Why per-CPU pricing for software can be sensible

Contra Tim Bray, per-CPU pricing is actually quite a reasonable thing to do if you think your product is not readily replaceable (that is, if all competitive products are actually substitutes only). It's a form of price discrimination, aka "charge the rich high, the poor low".

This approach is sustainable when 1) you can reliably tell who the rich are, and 2) you can prevent a secondary market from arising (so that the poor sell to the rich at a profit, undercutting you). Because (proprietary) software is copyright, and is licensed not sold, it meets the second condition; predicating high prices on expensive features of the platform meets the first condition.

1 comment:

pdf23ds said...

Seriously. Especially database software. I program for a small software company. There was this one databes vendor that I was considering switching to away from MS SQL (who licenses per CPU), that wanted to charge a per-connection fee, instead of a per-server-cpu fee. And that is just more trouble than it's worth.

We've switched away from multiple library vendors because they want royalties on redistribution, and we're still doing it, as we find other libraries that can replace current ones.