The Cost of Free Doughnuts: 70 Years of Regret
npr.org
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There was a time when they charged for data points/performance traces ingested into the system. At our scale, we were paying around $100/month. We were prepared to scale that to their, I think it was, $550/month plan when our usage got that high.
They relatively recently changed their structure to charge per registered user. This would have raised our bill to around $1500/month at our current scale, to get all of of the stakeholders in there.
This is a cost incongruent with the value we were getting out of it. Even a ~$500/month price tag does not correlate with the value received, at our scale. It would one day (its a great product), but not today. So, today, we have two employees who have access to that, keeping our spend the same.
Here's the key component of this pricing change though: They will, no longer, be able to grow revenue with us. A pricing change forced us to make organizational changes. Those organizational changes mean that fewer people are seeing any value the product could deliver. When fewer people see the value, then the product has fewer advocates within the organization; its fungible utility will eventually be rolled into a competing product we already pay for, like Datadog, even if the experience is worse, because when we discuss Engine its always prefaced with "Oh, I think Dave in ops uses that, no one else does".
For an APM tool like Apollo, only one of these requirements is true. It does provide a lot of value. But, there's no network effect, and their expenses do not correlate with users on the platform. That last point is the craziest one; being long-time users of Meteor and Apollo, I've always questioned the technical and executive leadership behind the Meteor Development Group (now Apollo), and they've done nothing in recent history to give faith that its a well-ran organization.
Retool (https://retool.com/) is another weird one. Amazing, amazing product. Truly transformative; what they're building there is unreal. There's a very light network effect in play, and usage may correlate better with users-in-app than it would with Apollo Engine, but charging per-user still feels weird. For them, I feel some form of bucket'ed plans, which allot X users, Y "applications", plus gated feature sets like SAML and Audit Logging, would make more sense. But, what do I know.
If you have a B2B SaaS product your goal should be optimizing for getting the maximum users in an organization. The more people who use your product:
- The harder it is to move off your product
- If people like the product, when they leave, they'll evangelize your product to their next employer
- It's less likely that different teams/business units/etc will try a competitor's product because there's no seats available for them (and the money is going to come out of their budget anyway--they might as well decide on the product)
- You're not causing friction for team leads who have to justify budgets every year
How many people have worked somewhere where there's 50 seats paid for and you can't go to 51 because that takes you from "Pro" to "Enterprise" at a huge jump? There's way too much shenanigans that goes on because companies make paying them money painful.
I've been working on evaluations of several enterprise developer tools in the last month and without fail all have licensing requirements that are per-seat and painful. The result has been that instead of the whole organization embracing the tool, a much smaller set of users is going to get it. The thing that's crazy is that the cost to the SaaS provider has nothing to do with the number of users.
Surely their support costs scale with the number of users? This might explain some anti-growth behaviors, support is expensive and a lot of companies struggle to get it right.
It doesn't increase going from 100 to 500 to 2000 users, because none of these users can raise support requests to the vendor. It's only the person (or micro team) who did the product evaluation and drafted the contract who has contact to the vendor support and sales team.
If you've worked in any large organization, above one thousand employees, doesn't matter how many above really. For any specific system, there are often only 1-3 people who are familiar with it and have access and would be willing to touch it.
There will be a few tens other employees who knows about them and have half a clue what they do (typically same department or neighbors sitting nearby). If one of those hear you looking for help on X, they can direct you "oh I think it's managed by that guy". The other 1900+ can't help you.
Having been the unlucky developer at work trying to track down whom to forward a ticket through (100k employees), for both internal services and external vendors. It's not uncommon that it takes weeks to find the one person. There are quite a few I've never found.
So yes, support can grow as user counts grow. But it shouldn't be a major expense (if it is that's a product failure).
Most "investment information"-type products are 25K-50K/user/year.
It's likely some people here will consider this low pricing, but it's a significantly different pricing model to the sell cheap, stack high $9 to $50/user/month type app.
That pricing model is not applied to most information, like pricing data and any sort of API, because these are not about physical users. (They do charge a ton but not per user).
It's not, actually. There's a bunch of financial information products that aren't aimed at traders that are around this price point.
Pitchbook is a good example. $30k/year.
And the whole point is that it's a limited number of people. The price has to be high to make it worthwhile.
There's a bunch of markets like this where your pricing advice isn't correct and that needs to be noted.
We have ended up telling everyone to use Retool with their personal email, then if they want to add an app they made to our company account (so they can used more advanced features eg. embed mode) they should chat to one of the small number of people with access to that account. It's mega annoying and I'm sure heaps of people don't bother.
I hope the team at retool reads hacker news.
Thank you for the feedback — that does sound infuriating. We were optimizing for sharing of applications, but it sounds like the workflow you've adopted is really quite annoying. I'll have a think about what we could do here that might help (e.g. perhaps disabling "auto-adding" to accounts). If you have any suggestions please let me know (my email is in profile)! (I will send you an email by end of day otherwise with some thoughts...)
But Retool is too expensive for us, because we have many situations where we might use an app 100 times max for the life of the app, spread over a dozen or more users. Your pricing didn't work, even though your product did and I'm 100% certain you would be profitable with us as customers.
One thing we don’t advertise — we only bill for active users every month. So if 10 people login during a month, but 50 don’t, we only bill you for the 10. Do you think that’d help you guys?
(I’ll send you an email in the morning to get more feedback and see what kind of pricing would work for you. Thanks again for the feedback and for trying Retool!)
But we have a ton of part time, low hours customer support we would use with Retool and the pricing was just obscene for our use case. Would have loved to use it though!
Per-user pricing is indeed tricky for us, since people oftentimes think about the value as per-app, not per-user. But ultimately, we want to encourage, not discourage the building of apps on Retool, and our best customers view Retool as a platform for building all their internal apps. (The best customers typically build 100+ apps on Retool.) That's why we don't price per-app.
But it's possible per-user pricing also isn't optimal. If you're open to it, I'd love to bounce some ideas off of you. Do you mind sending me an email? (I can't see the one in your profile.) Thanks!
