Subject: Re: Irrational customers?
From: Ben_Tilly@trepp.com
Date: Tue, 15 Feb 2000 14:36:21 -0500


Brian Bartholomew writes:
> For years I've been championing a business model whereby software
> vendors use simple accounting, reveal their profit margins, and
> compete on price and value.  Now I'm wondering if that model is
> realistic to sell to *any* non-trivial group of customers.

Why should a customer care what you made in profit?  They care about what
they expect to get and what they expect to pay.  The rest is irrelevant.

> Ah, experimental evidence.  Recently I've been trying to scare up some
> programming work involving EMC, a Linux-based machine tool control
> produced by NIST (US tax-funded research).  The EMC mailing lists seem
> to consist primarily of home hobby machinists -- smart, capable
> people, but not primarily computer nerds.
>
> EMC is based on real-time Linux, and the install process is ugly.  To
> a non-computer-hobbyist, it's a major stumbling block.  I proposed a
> "Brain-Dead Install" cd with as much stuff pre-integrated as possible,
> to sell 100 copies at $20/each.  I received 15 solid customer leads at
> a price of $20.  When people started reading the rest of my post,
> wherein I talked about the rate I was earning to do this and proposing
> to do more work at this rate, the momentum stopped.  It was the same
> old "you should volunteer your time for our needs" attitude.  But yet,
> these same users still buy highly-proprietary packages that are, as
> far as I can tell, a much worse deal -- but the costs are hidden.

How much is it per CD for the proprietary stuff?  What is the volume?

People want to know what they are getting.  This is not the same as being
told by the author what the author thinks it is worth.  It is testing it
out (in the case of shareware) or seeing it advertised and others using it
(in the case of proprietary software).  But accepting someone else's word
(particularly when that person has reason to shade the truth) is not
generally wise.

> Are the customers that irrational?  Are the customers rational and I'm
> not appreciating how?  Should I give up and give them what they want,
> software on terms I wouldn't want to buy it on?  Where are the
> customers who understand TANSTAAFL, and prefer to shop smart?  Is
> there some secret group of capitalists hidden off in a mountain valley
> somewhere, who I would rather sell to? :-)

It seems to me that you don't understand what is valuable to consumers...

Trust me on this.  Accepting someone else's self-promotion at face value
can be a great deal if that person is honest, and can be really stupid...

Cheers,
Ben