I am a MapInfo reseller, and we also create products like On Target. Both
Mike Hickey and Rick's postings really hit it on the head.
There is a great deal of time & money spent to convert, polish, document all
of this stuff.
One thing that Steve doesn't seem to understand is the value of TIME. Being
in this business, I still purchase data from Mapping vendors that is "FREE"
from government sources. Why? Because the amount of time necessary to
convert it, etc. would cost me more than what the vendor charges.
This gets right down to core competencies. The world doesn't know how to
write converters. Heck, most people have trouble just figuring out how to
use MapInfo!
My real shock is that Steve's boss let's him give this stuff away! They're
paying to train him, paying his salary, etc., and he's giving it away. This
could be a real competitive advantage for his company! Talking about
helping the competition!
Happy holidays!
Dan Munson
CDS Business Mapping
-----Original Message-----
From: [EMAIL PROTECTED] <[EMAIL PROTECTED]>
To: [EMAIL PROTECTED] <[EMAIL PROTECTED]>
Date: Wednesday, December 23, 1998 12:17 PM
Subject: None
>
>
>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
>
>
>
>
>
>***************************************************************************
>*****************************************************
> 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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