When you start selling per-seat licenses, everyone is incentivized to reshape usage so that only one seat is needed. That one seat is used by a team member who becomes the internal expert on the service, while everyone else turns to him or her for help
Assuming the employee doesn't decide to abandon the product first, because who wants to be the only person on a tool that can't be used by any of your teammates or interns.
And that has ripple effects if they deal with vulture capitalists as well.
Presumably you'd have to design the A/B test around this to get much use out of it. However, when you're just starting a service and not sure how consumers will view the value of it, the benefit is obvious.
Plus complex A/B test (eg per user vs per app billing) are complex to build and hard to get statistically significant results. You might have a perfectly reasonable SAAS business with 100 customers.
99% of the time if your pricing page doesn't have a list of prices along the top, that will be a nonstarter for a non-technical business oriented person.
If you give them multiple models and ways to do things then they will have to think over what is right for them, and someone thinking over it might decide not to go with you.
On the one hand I can see the point, I hate to think too much over things. But I also hate how often products don't have a reasonable model for my use case.
Marketing and Product rag on Sales a lot for discounting. Nevermind the fact that we own the touchpoints with an account, so it only makes sense that we'd know what any individual account needs. I've had this issue with Marketing and Product professionals since I started in Sales, and even more-so when I took over Sales Enablement and Sales Ops.
For one, pricing is a big deal, but value is bigger. I could sell you on that $1500/user easily by giving you a work product that factors the product roadmap, your business roadmap, and makes a compelling ROI case for you. I'm willing to give you those 8-11 hours.
But we both know it'll be wasted. Because in 90 days, Marketing will push a discount campaign that conflicts with preexisting agreements, and thereby throws all of that work product up in the air. We'd have to go back to square one and recalculate everything to see if a deal even exists. Or Product decides to drop the roadmap, delay a feature, realign to attempt to capture more of a saturated market.
You know who sets pricing? Pricing experts. And maybe, just maybe, if they spent five minutes on a discovery call with you, they'd understand why you bring up discounts, why I would rather give you the discount, and why both of us walk away knowing we missed an opportunity for quality relationship-building.
I tried this once with an account. We locked their pricing down, pushed a work product out justifying our use case. The account came back and requested we drop the discount, that they saw the additional upfront cost (nearly $40k+) as an investment in our roadmap that could return utility for them sooner rather than later. We made it six months post-close before Marketing and Product decided to completely drop the current roadmap and work on something else. I had to issue more than $22k back to that account, and we got forced into RFP by the parent org, which we lost and subsequently lost all business from them, domestic and international.
So. Thank you for airing your perspective. And just know that people like me have stormed in and out of meetings, and still do, trying to stop this BS.
Everyone wants to sell on _value_ and in an ideal world you could go up the food chain and say, "hey, if we spend $10,000 on this, we save $100,000 in employee hours". That should be the easiest decision in the world, especially if you could come back in a year and figure out it was really $105,000.
However budgeting in just about any organization I've been involved in doesn't work like that. You ask for $10,000 and there's no budget for it. Even if there is, there's no guarantee that next year you're not going to have to "tighten belts" and "sharpen pencils".
So.. a bigger question. Why doesn't budgeting work like this?
If the employees that you saved time from are hourly, you can just cut some hours and probably save money. Although you have to offset that with reduced morale if you cut employees/hours.
If you're saving time for salaried employees, you probably can't just cut hours. Now you have 1,000 spare man-hours this year, what do you do with them? If you saved 1000 employees the same amount of time per day, each of them has an extra 13.7 seconds per work day. A basically useless amount of time. If you freed up that time from only 100 employees, each gets an extra 20 minutes a day, which is an actually useful amount of time, almost 2 extra hours a week.
Assuming that you have saved a significant enough amount of time per employee, then the question becomes do you actually have productive work for them to do? You only saved money if you were going to hire people that you no longer have to hire, if those employees can create something with that spare time that generates revenue, or if you saved enough time that you can fire employee/s.
It's the same concept as discounts. Yes, discounts can save you money, but only if it was something you were going to buy anyways. It's like buying a new phone because it's 20% off. If your old phone was on it's last leg or you were going to buy one anyways, you saved 20%, yay. If you have a brand new flagship phone and you buy a new one just because it's 20% off, you haven't actually saved anything.
In an ideal world, yes. In the average large organization in the real world, though, very few people care about "saving employee hours". Particularly in middle management.
When a team's workload falls by 50%, there's rarely a magical stream of "useful work" that arises to replace it with. More likely, the team just sits around twiddling their thumbs; you either need to fire them, or concoct some busy work for them (defeating the point of the exercise in the first place).
Middle management are never going to gut their own team, because their headcount is what justifies their own position. This is also why your organization never has the budget for $10,000 - any money defaults to headcount, because headcount entrenches managerial authority.
Unless you're selling to C-suite (and can quantify the headcount reduction), "saving employee hours" is a terrible sales proposition for large enterprises.
Yes, there is. It's known as "addressing technical debt".
To be fair one $22k customer is not much for a SaaS business with many or large customers. It does not justify spending months of work on a "feature" unless other customers also need it.
More importantly. Do you follow up on the feature and put product development in touch with the client to make it happen? It's always easy for sale to discuss whatever directly with the client and swear it's coming next, but what the client wants is super blurry (at best). Nobody can work on a task they do not understand, especially 3 months later when there is some (planned) time to work on it, so it's simply dropped. Thus is the cycle of how things are promised and cancelled.
There is a big gap between being interested and being committed
One $22k contract may a lot for the bonus basket of the person closing the sale, but it is not be much for the company as a whole compared to the 20 other contracts being negotiated and the 200 current enterprise customers, and it definitely means nothing for the product/marketing groups who won't see a dime.
That being said I absolutely agree that if a customer is willing to pay for something, it's a very clear indicator of interest and it should be investigated. Hope it is easy enough to add and it is useful for every other customer!
The license costs ~18.000€ per year. Luckily it‘s a free floating license that can be reserved by the user. So it can be fully utilised and a wider pool of users sees the benefit and the great value add of the product.
Per user licensing with that pricetag would not have gotten managerial consent
Nope. We'll just roll our own solution.
