[net.micro] What it costs to produce a program

BILLW@Sri-Kl.ARPA (04/22/84)

Thank you Alex Pournelle!!  I almost became rich and famous by writing
an immensly popular communications package for the IBM PC.  Alas, I didnt
finish it in time (take a look and see how many competitors there are now!).
Here is how it would have broken down:

o  End price to user:	$200
This is what youy would have had to pay if you walked into
computerland and bought a copy.  This is about what good
communications programs are selling for these days... (those days?)

o  price to computerland:  $120  (40% markup to retail price)
In exchange for their $80, Computerland provides a place
where people can look at and try out the program, first order
customer assistance, and (mostly) salesmanship.

o  Price to 'distributer': $80	(another 40% down the drain)
the distributer runs around getting places like computerland, the byte
shop, and so on to carry the product.  Perhaps he also does advertising,
and/or shows your product at trade shows.  Maybe he sells some copies
through mnail order (now you know why mail order software is cheaper).
The distributer gets the disks from:

o  Publisher.
The publisher does a lot of work.  Making the disks; The disk labels;
The documentation.  Putting the documentation in those swell binders;
Shrink wrapping the whole mess.  Copy protection, if hes into that.
Advertising.  Support.  Suggestions for "version 2".  etc.

o  What do I, the programmer, get?  Why, 20% royalties of course (and
thats a pretty good royalty.  It'd be a lot less for a game or other
really 'mass market' type software).  Thats 20% of what the publisher
gets.  $16 for each copy of the program sold.  $0 for each copy of the
program pirated.  If everyone with an IBM PC bought MY software, I
could be quite rich.

o  So what do \I/ do with the money?  Well, I pay a lawer $500 or so
for having found me a publisher.  I pay him $60/hour for any other
problems that might creep up.  I go out and BUY a compiler for my
computer, so I can write more software.  Maybe I upgrade my hardware.
(in this particular instance, I had in mind buying the computer, since
the software was written on borrowed hardware.  Sigh.)  And there's
always "Version N+1".  [maybe I finance a venture that doesnt work,
like this one.  I spend hours and hours writing a program that no-one
ever sees, and is obsolete before it is done.  I spend the $500 on the
lawyer, and no one is interested.  I chalk it up as being cheaper than
a course at Stanford that would teach me an equivilent amount, pick up
the pieces and go home.]
-------------------------------

Places like JRT and Borland of course keep their prices down by
cutting out most of the middle men.   Maybe this works.  You have
to be selling a product whose audience is big enough that you get
reasonable economies of scale doing disk duplications.  Your audience
has to be small enough that you dont need the kind of distributer
network descibed above.  The program has to be bug-free enough, and
addressed to a suffiecntly intelligent audience that you dont need
a large support network.  JRT went out of business.  Borland seems
to be doing much better, and I wish them all the luck in the world.
I even plan to buy a copy of Turbo Pascal 'real soon now'.

I amazes me that the original programmer makes anything off of
a game that sells for $40.  Of course, you have a point.  Games
are basically worthless, certainly not worth $40!  Thus I dont
own any computer game programs.  Pirated or otherwise. [Well,
I did take advantage of Vectrex going out of business.  But im
sure Ill have my vectrex running unix (well, OS9) in no time :-)]

Gosh I feel better now!
Bill Westfield  (BillW@SRI-KL.ARPA)