay more. The problem comes when you really want different (not
more), but the only way to get it is to pay more.  In some ways, this
reminds me of the "programmer productivity" discussion -- we all know a
reasonably-priced machine when we see one, but no single definition really
seems to cover the bases. . . .

Just my $.02

midrange-l@midrange.com writes:
>Carl:
>
>"Carl Galgano" <cgalgano2@ediconsulting.com> wrote:
>> David:
>> With all due respect...
>> Your model is the basis of socialism.  Give according to your ability,
>take
>> according to your need.
>
>Been thinking about this and it brings up a question. Is your concern
>primarily about socialism or about tiered pricing? I'm not arguing for
>nor against tiered pricing in the iSeries marketplace, but it seems to me
>to be a _very_ capitalistic pricing model.
>
>Tom Liotta


Mike Naughton
Senior Programmer/Analyst
Judd Wire, Inc.
124 Turnpike Road
Turners Falls, MA  01376
413-863-4357 x444
mnaughton@juddwire.com