Whichever sales and marketing guy is responsible for that atrocious pricing will ultimately be responsible for the product failing. I don't know who's going to pay those absurd prices.
Just like GraphQL itself.
So the payment processor, after absorbing a good chunk of this organization became a behemoth, with a lot of political power and overnight they decided to charge additional license fees if you are throwing more then 5 connections/second from same IP to be processed.
Of course the client was upset and asked me if there is a solution before shelling what was possible more then a few million pounds (GBP, not the weight) per year in those fees. My solution? Made them just increase their pool of IP addresses from internet provider and additionally made an intermediate proxy which had the job to gather user requests and spread them to up of 4 requests/second to said processor. When waiting for your card to be processed usually the end user doesn't mind waiting extra 10 seconds, seconds that gave my proxy plenty of time to balance the requests. AFAIK it works without hiccups to this day. And of course, client only thanked me like government thanks to medics in COVID nowadays, all talk and no extra dime (apart from what we agreed upon). Oh well, I take pride in a job well done.
"wow it was that easy?? I am vastly overpaying" - heard several times
People joke developers are a very special breed of deer easy to get scared and lose focus when working. Tell you from experience, clients of developers are the same, but in their case you lose their wallet / business they bring. Personally I prefer to have long-term relation to my clients.
Back in the old Zortech days, we included full library source for free with the compiler. Library source wasn't even available for other compilers. Nobody particularly cared that we did that, and it was never mentioned in compiler reviews in the press. One day, Borland decided to package partial (not including floating point) library source for their compiler as a separate product. The press went ape over it with headline articles about how great this was. (Philippe Kahn was a marketing genius.) Naturally, we at Zortech found this annoying.
What we did was separate out the free library source into a separate package, and put a price on it. When people called up to buy the compiler, we'd ask "do you want the library source package, too, for an additional $XX?" They almost always said yes. So we made an extra $XX on each sale, leveraging the expectations Borland had set in the market.
Of course, these days expectations have changed again. We give D all away for free.
No one touched it. Then he started packaging it into $5 “grab bags”. That crap was gone in a week. The lesson? “You can’t give shit away, but put a price on it and it’ll sell”.
Maybe that says more about comic book store patrons than pricing, I’m not sure.
I think Diamond (the distributor) frowns on stores selling items that were meant to be given away for free. To be honest, the owner doesn’t sound like the most reputable guy.
I remember going to lots of different comic shops as a kid and even through young eyes it was obvious that some of the owners were fairly shady. I’m sorry for projecting that onto your story. Sorry to hear it didn’t work out for him; that sounds like it must have been a rough experience.
Posting a Craigslist ad for $20 for an otherwise free couch? Gone the next day.
It's bizarre that this works, but boy, does it work.
i.e people anticipating human psychology on the seller end.
A decent half of listing were decent IMO, but oh boy, the other half were odd stuff and/or in such conditions that I can't imagine anybody taking them (even if paid to). The adage you get what you pay for holds true.
Funny enough, it's even worse the other way around, trying to give (good) items for free. People are atrocious. They book to pick up and don't show up. When they show up, they're often empty handed and act like unbelievable idiots. "Oh it's the fridge from 3 years ago, not the newer model, nevermind not interested." Can't believe this happening if I didn't hear it with my own ears. Anyway, they came without appropriate transportation, couldn't pick up a fridge/couch no matter what.
If the friend asks "hey, will you help me move? I'm buying pizza and beer afterwards!" I will more than likely say yes, even though I can buy my own pizza and beer.
If they instead say "hey, will you help me move? I'll pay you $21.58 for your time," I'd probably bristle. Even though that might be the equivalent price of a few slices of pizza and a beer, the category has changed from showing appreciation to placing an actual value on my time, at which point working all day for $21.58 stops making sense.
In turn I'd also be uncomfortable asking others to do manual labor for me, if they didn't offer when I said I was moving I wouldn't ask. Buying them supper after would be a given, no bribe required.
GP doesn’t have weird friends.
There was an article that time is our most important resource... Having a meal with someone is giving your most important resource to them, and them to you.
If you take issue with an analogy, try one that fits your experiences better.
You offer to help, and then your friend says: "awesome, afterwards I'll buy you pizza and beer" vs "awesome, afterwards I'll pay you $21.58".
The order of offering vs asking for help wasn't at issue in the analogy.
I think this is actually kind of the point. By offering to provide pizza, you're casually confirming that you're still operating in the paradigm where friends help each other out without looking too closely at the balance sheet, as opposed to offering nothing (awkward) or paying them (turning it into a transaction).
The example given (I think it’s via Ariely) is that you wouldn’t pay your friend to have cooked you dinner. This is the same thing: there’s social contract value in helping your friend out, and they’re showing appreciation with a token. In fact, if you friend offers you more money than the pizza and beer, you are likely to be insulted by the lowball offer, since you now evaluate the suggestion in terms of work for hire via market norms.
Social norms are so powerful though, that even if the friend offers you higher than your market rate, it’s still not worth it to take it, as it would shift your relationship (with lifetime value X) from a social one to a commercial one. Usually when people say “humans are irrational” they should be saying “people have complex utility / reward functions”!
[1] https://www.behavioraleconomics.com/resources/introduction-b...
I have this relatively unconventional theory that, if we use automation just right and make the cost of food production, delivery, and preparation low enough, and also do so where ownership of the machinery is distributed throughout society, that we could make it a social norm to give anyone who needs it free food. All in a voluntary system. We just need to make the actual cost of the whole supply chain low enough that people don't care about giving away a bit for free. Like in the extreme case how cafes give out free wifi because the marginal cost of delivering wifi to one more person is so low. I could imagine shops having a "free food" option made using some low cost proteins and fiber and prepared using some cheap robot. And then they would charge for hand made food or something, using the free food as a loss leader.
So my theory is that those robots need to be made as cheaply as possible. And that makes me think they need to be open source so anyone capable of manufacturing them can compete to supply them. Like how 3D printers got so cheap once the patents expired. They went from $30k to $300 in 20 years.
