From mboxrd@z Thu Jan 1 00:00:00 1970 X-Spam-Checker-Version: SpamAssassin 3.4.5-pre1 (2020-06-20) on ip-172-31-74-118.ec2.internal X-Spam-Level: X-Spam-Status: No, score=0.8 required=3.0 tests=BAYES_50,LOTS_OF_MONEY autolearn=ham autolearn_force=no version=3.4.5-pre1 Date: Fri, 18 Sep 1992 15:31 EDT From: SAHARBAUGH@ROO.FIT.EDU Subject: Re: Ada's (in)visibility and pricing! Message-ID: <9209190322.AA21359@ajpo.sei.cmu.edu> List-Id: pat gioannini asks: I agree, this is insane. The Sun SPARC 1 compiler is probably identical to the Sparc 2 ( and if it is not it should be ). When I asked one vendor why they had this pricing arrangement the said that it was because of the precieved power of the machine; the compiler was in fact identical. I asked another vendor why their VMS compiler was ~$50,000 when their unix compiler was ~$10,000. Both of these compilers were cross compilers to the same target. The answer boiled down to people expect to pay more for a VMS compiler. Can anybody give a rational explaination for these pricing schemes. For people who what to use Ada pricing the the single biggest problem. Ok, I'll take a shot at giving an explanation: 1. Price and cost are not necessarily related. 2. In a competitive economy all equivalent products are priced the same. (This is the argument suppliers may use when accused of price fixing) 3. It is comfortable for a vendor to price his product based on "displaced costs". e.g., I have a product to sell you for $1 and you will save $2 every month. If the buyer has the $1 he will be very anxious to give it to the vendor. Now as to the Ada compiler pricing: If the compiler is for a PC the vendor knows that it will support one software developer at say 100 lines of code per minute. If the same compiler is hosted on a Unix box with 10 users then 10 software developers can use it, each at 100 lines per minute (averaged over say a 30 minute interval). The user gets X10 benefit, the vendor should get X10 price. In general, the economists use a model called a "demand curve". The vertical axis is the number of units sold and the horizontal axis is the price per unit. The general shape is y=1/x, i.e., as the price per unit goes to zero, the number sold goes to infinity; as the price per unit goes to infinity the number sold goes to zero. The vendor looks to maximize revenue and looks to the demand curve for guidance. His revenue is price per unit times number of units sold, or R=X*Y. He seeks to maximize R. Geometrically X*Y is the area of a rectangle whose upper right corner touches the demand curve. Now as to Ada compiler pricing: Who knows the demand curve? Probably noone. It changes with the economic winds, competition etc. The vendor must feel it out. Have a sale, drop your price and see what happens. If R goes up then you know you are going in the right direction. If it goes down then don't continue the sale, and next try adding a feature or two and raising the price. ( You have heard the joke, "we lose money on each sale but we make it up in volume" That is not a joke, it is called "marginal pricing" where you sell below cost but volume goes up, R goes up, you overabsorb your fixed cost and make additional profit in excess of the original loss. Its a lot of fun if you're playing with someone else's money.) I don't vend Ada compilers but I do vend Ada related services and products. I have a LOT of sympathy for Ada compiler vendors. Their market economics is distorted by one dominant customer (Uncle Sam, no relation) and their users are very smart, some smarter than they are. (What I mean is knowledgable of the technology, not basic IQ). They are caught where the Capitalistic system is trying to serve the Government. They aren't allow but they are They aren't allowed to make much money but they are allowed to go broke. No wonder they look to C++ where the market forces are "normal". I hope this helps some. I would suggest a book on Product Management for the interested reader. sam harbaugh saharbaugh@ROO.FIT.EDU -----------