CDNs should pay eyeball networks, too.

David Miller dmiller at tiggee.com
Tue May 1 22:03:06 UTC 2012


On 5/1/2012 5:20 PM, Valdis.Kletnieks at vt.edu wrote:
> On Tue, 01 May 2012 14:13:01 -0700, Mike Hale said:
>
>>> "But you *may not* tie your
>>> price to the hours used to produce it for the first."
> The above was William Herrin's comment (quoting level fixed by me).
>
> Mike - please get mail software that does correct quoting. It's 2012, and
> proper quoting has been understood since the mid 80s.  There's *really* no
> excuse for using software that can't get quoting and citing right.
>
>> Sure you can.  How else do you determine what the software's going to
>> cost if you're not going to factor in development?
> You missed the point - having given customer #1 an invoice that included
> a line item for 1,432 hours of R&D at $221/hour, you're treading on thin
> ice if you present another customer an invoice that includes a line item for
> the same 1,432 hours of R&D (absent an agreement between the two
> customers to share the costs, etc).
>
> And if you've *collected* that $316,472 from the one customer, it's somewhere
> between sleazy and skanky to include that $316K in the costs that need to be
> amortized over the next N sales of the software.
>

>From an accounting perspective, every R&D effort that I have seen or
been a part of was not billed to any customer.  R&D has always, in my
experience, been an internal charge against a company's own profits.

As to hourly software development, I have never seen or been a part of a
software development effort where the final work product was not owned
by the entity paying for the hourly development.  The contract software
developer can't sell the same software twice because they don't own it
to sell it twice.

It is possible that my software development experience, while broad, has
missed a model where R&D is billed to customers or software isn't owned
by those who paid to have it developed...

If a company expends their own resources to develop a piece of software
(i.e. a product) regardless of whether through R&D (internal
development) or contracting with someone else to develop the product
(external development), then they can set the price of that product to
whatever they like.  There is nothing sleazy or skanky if the price of
the product multiplied by the number of copies sold is positive after
subtracting the price of the development of the product - we call that
profit.

-DMM





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