The real trick is sustaining robotics businesses that can pay engineering talent to produce open source robotics. Prusa Research has succeeded here with their 3D printers, and I am hoping I am able to reproduce that success with the farming robot I am working on now. But we aren't certain we will make it open source. It depends on how we can sustain funding. I think it's very possible though and I'm committed to it.
I think it's extremely interesting that Prusa Research can give all of their IP away and coexist in the market with clones at less than 1/2 the price. Users understand that the first party product is higher quality, and those that can afford it still buy from Prusa. There seems to be room in that market for both Prusa and the many clones. I wonder if we can reproduce this success with automation in other areas.
Or, at work, I bought a pastry from the cafeteria. About 5 minutes later they put out a whole platter of the same pastries in the dining area for free (they didn't sell, and would be dumped otherwise).
Yes actually Sparkfun Electronics was the first company I noticed that followed this pattern. They are essentially a hardware company that gives most or all of their product's IP away.
I remember this blog post made it very clear that very open source hardware companies could thrive:
https://www.sparkfun.com/news/599
The internal side of their business is was built on open source software, which is a good example of what can come from open source ecosystems:
https://opensource.com/business/12/9/how-sparkfun-built-open...
This post of 15 years of operation shows where their value add is: https://www.sparkfun.com/news/2571
They do a lot of hard work that isn't in their product's IP. Just bringing physical matter together is hard and essentially that's what they get paid for.
The similar company Adafruit I believe does not always open source their products, though they do produce a lot of open guides and open source code. It would be interesting to understand what led them to keep some products partially proprietary (they'd share schematics but not board files sometimes). I wonder if cheap office space in Colorado vs a warehouse in NYC caused the differences.
Also all of the companies that make 3D printers are part of this. The Chinese companies which sell clones are important innovators in the field. Prusa and Creality are perhaps in some ways like Apple and Samsung - they feed off one another. They do not merely clone the prusa - none of the big companies sell an exact clone of the MK3 for example - they instead make the design work for their factory. Prusa relies on lots of 3D printed parts because the best factory for them is a print farm of their machines. But in China they may prefer sheet metal bending and injection molding. Since the design has few restrictions, whichever hardware company that can make a functioning product cheapest will succeed in a normal market. AKA open sourcing has some automatic cost reducing effect.
So if we open source a bunch of technology related to meeting core human needs, then the cost of keeping people alive will go down. Then you need a means of distributing that technology throughout the world. And again open source allows free movement of product around the world - no regional restrictions or limited supply chains. The takeaway for all of us is - the future can be good, go work on some useful open source stuff and lets all keep researching how best to fund it.
So this whole theory is like "OMG we're doing everything backwards" and I definitely want to write about it more. I just find personal engineering projects to draw my attention more than writing. I need a Walden Pond.
"cheap office space" is not a factor in our decision to be an open-source hardware company.
So fast forward to the next year, they charged the same for people to get in and something like $10 to get into the water park. Something like 101% of people were ANGRY. Not just a little angry, VERY angry. It was a HUGE change that people didn't expect. There were VERY few people that paid. I can't remember if they made it free that year or waited until the next.
They figured out how much the average guest paid for drinks, then raised the ticket prices that much but made all drinks free in the park.
It was a huge success. People expect ticket prices to go up occasionally and they expect to be gouged for drinks. By getting "free" drinks, it felt like a huge value. (At least for me when I visited.) I bet it made food sales increase too, because now people wouldn't have to pay for a drink too.
Not sure if they're still doing that, but at the time they also had free sunscreen all over the park. It's an amazing little park.
Currently air travel is a completely homogeneous service. There is basically no difference from one company to the other, so it makes no sense not to go with the cheapest (even then, the flight schedule matters). That is not reason for a company to not differentiate itself.
(But I am very skeptical that a free drink would be enough of a difference.)
Where are you getting this? Tons of airlines provide varying levels of service/amenities. Only thing that is homogeneous is that you get from A to B.
I think you are onto something there, but you should have phrased it another way.
E.g. I think airlines were caught in a devils agreement with air travel search engines.
They gave them access to their flights, and the search engines had to find the simplest qualities to compare fares on. That usually meant price.
So you have tons of airlines with no clear value proposition differences in a search result, and it leads to the equilibrium being a devastating fight for lowest price.
It's gonna be interesting to see the growth of new airlines now that COVID is a thing.
Low prices seem to be a given, but customers are expecting service that accommodates their new fears related to air flight.
Even on the same airline, often there are partnerships. For example JAL/American and ANA/United I'm make sure to book the fight run by the Japanese partner not the American partner and the experience will be night and day. The Japanese plane will be clean the USA plane will be less clean. The Japanese staff will be friendly and service oriented. The USA staff will make me feel like I'm a burden on them and they'd rather be doing anything than their job. The food, even though it's airplane food, will be higher quality on the Japanese airline. Etc...
They aren't going to advertise "Flight has an 80% chance of having power outlets". And likewise, they don't want to deal with customers complaining that a power outlet flight did not, indeed have power outlets.
Southwest has a pretty loyal following since you can "refund" a ticket for Southwest credit good for a year.
Alaska and Delta don't charge for bike fees (they're just priced like ordinary luggage).
And aside from maybe 1K members, I don't know anyone who enjoys flying United.
Long before that point, I start looking at other factors like departure and arrival times and whether I like the airline.
For example, I just did a quick search, and for $25 more total round trip, I can get nonstop flights both ways. I didn't specify nonstop as a search filter (since there are few nonstop flights between these two cities), but now that I know it's only $25 more, I'd pick that.
International flights are also significantly more profitable than short haul, so that might have some impact too.
The airlines are masters at A/B testing and figuring out what works best, as the industry is notoriously low margin and very cut-throat. You can bet that they price things this way because it works better.
BTW, people pay a lot extra for first class tickets and love the "free" drinks. Different classes is how the airlines optimize profits from different market segments. They're very good at this.
It's one of the primary reason airlines have moved so much of the total cost out of the ticket price, and on to additional fees: luggage, food, seat selection, printing a boarding pass, etc.
"No two people paid the same price" is a myth, most certainly not true. Ever book 2+ seats at the same time?
