I intended to answer Steve's open letter on this subject, but after I read
Rick's posting below I wasn't sure
my answer would add any value above Rick's response (attached below).
That is what we are really discussing
here, added value or a "value proposition". Since we are in a free market
economy, it is the market itself that
determines the value of a product or service. A market will not sustain a
product or service that is over priced or that
does not provide adequate value. Though Steve's letter addresses the
value-add he brought to these products it
does not accurately reflect the value-add On Target added. There are many
examples of customers who purchased
the On Target products after evaluating both. What Steve's letter really
does is open up what can be a never-ending
discussion of business philosophy or market economics. For example, have
you ever thought about what our economy
would be like if all vendors priced based on cost?
In closing, MapInfo welcomes all clients considering our products to
compare the value proposition
to what is available from other sources and make up their own mind. It's a
basic premise of a free market economy and
one which MapInfo and our Partners support. In the end, the market will
decide!
- Mike Hickey
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*****************************************************
Rick Stavanja response...
[For the record, I'm not a MapInfo reseller or
VAR. I run an
independent CAD & GIS consulting firm. I stand
to gain nothing
from MapInfo's success or failure selling data
sets.]
I read Steve's letter posted on your site and I
have a couple of
thoughts on the matter...
First of all, I think I should begin by saying
it's commendable that
Steve has posted the information publicly for
all to share free of
charge. This is what the internet is all about.
Freedom.
Steve has obviously contributed a great deal of
his time and effort to
research, disseminate, translate and post the
information that he
has. I'm thankful for that and I'll be adding it
to my list of GIS
resources for future reference.
However, I have a problem with a couple of
statements he makes.
First he states that products should be priced
based on the cost to
produce them. Then later he also states that
"...to sell this data for
thousands of dollars is to take unfair advantage
of the uninformed or
unskilled user." I feel that both of these
statements are
short-sighted. It's one thing to say that he
thinks their prices are too
high, but his characterization of their
motivation to take advantage of
people is a bit much.
Regarding product pricing, I too once subscribed
to Steve's way of
thinking early in my career, but over time the
realities of the
business world has educated me otherwise.
Pricing of any product
or service should be based on one thing... its
value. I'll even go so
far as to say the production cost of a product
or service should have
NOTHING to do with its pricing.
I can not begin to try to justify the prices On
Target charges for the
products in question. Not because they're too
high or too low, but
because I have no idea what factors went into
pricing the products
nor do I know how many they sell at those
prices. They may very
well be too high. But I do think it's fair to
make a couple of
assumptions. First, they obviously must be able
to sell data at
those rates since they continue to market them
and create new
ones. Likewise, at least some people must feel
that the prices are
fair otherwise they wouldn't buy them.
If every potential customer for data such as
this possessed Steve's
knowledge and skills, they'd all be able to do
what he has done and
therefore have no need for On Target's products
(or those of any
other data vendor) at all. If they all know
where to find the data they
need... If they knew how to translate the
data... If they knew how to
write the code to translate the data...
Unfortunately, most people
that need it don't possess the knowledge or
skills to do so. They
are not systems analysts or programmers. They
are Real Estate
Agents, Planners, Engineers, etc. On Target and
the other vendors
are simply catering to them. What those vendors
charge is
ultimately controlled not by the vendors, but by
the consumers. The
concept is no different for this product than
for any other...
I also feel that the implication that they are
taking advantage of
uninformed or unskilled users is unfair. Does
uninformed mean that
they don't know there is raw, untranslated data
somewhere on the
internet? Does uninformed mean they don't know
about Steve's free
alternative? Does unskilled mean that they don't
know how to
translate existing data into a format useable by
MapInfo? If so, I
agree. But is it taking advantage of that
customer to solve those
problems? I don't think so. They offer products
that address a
market. If they're priced too high, the customer
should look to a
competitor. If there isn't a competitor, they
can use a consultant. If
there isn't a consultant, they have the option
of learning the skills
Steve already possesses and solve the problem
themselves. Or
they can do without. It's my guess that to most
customers $199
looks pretty good when compared to learning to
translate raw data
from scratch.
To lower a market's price point there needs to
be competition. He
could offer that rather than offering to take
the data off of his site. He
could expand and promote his solutions. He
should support people
that use them, market them to people that don't
know about them,
offer tech support, provide easy installation
routines, product
updates, hire supporting tech and admin staff to
handle increased
demand, etc... Obviously he'd have to treat it
like a business and
start charging for the service. As a software
developer myself, a
market for alternative lower cost data solutions
seems viable. It's
just my guess that when all is said and done,
his pricing per
product will be much higher than the equivalent
of a couple of lunch
hours worth of work, and he'll have learned what
I've also had to
learn the hard way. Sell it for what it's worth,
not what it cost.
Rick Stavanja
[EMAIL PROTECTED]
Tangra Development, Inc.
CAD/GIS Systems Consulting
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