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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

#301

Post by ghiculescu »

user5994461 wrote: post #282
apatters wrote: post #258

Earlier quoted context omitted.

> 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.

Support costs has no relation to number of users. It's constant time O(10) in engineering speech. 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.

This might be true in enterprise SaaS (even then it's risky) but not in small/medium business. Particularly if you are using Intercom etc in your product - it's expected that you'll allow any user to contact you.

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).

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

#302

Post by unnouinceput »

rasz wrote: post #287
unnouinceput wrote: post #262

Earlier quoted context omitted.

You're wrong. I have plenty of clients that seeing my efforts in putting that extra-mile for their project paid a bonus as well. But that's because I have good communication with them and plenty of times when they need it something fast I simply code it in front of their eyes instead of "let me see these requests and I get back to you". That's the difference between a senior developer and a junior one.

> when they need it something fast I simply code it in front of their eyes "wow it was that easy?? I am vastly overpaying" - heard several times

Then you're doing it wrong. You see, this needs to be done after you already coded the application at least on 2 different versions and the codebase of it it's over 50k lines and at least a year old. Then implementing something fast it blows their mind especially when they have the proverbial carrot in that proverbial place. As for overpaying is not the case since I am paid hourly. I prefer to blow their mind from time to time in order to do repeat business instead to always be "I'll get back to you" and have them feeling that I'm procrastinating.

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

#303

Post by unnouinceput »

hajimemash wrote: post #289
unnouinceput wrote: post #195

Earlier quoted context omitted.

I have a similar story. Year is 2014 and client was using a very specific payment processor because the client was part of UK government and credit card processing was to be done using only that processor - you know, politics and stuff when dealing with government. 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…

Would the right move have been to see the value you could give to the client, and charge more at that point for an additional service to capture some of this value?

No. At best give a hint or make a joke comparing you to those lawyers that they seen in movies winning lower prices/fees for their clients. If they get the hint and / or act accordingly it boils down to what kind of person they are, but in no way make them uncomfortable by bringing this ever again. You may lose them instead and it's preferable to do repeat business instead.

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.

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

#304

Post by laurex »

dperfect wrote: post #75
throwaway3999 wrote: post #60

Earlier quoted context omitted.

There's a common theme on HN that it's all the fault of consumers for wanting free stuff. The truth is, budgets are limited, and if you start charging for stuff you will soon find out how much consumers actually value it - with respect with other stuff they can buy. I'm not talking about the average HN user making six figures in a cushy software job - of course you'd pay for a product like Gmail. But think about most…

I'm not faulting consumers for wanting free stuff. If anything, it's a symptom of companies (and investors) putting too much value in vanity metrics and expecting that it will be easy to transition to revenue. 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 sta…

My understanding is that VCs actively encourage the behavior of “grow then figure out the business model.” Of course, if you are a free product at scale, the most simple solution is to start selling data, since it avoids the challenge of trying to get consumers to pay for something they “believe” is free. This obviously leads to free products that are less and less in the interest of the user, but it’s very very difficult to convince someone who got a thing for free that it can’t continue forever that way, even if there are obvious costs that must be converted to supply the free good. This is especially true if the competitors are offering free based on selling data. There’s definitely an interesting and challenging future in finding ways to scale in spaces that are currently dominated by “free” in exchange for data and privacy.

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

#305

Post by user5994461 »

apatters wrote: post #295
user5994461 wrote: post #282

Earlier quoted context omitted.

Support costs has no relation to number of users. It's constant time O(10) in engineering speech. 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.

I'm not convinced. Even if only one person at the company has access to support, he's going to have more people asking him to submit tickets about their problems when there are 2,000 users vs 100.

This doesn't happen in practice because the 1900 more employees do not know who is that person and couldn't figure it out even if their life depended on it.

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.

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

#306

Post by vkou »

freeone3000 wrote: post #123
Jommi wrote: post #80

Earlier quoted context omitted.

>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 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 air…

Getting from A to B is the most important service an airline provides. The seats are always cramped, so the degree doesn't matter terribly. Even on their website, I can't search by "flight has power outlets". Nor is the wifi speed available, or even consistent. Maybe the problem is that airlines don't have a value prop relative to each other at all.

You can't search for "Flight has power outlets" because the airline doesn't necessarily know that the flight will have power outlets until the day of the flight.

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.

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

#307

Post by MaxBarraclough »

user5994461 wrote: post #290
1123581321 wrote: post #206

Earlier quoted context omitted.

You would need to pay quite a bit more to make this viable for most publications. The ballpark formula is the issue price divided by the number of articles the average reader wants to read enough to pay anything . For example, a WSJ is $4, so if readers wanted to read ten articles, they should charge 40-50 cents for them. A more realistic price might be $1-2/article since the median reader won’t be that interested. P…

The price needs to be at or below $0.09 for people to just unlock the news and read on, no thinking. 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.

Not all online news sites are the same. The New York Times does real journalism, which takes real resources. I'm not convinced that they can be sustained on advertising dollars.

> 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.

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

#308

Post by dahart »

klmadfejno wrote: post #299
RandallBrown wrote: post #105

Earlier quoted context omitted.

It greatly increased guest satisfaction and I would bet it helped their bottom line a little too. 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.

> free water This is often not a thing in closed environments like theme parks

Which ones? At least several of the largest theme parks chains do offer free water, you can google it. Many allow bringing refillable bottles. I’d speculate it might be a medical liability issue to not offer tap water to guests in a closed environment summer activity.

None of that changes whether it’s profitable or a good idea to give away water or drinks.

https://www.themeparkinsider.com/flume/200908/1350/

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

#310

Post by TaylorAlexander »

yoshyosh wrote: post #279
TaylorAlexander wrote: post #167

Earlier quoted context omitted.

Interesting comment! 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 suppl…

Pretty cool concept you should write more about this. Do you have any other examples of companies that give away their IP but still thrive in the physical or digital world? Will definitely check out Prusa Research. I've always wondered if a restaurant could be built upon a similar concept, teaching people how to recreate it's foods but being so cheap and accessible that the cost of creating it yourself outweighs just…

Thank you!

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.

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