Airlines do use yield management techniques, however, which results in pricing that changes for the same resource over time. That's not A/B testing, and like anything that relies on a lot of forecasts as inputs, bad forecasts up front often lead to sub-optimal revenue totals.
economy+ class
business class
first class
> Ever book 2+ seats at the same time?
Ok, ya got me there. Ever book 2 seats not at the same time?
> often lead to sub-optimal revenue totals
Airlines are not stupid with their operations management, and expend a great deal of effort optimizing revenue.
I never said airlines are stupid, I stated an opinion they are not "masters of a/b testing". You've not provided any evidence to convince me otherwise.
I read it some years ago in an article about airline operations management and how they optimized their fares, which varied constantly through the day and the days of the week. Then there are all the various discounts people can get, frequent flyer prices, rebooking fees, etc. It's all based on heavy use of statistics, which is a more complex version of A/B testing.
> I never said airlines are stupid
You suggested they often make bad forecasts, implying they didn't know what they were doing.
But you may believe whatever you like.
Alcoholic drinks are free on every one of the ~100 long-haul international flights I've ever taken, even in cattle class.
Then they sold their terminal and started leasing it, and now suddenly, no more free coffee and free cookies. I don't know if the free beer is still around but for a while we had everyone complain on how "they no longer have free cookies". And then we just stopped hearing about it because people just didn't care about Porter anymore, you would just get the cheapest flight and that would typically not be them and it's not like they were offering something special anymore.
It looks to me that this was probably not a super huge expense that was probably giving them a much higher ROI than the pure $ value of what it cost them.
That route was the best, BTW; I'd leave my house at 6:30am or so by taxi, get an early morning flight to Newark, take the train to Penn station, walk from there to the office and still arrive before many of my NY coworkers were at the office. Once we got bought by Google I found I could still make it to the Google NYC office in time for breakfast service. Memories :-)
So they weren't free. They were just priced into your ticket.
note: I'm not saying they didn't generate good will. Just say if the flight was more expensive then a competitor then you were actually paying for those things and it was just fiction that they were free.
For people like me a paid-alcohol policy is a feature, not a bug.
For similar reasons, restaurants are hurting extra hard right now because people don't order drinks as often with delivery or takeout.
If they were hoping to increase per capita profit year over year without increasing ticket prices, yes, that was a mistake.
There will always be people that stick to free water or don't drink anything. By building the drink price into the ticket price, you're essentially getting everyone to pay for a drink.
This is often not a thing in closed environments like theme parks
None of that changes whether it’s profitable or a good idea to give away water or drinks.
It sounds like the margin was part of the ticket price increase. So it was a success in that more people came to the park because they thought they were getting a better deal and were happier about it because "free drinks".
And so we went to Holiday World way more often than King's Island, which was almost an hour closer to us (maybe Holiday World was just a better park too, maybe not--like I said, I don't actually remember much about various parks).
[1] I worked food service at Kings Island for a summer and a half way back in High School.
[1] and I hadn't remembered the free sunscreen until I read the parent post.
(except six flags where they'll try and gouge you there too)
Was maybe part of the issue that people leaving when the exit survey was being run (at "night") not representative of the visitors as a whole?
It's a recurring element in the recurring "I Tried To Start A SaaS Business And It Crashed And Burned Taking My Will To Live With It" posts on HN... "I asked some people if they'd be willing to buy it and they said yes, were very encouraging, until I asked them to actually buy it."
- The audience coming out of the waterpark at the end of the day are different than the people entering the overall park at the beginning of the day. If nothing else, the larger group will include people who have no interest in going to the waterpark and therefore find no value in it at all. The smaller audience is more highly qualified.
- The proximity comes down to when you received/perceived value. Polling people immediately after they had a fun filled day is terrible timing. Think of the last time you went to a movie you LOVED. On the way out, if someone had asked "want to see it again" you would have said "yes!" but a week later, much less so. Now a year later would you buy the same movie on streaming?
- And finally, people are terrible about predicting their own behavior, especially if it requires work or not-immediately visible value. That's why most New Year's resolutions are dead by February. After hitting this lots of times, I stay away from "would" questions: https://caseysoftware.com/blog/the-problem-with-would
But without going through that pain and suffering it first hand, it's hard to predict when/if it will occur. There are lots of other packaging & pricing strategies to address this intersection of economics & psychology.
Whereas, on a random Tuesday, announcing: "Want to come to the water park? PAY US MORE MONEY." Is a proxy for "we're taking something away from your admission ticket and trying to backdoor a new charge".
instead, you want to reveal preferences using techniques like conjoint analysis (not always feasible), which better simulates the actual choices respondents might make in real situations.
“Based on this forced social interaction of questioning strangers as they left the park, we have forecasted how different people entering the park will react to a commercial interaction.”
Seems shocking that it would ever work at all.
The people reading a poorly written survey might have thought that the park wanted to SPLIT the fee structure.
* Same $$ Both Parks
* Fraction, One Park
Unfortunately, a lot of tech companies have (perhaps unintentionally) conditioned consumers to expect software to be free. The terrible consequence is that in response to that pressure, many companies choose ethically-questionable ways to make money when they need to, rather than simply charging a fair and honest price for their product (this includes selling users' data, overwhelming the user experience with ads, in-app purchase shenanigans, etc). Paying fair prices for things we use isn't the most appealing idea in the world, but (in my opinion) we probably need more of it, not less.
It's a pity it's still quite inconvenient to make micropayments. If I could make a single click to pay a penny for access to a single article, I imagine I'd do so frequently.
I favour the nickel-and-dime approach. I'm sure I'd only need to pay pennies per day to outpay advertisers. (I'm assuming that would be enough to keep these outlets afloat, which might not be the case.)
It would be nice if there was somebody other than Google running the program.
A more realistic price might be $1-2/article since the median reader won’t be that interested. Pricing schemes that increase the total reading cost on a log curve can be imagined.
Of course we dream of a micropayments system fluid enough that people start consuming 10-100x the content so the price per piece can go down accordingly, but that is unlikely since there isn’t that much free time. A first mover might accumulate a lot of new readers, but that would eventually even out.
