CDNs should pay eyeball networks, too.
alex at corp.nac.net
Tue May 1 22:46:56 UTC 2012
I can't agree with this. You are assuming a cost-plus model. Many things are market-priced.
If you are the only game in town, and you have a great product, you sell it for the most you can. You aren't a charity.
The customer always has the option to not buy your product.
----- Original Message -----
From: Valdis.Kletnieks at vt.edu <Valdis.Kletnieks at vt.edu>
To: David Miller <dmiller at tiggee.com>
Cc: nanog at nanog.org <nanog at nanog.org>
Sent: Tue May 01 18:18:48 2012
Subject: Re: CDNs should pay eyeball networks, too.
On Tue, 01 May 2012 18:03:06 -0400, David Miller said:
> 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.
RIght - and when pricing the result of the R&D, you take into account the
internal charges and estimated sales volume to determine a target price
point. R&D was $316K and you estimate you can sell 100 of them, you're
going to have to charge at least $3,160 a copy to make a profit on the
project. You sank $150M into R&D and think you'll sell a million units, you'll
need to charge $150 to break even. And so on.
The point is that if you already got *paid* the $316K, it's morally wrong to
include it in the calculation of "sunk costs we need to recoup to turn a profit".
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