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.
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?