If there were an extremely convenient way to pay a few pennies for access (a price low enough that I wouldn't think twice), they'd be making something, at least. I'm not about to go through the hassle and cost of subscribing for a month, to access a single article, and neither is anyone else here.
I understand that this 'one shot' model isn't necessarily representative of how their website is generally used, of course.
> a WSJ is $4, so if readers wanted to read ten articles, they should charge 40-50 cents for them.
For a physical copy.
Disregarding current promotional prices, The Guardian charge £12/month for a digital subscription. New York Times is £8 for 4 weeks. Not sure how many articles the typical reader gets through though, or how that should inform our thinking here.
An online newspapers might make $3 per thousand views, plastering ads everywhere and maybe videos. That means they survive with way less than 1 penny per view. They have no excuse to try to charge orders of magnitude more.
> They have no excuse to try to charge orders of magnitude more.
But that's just what you proposed. $0.09 is over an order of magnitude greater than $0.003. That pricepoint would still be fine - far less than the price of a coffee.
I think Apple started this movement with the App Store and the .99 cent app. I think it coincided with the shift from on-prem software to cloud, but that really shifted what people can charge for software. We've seen a bit of a shift back the last ~5 years maybe? But I still think it the App store started the current epoch.
Hence companies like MicroSoft are shifting towards services.
It's not that consumers want free stuff, it's just that most people do not have extra money laying around.
I'll also add that "charging a fair price" has never deterred companies from engaging in unethical and privacy-violating practices in addition to taking your money. See: Microsoft, Amazon, etc.
I've seen it first-hand: startups intentionally forgoing revenue so they can be measured by the stick of imaginary future profits correlated with their free product's success. Then when investors finally do start asking to see real returns, it's a scramble to find something that doesn't involve charging their current user base (because of course no one wants to pay for something that has been free previously). That's when the "creative" money-making ideas start getting real consideration.
In effect, those actions end up communicating to the public that software is free when it really isn't. It gives the impression that there isn't a cost associated with developing and maintaining software, when really it might just be funded temporarily by investors with deep pockets and high expectations, or supported by other revenue sources that the end user would not agree to in full transparency.
I don't get the vibe that HN thinks the current state of affairs is completely the fault of the customers. it's a two way street. companies offer free services either at a loss or supported by ads or data mining. once people have a free option, it takes a lot of value add to get them to actually pay for a competing solution.
https://www.npr.org/sections/13.7/2014/02/27/283348422/that-...
I heard a related story (I'll add source if I find it) where monkeys received 2 grapes every day. This was increased to 3 grapes per day for one week. When they returned to the normal 2 grapes per day, the monkeys threw poo at the experimenters.
One sociologist I read wrote, and I'm paraphrasing, "Sharing food with another is an action of great significance. Evolutionary, the sharing of food by hunter gatherers was more significant than sex in establishing a mutually bonding relationship." They went on to discuss the importance that meals played in our history and why we "throw a feast" to welcome heroes, and the Jesus' "big reveal" happened at a meal.
The main point was that when you share food with someone you trigger a very ancient and well established mechanism. Conversely, when you stop sharing food with someone, you signal their ancient brain "I don't trust you any more, we aren't friends."
Now whether or not that thought/emotion comes to the surface, it's very clear that the for many people the change from "sharing food with you" to "not sharing food with you" changes how they see their relationship with you. What is perhaps worse is that the damage is instant and irreversible. Even if you start sharing again, the people you stopped sharing with, even temporarily[1], will no longer feel the same trust that they felt before.
At tech companies those people leave and eventually you have all employees who only remember the current system and so you're at a new "normal."
Bottom line, taking away "free" food is waaaay more impactful on company morale/relationships than you would ever imagine unless you had researched it. Thus, it happens over and over again. And even though I know a company is just trying to make me like it by giving me free food, I can't keep myself from being positively effected by it. That response is buried somewhere deep inside my head that doesn't allow for excision.
[1] Yes, there are ways to temporarily stop and not disconnect but that involves messaging before one stops sharing to both provide the external reason for the change and the conditions on which the change would revert back to sharing.
I can remember when my company was trying to spend less, so they took away an employee perk. Now this employee perk was kind of ridiculous (no other company paid for it) and it wasn't that popular (a few people used it).
However, when they took it away? Holy crap were people pissed.
This is one of the big lessons for me early in my career. Before you do something, ask yourself if you're prepared to do it forever. Sometimes it doesn't matter, but sometimes it does and you'll be better off if you never do it in the first place versus doing it and then taking it away.
My experience is that you get a mix of people saying "just give me the money, I'll decide if I want to spend it on snacks" and people who say "I really like that snacks are available, please keep them."
From a financial perspective its pretty hard "move the needle" on an engineers salary with free snacks and drinks. Median engineering salary in the Bay Area is more than $100K. So assuming the engineer was consuming $20 of snacks per day, 5 days a week 50 days a year, that is $5,000 per year per engineer. Not surprisingly there was lots of data on this at Google which I got a chance to review when I made a big stink about the switch in juice vendors. Not something I could share but it looked exactly like I expected it to look, sort of a power log curve where most people were way under the average and a much much smaller number were way over. That they couldn't manage the people who filled up their back packs with food and drinks for their family before they went home each night was telling on a number of levels.
Of course the IRS and New York Times are all about how this "under the table benefit is robbing us of income tax" is pretty predictable as well.
[1] https://www.indeed.com/career/engineer/salaries/San-Francisc...
Oh that one is easy. The management all want to take home stuff too. My last company had some IT items that you could get from vending machines. The moment I said I was leaving a manager asked if I could use my badge to grab something for her, saying she'd already maxed out for the month. I realized I'd become a source of untracked purchasing, and assumed she probably wanted to take an item home.
It's more than 50 cans of soda a day. Thank god they were taken away before the poor engineer would drink them all and liquefy.
https://www.walmart.com/ip/Coca-Cola-Soda-12-Fl-Oz-24-Count/...
In Austria (and maybe some other parts of Europe, not sure), not only that free refills are unheard of, you even get charged for ketchup sauce at McDonalds. (The minimal allowed food quality is higher, though, so there might be economic reasons on top of, I believe, primarily societal reasons.)
It is charged somewhere around 40 to 50 Eurocent per 25ml.
