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The Cost of Free Doughnuts: 70 Years of Regret

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Re: The Cost of Free Doughnuts: 70 Years of Regret

#241

Post by xyzzy_plugh »

marktangotango wrote: post #199
WalterBright wrote: post #55

Pricing things can be strange. 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…

A looong time ago I worked at a comic book store and the owner had a table of freebies at the front of the store. The distributors were always sending marketing material with cool artwork, so instead of throwing it in the trash when it piled up, he figured why not give it away? 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…

Recently I was moving and had some furniture ("junk") to dispose of. Calling a company to come get it was really expensive considering the stuff was effectively worthless. Posting it on Craigslist for free was useless -- no one wants your crap fo free.

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.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#242

Post by david422 »

a_c_s wrote: post #151
save_ferris wrote: post #23

Earlier quoted context omitted.

Ive been saying for years that airlines should do this. Add the price of an alcoholic beverage to everyone's ticket and then give those who want one a "free" drink. I never understood why they opted to go with ruthless cuts and declining customer experience.

As someone who doesn't drink alcohol it drives me crazy when the only option is to subsidize other's alcohol (because alcohol is marked up so heavily). For people like me a paid-alcohol policy is a feature, not a bug.

Same for paying for luggage. I'd rather pay for bags because it means when I travel light that I'm not subsidizing other people's bags.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#243

Post by erichocean »

ghiculescu wrote: post #146
013a wrote: post #78

Earlier quoted context omitted.

I don't know about that. I suspect, generally speaking, per-user billing does not work for the vast majority of SaaS. It can really only work well in communication tools, where (1) most organizations receive a lot of value, (2) there's a network effect in play, and (3) expenses incurred by the provider generally correlate with the number of users. Slack. Jira. Notion. Etc. For an APM tool like Apollo, only one of the…

The retool pricing is so annoying! Not only is the price per-user, but we found a weird SSO bug (well, I call it a bug) where if there is a company account and a new person logs in using google, they get added to the company account. Meaning your price can go up without you explicitly inviting users. We have ended up telling everyone to use Retool with their personal email, then if they want to add an app they made t…

I'm a perfect Retool customer; didn't buy due to the pricing, and we spend $10K+/month on computing/service and many tens of thousands on developers, and about a dozen SaaS companies (the usual suspects and some others).

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!

Re: The Cost of Free Doughnuts: 70 Years of Regret

#244

Post by erichocean »

dvdhsu wrote: post #148
ghiculescu wrote: post #146

Earlier quoted context omitted.

The retool pricing is so annoying! Not only is the price per-user, but we found a weird SSO bug (well, I call it a bug) where if there is a company account and a new person logs in using google, they get added to the company account. Meaning your price can go up without you explicitly inviting users. We have ended up telling everyone to use Retool with their personal email, then if they want to add an app they made t…

Hi, I'm the founder of Retool. (I do indeed read a bit too much HN, hah.) 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 em…

We view Retool as an option for building ultra lightweight apps when our normal app development flow (which is already very lightweight) is too heavy (read: costs too much in terms of developer time).

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.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#245

Post by david422 »

ellard wrote: post #56
hammock wrote: post #12

Once you lower the price of a product, you can never raise it again. 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.

Reduce the quality/quantity of the existing product to keep the same price over time. Release another similar 'product', possibly under a different product name and/or brand with the original quality/quantity but at a higher price.

Ice cream containers always go down in size. Then they go up again advertising 30% more.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#246

Post by ChuckMcM »

listenallyall wrote: post #234
ChuckMcM wrote: post #117

This is a good cautionary tale and one I've seen played out in the tech industry with food. Even in the 80's it wasn't uncommon for a tech company to have a "beer bust" on Friday's where drinks and snacks were served as a social gathering for employees at the end of the work week. It was a turning point in employee relations when the VP of HR at Sun cancelled the weekly beer bust. Similarly at Google when they decide…

Keep in mind that, according to your post, it was the VP of HR, not Finance, that shut it down. Sun didn't end the outings for financial reasons -- the HR dept decided, unfortunately, that it was legally prudent to stop serving alcohol and to end the encouragement of socializing between employees.

Yup, the unfortunately named Crawford Beverage.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#247

Post by ChuckMcM »

ja27 wrote: post #230
refurb wrote: post #205

Earlier quoted context omitted.

I immediately thought of company perks as another good example of this. 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…

We went through this. When 2008 hit the company stopped providing free sodas and bottled water for our office of only about 30 people. I was damn close to just buying them myself but it was crazy how upset a few people making moderately insane amounts of money would get over not getting a $1/day benefit.

I completely relate to both of these.

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...

Re: The Cost of Free Doughnuts: 70 Years of Regret

#248

Post by WalterBright »

listenallyall wrote: post #236
WalterBright wrote: post #235

Earlier quoted context omitted.

That underestimates how sophisticated the airline's slicing and dicing of the market is. Ever wonder why no two people on a flight paid the same price? Why there are a proliferation of classes on board?

Beyond economy class, of course the price is less of a factor (didn't realize that needed to be stated). "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 in…

> Beyond economy class

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.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#249

Post by prawn »

save_ferris wrote: post #23
RandallBrown wrote: post #13

Earlier quoted context omitted.

A park in Indiana, Holiday World, did something sorta the opposite. 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 mad…

Ive been saying for years that airlines should do this. Add the price of an alcoholic beverage to everyone's ticket and then give those who want one a "free" drink. I never understood why they opted to go with ruthless cuts and declining customer experience.

I stayed in a hotel in Chile many years ago that included dinner in your room (anything off the menu) and the entire mini bar. It made for a great, positive experience rather than the usual situation of griping about mini bar pricing. Surprised more places don't do it, at least for non-alcoholic drinks.

Re: The Cost of Free Doughnuts: 70 Years of Regret

#250

Post by xchaotic »

danielrhodes wrote: post #98
013a wrote: post #57

I can call out one example of a poorly executed price raise: Apollo Engine ( https://www.apollographql.com/pricing ) 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 char…

This is an important point. A lot of companies do great revenue by selling seats, but that model is obviously not always applicable. In this case, you're pointing out that the marginal utility of a product like Apollo Engine is not driven by the number of users, but by the usage. In other products, say Box or Dropbox, the marginal utility is in how many people in an org you can get using the product, not in how much…

Your argument makes sense but not Dropbox pricing then. Their business pricing costs are per user. If they become more entrenched and valuable the more people use them, then extra users should be free, initially? (And maybe just charge for storage)
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