[Sigia-l] Discounting software vs. discounting IA consulting services

[David R. Austen]

Hello, Laura:

(As you will have noticed, I have taken the liberty of changing the
Subject: name to fit the thread.)

This question has come up before in a different arena and I think I
can explain how and why these companies can offer discounts. (I do not
expect to cover all bases here, so help out anybody.)

First, the "products" are goods delivered and not a services. The
software is published and manufactured, and all units are more or less
identical. It is not necessary to create a new product for each and
every customer, so calculation of costs and revenue is done in a very
different way.

So they achieve economies of scale when they press more CDs and print
more manuals; we providers of services only achieve economies of scale
when we make more use of the computers and desks we own. The use of
those is severely limited: let's say 12 hours a day and, of course,
only one computer can be used by the average person at a time.

The publishers carefully determine how many units need to be sold at a
certain price and how many can be sold at lower prices. Later, a
larger percentage will be sold at the lower price. The line between
for-profit and non-profit is a convenient place to make a division.
There may also be a tax advantage, and their is great PR value.

For each unit of software sold, a certain number of prospective buyers
get an opportunity to use and discover its merits it; the employees at
the non-profit (and their family members) may then buy a unit for home
use. This is a great promotional opportunity. (As is heavily
discounted software for university students.) We consultants would
achieve no similar advantage with our highly customized services.

There is usually a pretty substantial firewall between qualified
non-profit purchasers and other purchasers. Most of us just know
better than to expect the price to be discounted if we are not at a
non-profit, and little time is wasted by retailers and publishers
explaining the difference to us.

I would expect thought that little serious effort is made keeping SW
with nonprofit discounts out of the hands of the rest of us. It would
likely not be cost-effective.

I'd like to hear more from others who understand other factors.


Best regards,

David                           

http://zillionbucks.com -- Web hosting for the creative industry

Monday, June 10, 2002, 2:40:18 PM, you wrote:
LN> For the most part. However, I have found that I can usually get 
LN> discounts on expensive products (such as training CD-ROMS and 
LN> training videos) by virtue of being a non-profit. And DiscounTech 
LN> offers amazing deals on software to non-profits.
LN> http://www.techsoup.org/DiscounTech/default.asp?cg=home&sg=dt

LN> Laura Norvig
LN> Resource Center Coordinator
LN> National Service Resource Center
LN> 4 Carbonero Way
LN> Scotts Valley, CA 95066
LN> (800) 860-2684, ext.116   
LN> Fax: (831) 430-9471
LN> lauran at etr.org
LN> http://www.etr.org/nsrc/


LN> At 6:11 PM -0400 6/7/02, David R. Austen wrote:
>>I expect that non-profits pay the same rates as Microsoft for pencils,
>>power and personnel.
LN> ------------
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