Do you feel all the tension in bladeforums sice the new changes?

Interesting article re: similar issues in this weeks Business Week.

Too Much, Too Soon by Robert D. Hof

The article appears in the August 6, 2001 edition on page EB 30 FYI.

Pretty much what Spark is facing. $30 is too much when alternatives are free. I always thought $10 per year would have generated less ill will and more cash. Could be wrong, though. Anyway...it's a time of change for every site....
 
Well, Hell, if the market price point is $10, then give people a $10 option, like 6 mo. posting in two for sale forums, etc. If it works, it works. Pricing is always set by market, with the notable exceptions of corporate collusion on price fixing-why don't we burn alcohol in our cars?-and is a great indication of what people are willing to pay. Ever notices how a decent computer system with printer usually sets you back 2-3K? Or how mid sized cars cost 20-30K now?


Hank
 
The problem is that there is a certain cost of receiving money.

The other day, I went to the grocery store needing a garlic. Twenty-two cents. By the time the store paid the cashier's wage and benefits, gave me a bag to put my big purchase in, etc., they lost money on that sale even though the garlic is doubtlessly priced to make a profit.

Most will want to pay their BF.C membership with a credit card. The CC companies skim a fee off of that. It takes Spark a few minutes to set up your account. There are accounting efforts that have to be made to keep track of the money, etc.

It's sort of like your pay check. It starts off with an impressive amount and you think, "Wow! I'm rich. I'll have no trouble living well on that and maybe getting a new knife or two." Then, after that big number, there's a long list of "deductions." A couple of them are significant, but most of them seem trivially small. However, together they add up. They take out taxes, health insurance, life insurance, long-term disability insurance, short-term disability insurance, unemployment insurance, social security, payroll tax, and 401K, United Way, etc. Suddenly, the amount in the box right after "pay to the order of" just isn't as big as you might have expected. If you need/want $24,000 per year of actual cash money in your pocket, you actually need at least a $38,000 per year job because of all those nasty deductions.

Likewise, for a merchant there are "deductions". If a product costs you $X and you want to make $Y when you sell it, you might think that you should price it for $X+Y. But, you will not make Y dollars if you do this. In fact, you might easily loose money. This is a common mistake and the downfall of many small businesses. To achieve your goal of making $Y, you've got to sell the product for $X+Y+Z where Z is all of those "deductions".

Recently, a popular dot com, pets.com, closed its doors. As I recall, they sold goods that cost them something like $15M (that would be X in my previous paragraph) for something like $30M (that would be X+Y). That sounds good, like a $15M profit (Y). But, as I recall, they spent something like $45M to do it (that would be the Z in my previous paragraph). So, they actually ended up loosing $30M. This is the heart of most dot com failures... "we loose money on every sale, but we make it up in volume"

So, out of a $10 membership, there probably won't be much left to actually fund BF.C operations. I'm sure that Spark selected his base membership level to be as low as it could be and still produce a reasonable revenue.
 
Hmmm, and here I thought selling was already $10. It's just that in order to do it, you've got to get the other services first - kind of like having to have cable before you can get the movie channels.

I read the above article... and while it does apply in some points, it doesn't apply in others. For example, unlike a restaurant, if you dine and ditch we've got no recourse - so we have to eat the cost on that lobster dinner mentioned.

Second, we are offering the information for free still - it's the added features like selling that cost. You want the premium features, you have to pay the premium price. There Ain't No Such Thing As A Free Lunch.

Kevin
 
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