Joel Spolsky recently spoke at Y Combinator about selling software to corporate customers. He said that in most companies software costing up to about $1000 could be bought by individual managers without any additional approvals. Above that threshold, software purchases generally had to be approved by a committee. But babysitting this process was so expensive for software vendors that it didn't make sense to charge less than $50,000. Which means if you're making something you might otherwise have charged $5000 for, you have to sell it for $50,000 instead.
The purpose of the committee is presumably to ensure that the company doesn't waste money. And yet the result is that the company pays 10 times as much.
- Paul Graham in 'The Other Half of "Artists Ship"'
Sunday, November 30, 2008
One Reason Why Software Is Expensive
Posted by Rams at Sunday, November 30, 2008
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