@Simon: and how exactly 37signals is different from Microsoft? Price difference in Microsoft’s offering is not just supported memory, but some other advanced things which make sence in enterprise environment, whereas 37signal’s is just limiting you on the same features for a price.
There’s another misconception among people who argued that different hosting tiers are actually vary in physical resources available to customer for a price. If we’re talking about shared hosting, Pareto principle works in full power: 80% of people sitting on the same server will use only tiny fraction of resources of this server. Even if you pay more for “more resources” you may end up sitting on the server packed with lowend consumers and will never notice this just because their usage pattern doesn’t interfere with yours.
In 2008 you ask non free softare vendors, “do you understand what it takes to build the premium experience that trumps your free competition? And can you deliver it?” Why are you running Windows Server now? The sooner you leave that stuff behind, the more time and money you will save.
When you read Joel Spolsky “Camels and Rubber Duckies” (which was linked in article, so Jeff does know about it) to the very end, you would see that he argues that for software pricing artificial market segmentation just angers users (non-artificial example: paying more for full support), and he argues against it.
I am not sure if it applies to market segmentation and differently priced plans in hosting; there to some extent you sell different products, even if it is only virtual resources (e.g. storage, or bandwidth, or users).
That is… First-world countries end up gaining the companies more profit/unit than the sales in third-world countries. Which still turn a profit, I might add.
The various points about cars – that you pay more to get more – is true to a point. But the American car industry spent 50 years selling essentially the same cars under different brand names at different prices – Mercury rebranded Ford cars and charged more; Pontiac rebranded Chevrolets and charged more; etc. But there was more prestige, apparently, in driving the Mercury version of a Ford Pinto (!).
Same with watches. A Timex will keep time as well as a Rolex; it’s not engineering you’re paying for when you go to the jeweler’s to buy a timepiece.
‘In an ideal world, the price would be different for every customer. The “perfect” pricing scheme would charge every customer a different amount, extracting from each one the maximum amount they are willing to pay.’
Its called the barter system… I seem to remember we abandoned it a long time ago.
this is one reason I am experimenting with os x, weaning myself off of Microsoft, if possible. Much cheaper and very realiable, I hope. I despise all the complex Microsoft licensing.
Just the ability to use Visual Studio, and especially the Visual Studio debugger, makes using Windows cheaper in terms of money and stress equity than Linux or Mac, regardless of licensing costs.
Jeff, what I love about you is your devotion to your misconceptions.
37Signals pricing may not be fully incremental, but each new price point does involve an increase in both resource availability and a likely increase in support costs.
I assume that MS price point differentiation includes more than a simple bit flip for memory usage as well. I certainly see the difference between my Vista Home Basic and Vista Ultimate installs.
The best argument against MS for smaller businesses would be that you get penalized for success. In your case, needing extra RAM is just a side-effect of popularity. You really don’t need a different edition of the software, except that they included an artificial limitation on RAM.
Similarly, if you set up the whole site on a single server first, and then need to split the IIS and SQL services to separate machines because of higher traffic… now, even though it’s the same OS on each new machine, you’re paying twice as much for software you already “own”.
I don’t see any problems in this kind of price differentiation. Ofcourse since you have cash you can pay more. This is true with all software products. Businesses tend to maximize profit nothing wrong with that. You might already be aware about Joel’s article, MS is doing exactly the same . Link to Joel’s article on it : http://www.joelonsoftware.com/articles/CamelsandRubberDuckies.html
Where in life dont you get more by paying more. Faster car. Bigger house. More features. More user connections from a DB. STD, PRO, ENT editions. CPU Cycles. Functins on a calculator. Safty features on a car. Air bags for a while were just on the expensive cars. Now many inexpensive cars have them. You PAY for it. We PAY for something because we dont have the resources to make it ourselves. Build your own server OS without the limits. Use open source if available. Those capitalists can profit on their hard work. If a competitor comes out with a cheaper alternative with a higher limit, then you can bet all prices will come down. I am not angry because I cant afford a better thing, I just work harder to get it. Motivation. Not class warfare crap. Save it for the Obama rally. Dry your tears and think how you can get that nice toy.
@Wedge: Unless you’ve upgraded your ThinkPad’s CPU, you are mistaken about which processor it has. The T60 came with a Core Duo, not a Core 2 Duo. It is a 32-bit CPU, not an x64 CPU. That’s the reason for the 3GB limit - part of the 32-bit address space is reserved for the BIOS and other things.
ThinkPads with x64 CPUs can indeed address the full 4GB.
