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And then you’ll make it up in volume, right?
Originally posted at 12/6/2010
I recently had a few discussions with several startups, in the process of going to the cloud. One of the first questions that I ask is “what is your licensing/revue model?”.
At first, I usually get some very funny looks, I am not there to do business consulting, but to do technical stuff. Why do I stick my nose into things that have absolutely nothing to do with technical stuff?
The answer is quite simple, you have to consider the money side of things in your architecture. Let me give you a real world example. A startup that I was talking with was talking about creating a SAAS system on the cloud. Each client would pay a flat fee of 150$ per month. When I started talking with them, the idea was to use EC2’s ability to just create a new node on the fly, and give each client their own server. That would allow very easy development and deployment, and remove a whole bunch of complexity.
I even agreed, except that I raised one small problem. Each server would cost them roughly 250$ per month. I had to ask them: “Do you intend to make it up in volume?”
We always had to make those sort of calls, but especially when we are using the cloud it becomes so much clearer. We have to take into account the actual real world costs of our architecture choices, and in many cases, we have to adapt our practices to the actual economical realities.
Comments
maybe they run a charity;)
Eons ago, when IT departments had their resource limited, the question would be: "do we have enough servers to make it running all night long?". If no, the deliberations about buying would have been started. Now, because of the ease, the question is postponed for a while, isn't it?
What was the complexity they were avoiding - security sandboxing?
I had this discussion several times at my old workplace.
It's all very well coming up with a nice figure that undercuts the nearest competitor - but you need your costs to come in at under that nice figure.
Same with offering services like "24x7 phone support" - Unless someone's working for free, that costs real money too.
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