Why is selling software so weird? • Hacker News Board

Re: Why is selling software so weird?

#151

Post by dotancohen » Sun, Apr 17, 2022, 5:40 AM UTC

krisoft wrote: post #67

dotancohen wrote: post #55

Earlier quoted context omitted.

> How would you break down a coaxial swirl injector (an important part of the Raptor engine) into “simple machines”? I didn't complete the Mechanical Engineering degree two decades ago, so you might want to consult an engineer. Preferably one at SpaceX )) Being familiar with only typical automotive electromechanical fuel injectors, which presumably operate on similar principals, I'd also like to see where the spring…

> you might want to consult an engineer. Preferably one at SpaceX I suspect that they would tell us that the idea that every machine can be broken down into a series of simple machines was a cute theory in the Renaissance, but is not a usefull model to explain how a Raptor engine works. Maybe the theory of simple machines and compound machines is usefull for purely mechanical constructions, like a bicycle or a clock,…

I suspect that you are correct. Thank you for the perspective.

Re: Why is selling software so weird?

#152

Post by esel2k » Mon, Apr 18, 2022, 5:14 PM UTC

photochemsyn wrote: post #115

bob1029 wrote: post #49

> Low volume software is not a good business to be in. I disagree very strongly with this based on my experience so far. Being in the business of low volume software is fantastic if your customers are other businesses . The advantages of low-volume/complex B2B software biz are incredible to me. Contract terms are measured in half-decades. Your users can actually be trained and held accountable in many cases. You don'…

My only experience using really expensive software comes from the academic biotech sector, in which (for a while) there was a thriving high-end software business, with research groups paying $10K+ for a limited license for DNA sequencing and analysis software, and also software that came packaged with instrumentation, things like mass spectrometers, that cost $100K+. The stand-alone software for DNA analysis has been…

Coming from that exact same domain. I still see a little risk: I used to use a specialized image analysis software for microscopy coming with the instrument and the software was hitting its limits mainly because it was running locally. We started using third party software or even developed our own software and were going to buy fewer license from the instrument manufacturer. Of course instrument controls waa a thing, but also this: if not integrated these instruments are getting harder to sell.

What I am trying to say is that even these software business model tied to the instruments are no a guarantee anymore.

Re: Why is selling software so weird?

#153

Post by vineyardmike » Tue, Apr 19, 2022, 5:54 PM UTC

simonh wrote: post #43

vineyardmike wrote: post #17

Earlier quoted context omitted.

Software still has the lowest marginal cost - the distribution cost is basically 0, unlike things like CDs. And unlike a movie or album, the value that can be extracted via software is much higher. There's tons of make-once sell-lots products, but you need factories and supply chains and all that crap, not just a cat6 connection. If you want to serve more customers, you need to buy more CDs. Streaming is better for c…

>They generated about $1B for the company by creating a portal to (essentially) sell access to the company's existing data. You are completely discounting the cost of creating and maintaining the underlying data. You can't just write that off as zero. It also doesn't matter if the data generates other sources of revenue, that's great but you still don't get to write the cost off against one revenue stream and not ano…

The marginal cost of selling the data is effectively 0, since the difference between selling "zero data" and "one data" is 0, and the difference between "n data" and "n+1 data" is also 0.

The sale of data was essentially "free" to the business as a revenue stream, it cost them almost nothing extra to sell the data (again, beyond building a portal and integrations). You CAN discount the cost of data maintenance, from the sale business since the core business (also profitable) is already factoring in the cost. You can't double-count the costs, and accounting DOES let you pick-and-choose where to apply those costs.

Re: Why is selling software so weird?

#154

Post by vineyardmike » Tue, Apr 19, 2022, 5:59 PM UTC

elliotec wrote: post #20

vineyardmike wrote: post #17

Earlier quoted context omitted.

Software still has the lowest marginal cost - the distribution cost is basically 0, unlike things like CDs. And unlike a movie or album, the value that can be extracted via software is much higher. There's tons of make-once sell-lots products, but you need factories and supply chains and all that crap, not just a cat6 connection. If you want to serve more customers, you need to buy more CDs. Streaming is better for c…

> the distribution cost is basically 0 How do you figure? Surely you know the magnitude of ad spend on software products, not to mention hosting and scaling infrastructure. We're not shipping cd's to every mailbox anymore but a typical marketing budget + Heroku/AWS cost is likely far higher for a typical growth SAAS startup than AOL was dumping on their physical distribution methods in the early 2000s right?

In this case, it was 0 ad spend but large b2b negotiations, so yea theres still quite some acquisition cost, but thats not really part of those calculations.

Any major company that owns data centers, they have large contracts with peering for networking, which is pay-per-bandwidth not pay-per-byte.