I think Jason has this perspective because basecamp caters to smaller businesses (basecamp isn't an enterprise product per se). Big/enterprise customers will usually want to have software like basecamp housed on their own servers vs having to sign up for a SaaS, and its instructive to note that even though github follows the same pricing model as basecamp (top plan has unlimited access) ... they do have a much more expensive product targeted at the enterprise crowd ... https://enterprise.github.com/
Its pure speculation on my part, but I think that if he had a bunch of 500+ user companies signing up to use basecamp for $150/mo, then sucking up bandwidth, storage space and cpu cycles, basically for free, he'd feel a little differently
The cost economics for this model for a CRUD application like everything 37 Signals builds seems favorable for a capped pricing model. Having a business where all of the data is entered by a live human being on a keyboard slows down the pace of consumption to a point where COGS are negligible (in my limited experience.) In an organization with 30,000 people using BaseCamp you're still not likely to get > $150 worth of COGS in data storage, compute, or bandwidth since all of that data still has to be intentionally, manually created by a person. And the pareto principle still applies: only a small portion of those users in an enterprise organization are going to be the ones who actually use it with regularity and frequency.
I don't know if a flat / capped price model like Jason's will work for a more service-oriented product that integrates deeper into the organization and touches parts of a company's automation, like a payment processing gateway or a web analytics system. What type of COGS would a web analytics service incur for a website with millions of uniques a month?
> In an organization with 30,000 people using BaseCamp you're still not likely to get > $150 worth of COGS in data storage, compute, or bandwidth since all of that data still has to be intentionally, manually created by a person.
I hadn't actually thought about that. good point. However, I think you forgot to factor in consumption of said resources. Just as a wild example I can upload a 50MB video by myself, if 1000 people in my 5000 person company view that video, thats 48GB in bandwidth that somebody has to pay for.
> I don't know if a flat / capped price model like Jason's will work for a more service-oriented product that integrates deeper into the organization and touches parts of a company's automation, like a payment processing gateway or a web analytics system. What type of COGS would a web analytics service incur for a website with millions of uniques a month?
I think this was more along what I was (very clumsily) trying to say. A resource intensive service wouldn't work that well with this capped pricing model.
So you are saying that hosting is what makes the difference between products like Basecamp and other enterprise software? I am genuinely interested in knowing the differences. Specifically, I want to know what makes up enterprise software.Should anything that is not SaaS but is still provided to more than few companies be considered enterprise?
What I'm saying is that, for whatever reason, Basecamp & 37 Signals in general doesn't strike me as having a lot of enterprise-scale customers (500+ users for me), probably because they don't go out of their way to attract that crowd.
Because of this, I don't imagine they've had to deal with issues of lots of users consuming massive amounts of resources, hence their perspective.
But I'm completely speculating here ... they do factor GB of storage in the pricing for basecamp, so there's that
Its pure speculation on my part, but I think that if he had a bunch of 500+ user companies signing up to use basecamp for $150/mo, then sucking up bandwidth, storage space and cpu cycles, basically for free, he'd feel a little differently