A customer shot employees at a McDonald's because the customer wasn't allowed to dine in the restaurant: https://www.latimes.com/world-nation/story/2020-05-07/police...
But people were pissed. It was only a small portion of customers who even asked for more than the include packages, but they were hot about it.
When I first started, we didn't even give free refills of soda or coffee. And I remember, we had this group of senior citizens who came in every morning as a group to just drink coffee and BS. Well, the tax rate in CA changed one day, bumping the price of a cup of joe up a penny. You'd think we had stolen their Social Security checks. They were outraged. Trust me, you do not want a pissed off senior citizen yelling at you when you're 16.
Soda refills are almost free, the cup costs more than the soda, so besides avoiding an obesity epidemic, the customer satisfaction of giving free refills is probably worth it. Also it probably costs more to pay someone $15/hr to just fill sodas, when you can get the customers to self-service for free.
I heard that on/around HN at some point and I haven't seen it proven wrong yet. There's a reason why chip bags get smaller, why new versions that seem identical to the old come out, why Tommy Hilfiger will never be a prestige brand again. And it's because customers don't tolerate raising prices.
But no, we raise the price of our products, and never saw any issue from it.
A few well received wine brands for example have had very rapid price increases. However, it’s more common to increase prices a little faster than inflation which quickly adds up, see Disneyland for example. What brands can’t do is lower cost and quality then try and quickly add it back.
PS: In 1964 Disneyland charged 25c/day for parking per day or about 2.08$ in today’s money. Except they currently charge 25$/day for parking.
I'm a little closer to accepting your premise with Disney. However, it's not "parking" you're paying for; it's "parking at Disney" and Disney continually makes changes to its product offering. Further, neither "parking at Disney" nor "tickets for Disney" are a regular, periodic purchase.
> Tommy Hilfiger will never be a prestige brand again.
They don’t sell the same shirts every year either. But, they can’t simply make a better product next year and expect to charge premium prices because people associate brands with relative costs. Bud light at 30% more a case is not going to sell well even if they suddenly increased the quality. Thus Honda created the Acura brand when they wanted to sell up market, and even BMW swaps to Rolls-Royce when they want to go really up market.
The price also gets bundled in with all sorts of options, 50 different configurations, different financing rates and terms, etc.
In fact, I'd say they are still undercharging. The park will still fill up on peak days. They have been trying to fix this by increasing the prices of passes and decreasing the days they allow you in. But it's not working (current situation not withstanding).
Disneyland is a fixed resource, so it doesn't really apply to pricing discussions of resources that can be variable, like SaaS products.
Disney does a lot to segment visitors with both after hours events and even ultra premium packages. However, they are also making money from food, merchandise, and hotel’s so they want attendance to be near maximum capacity year round and adjust prices weekly to get people in the doors. Further they want long lines at major attractions to get people to spend money at gift shops rather than do free rides all day.
They don't adjust prices very often at all. They way they regulate attendance in real time is by allowing lower tier passholders to come in on days they predict low traffic.
The page isn't interesting now, but they have a website that shows when employee passes are good and for which park[0].
That's a great way to figure out when Disneyland will be crowded. If employees are allowed to bring guests to both parks, it'll be a light day.
Most of these are either seasonal events or have prices that shift in response to time of year or just demand. https://disneyworld.disney.go.com/events-tours/
DisneyLand can't build any more park, so they could charge even more than they do now and keep the park full.
https://www.vice.com/en_us/article/evk75k/the-slow-death-of-...
> It’s a beautiful system, but it’s quickly vanishing from the city’s food landscape right from under our noses. The spots that used to churn out this style of pizza, many of which still have the awnings over them marking them as $1 slice establishments, are giving way to outside forces and silently raising prices to $1.25, $1.50, and even two dollars per slice.
Your customers don't like being swindled. And oftentimes, when a price jumps, they feel swindled. I think the consumer's swindle perception factor is more dependent on the second derivative of the price history than the first.
Don’t advertise it, just put it on your website where someone might be able to find it on Google.
Tommy Hilfiger used to sell high end ($1000+) foul weather gear stuff for offshore (ocean) yacht racing in the 1980s. Briefly in the 1990s they were the preppy kid's branding of choice. Everyone bought at least five branded tshirts at JC Pennys or whatever at the mall each year along with Gap and Mossimo and Nautica. They are now the premium brand at Ross dress for less.
https://steveblank.com/2009/12/21/the-elves-leave-middle-ear...
edit: I see it has already been posted.
Well, handling it may be difficult on the frontend, depending on implementation. May very well be easier to just serve it as plaintext.
https://text.npr.org/s.php?sId=156737801
The "sId" parameter on text.npr.com matches the penultimate part of the www.npr.com URL.
Was this grudge instilled in children?
https://www.npr.org/transcripts/582509923?storyId=582509923?...
https://www.newsweek.com/two-percent-us-export-income-blood-...
He still talks about it like it was a personal attack. I grew up thinking the Red Cross was a for-profit war-profiteering leach of an organization.
Not surprising, otherwise he wouldn't hold the grudge for so long.
Many climate change deniers feel like even implying they're a (tiny) part of the (systemic) problem is a personal attack, hence their shitty attitude about science.
I study WW2, especially the Pacific.
Trust me, that war was taken very personally, especially by infantry.
(The next time you watch a documentary on Saipan or Tarawa, note the American rifles are pointed at the ground, since the enemy was coming up through cave networks behind lines. Talk about close quarters fighting!)
Oddly enough, probably yes. The military is a family business, something like 80% of servicemembers have a family member who served. So grandpa bitches about that time back in 1944 when he had to pay for donuts, and you make sure all your buddies know about it.
They are still like that to this day. No deep historical knowledge required.
LOL, my first ex-wife's mother would charge $40/person for hosting the mandatory Thanksgiving dinner, after people also contributed in the way of co-ordinated sides, fixings, beverages.
By the way, $40/person in the 90's.
And no she was not poor, and nobody in the family was flush with cash.
Now you have me wondering how many ex-wives you got! Sorry but couldn't resist.
