Subject: Re: Irrational customers?
From: Brian Bartholomew <bb@wv.com>
Date: Thu, 17 Feb 2000 14:47:27 -0500

Stephen writes:

> _If_ you are in a one-on-one bargaining situation comparable to
> buying a used car, then knowing the profit margin of the vendor may
> help you.  But in such situations you're buying a one-of-a-kind
> good, and you need a lot more information anyway.  It pays you to
> carefully research both the vendor and the good itself.

I could have written that paragraph; perhaps our positions are not as
far apart as I thought.  If I'm looking for a vendor to supply me with
a legal copy of ShrinkwrapWare version 3.14, then as long as they
deliver all I care about is price.  But if I'm choosing between
ShrinkwrapWare and BundledWare, each of which is a unique pattern of
bits, I have to shop extensively.

> But in those cases, no vendor in her right mind would reveal profit
> margins.  You have to get them from the "blue book" or whatever.

When I'm the vendor for a unique program that I have a copyright
monopoly on, I reveal profit margins to demonstrate a lack of abusive
monopolistic intent.  Or at least that was the theory, which I'm now
doubting.

> But that's not the case you're talking about in your "experiment".
> The idea of shopping on price/value implies that (1) there is a
> market of several vendors

In my case, the market is for the service of program development.  You
can hire any of a million developers to write your program.  My
service is delivered simultaneously to a group of otherwise unrelated
customers, but that's not what I'm emphasizing.

> and that (2) value can have a market price (ie, all customers
> perceive value basically the same way).

My experiment seems to disprove my assumption of this.

> In that context, profit margin information tells you nothing about
> what the vendors are likely to do.

I think I learn meaningfully more than "nothing".  For instance, I can
reasonably assume nobody will operate a business at a loss forever.
Other software developers are not a completely unknown animal.  I can
estimate the lifestyle they're earning and guess if it's sufficient to
motivate them.

> Brian, the whole point of your first post was that you acknowledge
> that you don't know what customers want, because you offer them what
> you think they want and they ain't buying.  Now you claim to know?
>
> Methinks this is a contradiction.  And the height of hubris to pretend
> to judge who's telling the truth better, when you can't define it.

My first post complained that I wasn't finding customers who thought
like me.  I suspect I know what the customers I *have* found want:
Fischer-Price busy-box screens and the help-customers-fool-themselves
walking-the-edge-of-fraud techniques from _Information Rules_.

I have two problems with simply selling people what they want.  One,
as a personal social goal I want to educate and convince people to
fool themselves less.  It seems to me that people in general are
becoming less intellectually capable over time; this scares me as a
citizen.  I really hope this is a variant of the fallacy "today's
youth is going to pot", and a product of shifting baselines after
moving from Florida to Boston.  Two, the more satisfied customers are
initially, the less satisfied they will be when they realize how
they've been led to fool themselves: "This way to the Egress."  Then
they blame me for helping themselves fool themselves, which is a
service they required from me before.  The commercially successful
approaches are all too obvious.  What I haven't concluded yet is that
the commercially successful approaches are the best I, or anyone, can
do.  Maybe I'm just whining because my altruism isn't being rewarded.

Brian> This was the intro to the group to prove I was for real.

> In other words, you offered them an "honest business plan" that made
> no business sense.  Why should they trust you?  You look like either a
> swindler (I gather that what you meant by the comment about what you
> are getting and would want for future work is that it's not included
> in the $2000; this is a type of swindle called "bait-and-switch") or a
> fool (possibly well-meaning in the latter case, but still a fool).

The intro development offer was at the same hourly rate and license
terms I was offering to use for larger development projects: Expect to
pay me $xxx/hour, I'll sell copies for ($xxx/hour * #hours) /
#customers, and put results in the public domain either immediately,
or after six months if that eases customer concerns about free riders.


A member of the League for Programming Freedom (LPF) http://lpf.ai.mit.edu
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Brian Bartholomew - bb@wv.com - www.wv.com - Working Version, Cambridge, MA