Subject: Re: "I've got more programmers than you"
From: Bernard Lang <>
Date: Sun, 7 Oct 2001 15:39:00 +0200

Is it correct to consider that the idea of free software economy is
that COGS may be considered 0 if people just download their copy from
the internet, while a free-software company may actually have to have
another business offer because there are others costs to be covered
(e.g. R&D).


On Sat, Oct 06, 2001 at 06:38:41AM -0700, Larry Augustin wrote:
> > From: Christian Robottom Reis []
> > 
> > > Gross Margin:
> > 
> > Margin after you've paid off direct suppliers. In a grocery store, for
> > instance, the what's left of the revenue after you've paid the farmers
> > that sell you your vegetables. I'm not sure why EDS has so low gross
> > margin here, though, so maybe I'm wrong.
> This is one people often don't understand.  It's not just direct
> suppliers (which is called "direct material cost" and the associated
> "direct material margin").  It's the total cost of providing the good or
> service.  (COGS == Cost of Goods Sold.)  It's not the cost of selling,
> marketing, or developing the good or service.  Think of it this way.
> You could spend the costs to develop, engineer, market, and sell the
> product without anyone ever buying.  Once they buy, you have certain
> costs necessary to deliver the good or service.  Those include the cost
> of manufacturing the good (including labor), and the cost of supporting
> the good or service.

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