According to my late paternal grandparents, who went through WWII, Korea, and Vietnam on active duty (and arguably the wives did as well), the American Red Cross had not-so-nice aspects to it that didn't get much press.
Perhaps national governments should support apolitical, non-religious volunteer nonprofits more, but I can also understand the need for nonprofits to survive (which may often entail charging small fees). Charging people for doughnuts who don't make much money to begin with, are first-responders, active-duty military, or individuals who just went through a disaster seems kind of uncool where I come from.
It's difficult to say how good they are today without first-hand and multiple accounts of experience. The available data shows they presently spend 3.5% ($104m) on admin and 6% ($177m) on fundraising. https://www.charitynavigator.org/index.cfm?bay=search.summar...
As an example, Feeding America, although they pay their CEO 16% more ($100k+), is a mostly better charity on paper.
I do this for a couple of reasons:
1) "Brand-building." I'm developing a "personal brand," and I do it for a similar reason as companies give away free T-shirts with their logo.
2) Lead by Example. I have a beef with the quality of most software, these days. I have decided not to whine about it.
Instead, I just write my own software the way that I think it should be written, and leave it out there. Since quality isn't really a coefficient in most developers' minds, these days, it doesn't get much attention; which is fine by me.
So...sort of "virtue signaling," but in an even more passive-aggressive way.
I also have a personal policy of making all my work public, because I am used to it, and I think that it helps me to write better software. You always vacuum before the in-laws visit.
I would never charge for my open source (MIT-Licensed) work, but I also put the source up there for the stuff I do charge for (a tiny pittance). It isn't licensed for reuse, but it's out there.
If someone hires me to write proprietary software, then I won't put it out there (unless that's what the customer wants). I did a great deal of "behind the firewall" work that is likely to never see the light of day (indeed, much of it was in products that were never even officially released).
Otherwise, I'm likely to keep putting my work out there for free; whether or not anyone else cares.
I care.
I know that makes me a bit of an "outlier" in the tech industry, but I guess I'm a bit of a "throwback."
I enjoy sharing, and I enjoy shipping apps. It's my dream to code for free; and I'm just about there.
Writing the code I want to write, without having people deliberately spike the development process, is kind of fun.
I mention my outlook here: https://medium.com/chrismarshallny/thats-not-what-ships-are-...
BTW: I've enjoyed reading a lot of your comments. You like to write.
So for example, I use horrible debuggers like GDB in 2020, because there is no company that is willing to put that much effort and take that much of a risk into developing a better tool debugger, since there are no profit incentives around it. You cannot really expect developers to pay for their tools in 2020 and that is both good and bad.
Also, now I want a coffee and a doughnut, goddamn it. Is Dunkin still open in quarantine?
https://www.npr.org/2020/01/08/794592539/episode-386-the-cos...
Transcript: https://www.npr.org/transcripts/794592539
After a deserved backlash, they fortunately backtracked and allowed people to buy perpetual licenses. But it left a bad taste.
Per Wikipedia, "member stations derived 6% of their revenue from federal, state and local government funding, 10% of their revenue from CPB grants, and 14% of their revenue from universities"
NPR is most certainly not 'free'.
1. Stop giving away doughnuts 2. Start selling funnel cakes
For my dad it was the apples. "Shriveled and all dried out."
But in any case, I've realized something. In the URL, just replace "https://www.npr.org/sections/money/2012/07/13/" with "https://www.wbur.org/npr/" and the damn page just loads.
So I picked another npr.org article recently posted to HN: https://www.npr.org/2020/05/06/849996451/what-hamburgs-misst...
And yes, this URL loads without challenge: https://www.wbur.org/npr/849996451/what-hamburgs-missteps-in...
So hey :)
What I'm saying is that this is not an easy problem to solve because in any business, some of the things you provide will be provided for free. For example, businesses that serve food have bathrooms available for free.
In busy downtown areas or areas with a lot of homelessness, you will see local establishments with signs saying the bathroom is for customers only and some even have security codes so you can't just walk in off the street and head to the bathroom. But they don't charge for use of the bathroom.
If you are a small shop, figuring out what to do for free and what to do for pay is a thorny issue because time is money and it's easy to end up in a situation where you are de facto slave labor.
For some businesses on the internet, your members who are there because it is free can be part of the value you are bringing to the table and if you try to charge and you drive those people away, you may kill the business because now your paying customers have no reason to pay you. The membership base was part of your value position and you've just thrown the baby out with the bath water.
So before you go acting like businesses who give stuff away for free are somehow nefarious actors, stop and realize that successful businesses have to pursue models that are viable and those models have real world factors. This is not just something decision makers at companies can arbitrarily decide willy nilly. You need to be taking the landscape of your marketplace into account when trying to figure out what piece of your product is the piece you charge for or monetize and what piece is something you give away for free.
Historically, TV was free to viewers. You just needed to own a TV, but subscription channels came later. It got monetized with advertising and having a large audience helped you monetize it. That large audience was valuable to your advertisers, so giving it away for free to viewers was part of how you made your money.
So this model wasn't born with the internet. It existed before the internet. And there are valid arguments to be made concerning things like "If you aren't paying for it, you are the product, not the customer" and lots of different angles to look at such questions.
But at the end of the day, there is no free lunch. You somehow need to pay the bills. And sometimes the method that actually works effectively isn't as straight forward as "Well, just charge people for using the darn thing." Sometimes that doesn't work at all and in other cases it may work, but will limit your growth. Sometimes giving part of it away for free is how you grow to the point of being able to make serious money.
Remember when ATMs were free?
Price was absolutely the problem. Soldiers were paid about $600 year. Not much for a job where you risk your life and dont have much of personal freedom or comfort.
Free food was part of benefits. Charging soldiers for it seems ludicrous, they can not just leave, and go to nearest cafe.
The Red Cross is a civilian organization that is not part of the army and was not, as far as I know, obligated to provide free donuts or coffee.
Pay was $50 a month, doughnut was 2 cents, that is like 1% paycut.
Why couldn't the Red Cross just give free Doughnuts to everyone? I'm not sure; maybe because they collected the money for "support our troops", and supporting the Brits might have been considered a violation of the terms for which the monies were donated.