[bruce511]

The problem with the "how much it cost to make" approach is that means that there is literally no room for error. You're not building in any cushion - no shock absorber. One bad idea, one dud product etc and the company goes under.

On the other hand there are _lots_ of examples of value based pricing outside the tech world. some examples;

a) Any "luxury good". Think Ferrari, Birkenbag, designer clothes etc. b) Any supply-constrained service - think rounds of golf at St Andrews. c) Popcorn at the movies d) Movie tickets (they are not dependent on the cost, or earnings, of a movie) e) Office rent. It costs the same to build a building, so why do rents vary so much depending on location?

and so on. value-based-pricing is not a tech thing - it exists everywhere.

[manuelmoreale]

I'm not arguing for a "how much it cost to make" approach. I'm arguing agains the "Now I price things based on their value to the customer" approach.

Because the notion of "value to customer" means nothing. What is the value of a piece of software? What is the value of a website? What is the value of branding? The problem I have with all your examples is that those are all tangible things while software work is, for the most part, a service. Coding a website for a client doesn't cost me anything in a traditional, material sense.

I can't quantify how much it cost to make a site. But I do have to assign a monetary value to my work as a developer. And figuring out that value based on how much value my client gets out of my work is a conceptually flawed aproach IMO.