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by bombcar 1303 days ago
“Value capture” means rent-seeking.

And charging for a metric optimizes against using that metric.

2 comments

Of course. Much of the economy runs on "rent-seeking".

One of the fundamentals of economics is that ownership tends to incentivise improvement. If you license something in perpetuity, you more than likely won't be doing the upkeep and improvement yourself. By renting, cash flow goes to the company doing the work and maintenance, and they can appropriately prioritize and fix issues, develop the product, etc.

Compared to SaaS, it's more difficult to develop and maintain on-prem, single purchase software for clients. You don't get to control the deployment or the operational conditions as easily, even if you do get to make certain mandates. It's a more distributed problem.

Perpetually licensed software also has to be priced higher, pushing lots of businesses and individuals out of the market entirely. Lots of customers never get served, and thus lots of money gets left on the table.

If you don't bring value to a company, they won't hire your product to do the job. It also makes it theoretically easier to switch to a competitor if paying for short term contracts.

Value first, money comes after. I do agree with your comment!
> “Value capture” means rent-seeking.

How is it "rent-seeking" to have an optimal pricing model? https://en.wikipedia.org/wiki/Rent-seeking

How is it not? You are trying to increase your profits without producing additional value.
Let’s assume the device or saas replaces something that cost $X per whatever.

The optimal pricing model will charge as close to $X without going over.

Even if charging $1/10th x would be wildly profitable.

Perhaps the term “price gouging” would be better.