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Comment by teekert | Hacker News Reader

Although I like the initiative and encourage it, the use of "getting fair prices" grinds my gears a bit.

A fair price is whatever a seller and a buyer agree upon, not the rock bottom value that you get when applying sustained pressure to a price point, collectively. You may get a product cheaper and cheaper but probably at the cost of the stability of the seller, which is also of value to a buyer. You may find that if you pay more you are more valued and a seller will do more for you in the future. Or you may be the last to close an important target of a sales person and get a below market price, at least for a while. What's fair? IDK. Just keep thinking and occasionally reopen negotiations in a respectful way if you think you can get more for less. Or switch to another product.

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I work in a niche area of consulting focused on SaaS sales / pricing.

All this will do is boost the threshold at which companies will even bother to negotiate. Too many people negotiating hard on $4k quotes? They’ll stop negotiating anything below $10k because they know the smart competition will do the same. They will be willing to let you walk rather than anchor a lower price.

They know their competition doesn’t have a significantly different cost structure, so by letting competitors undercut in competitive markets, they can afford to build a better product with the higher margins. Unless there are strong network effects creating a winner-take-all situation (and most of those markets have been claimed), this can work.

Don’t play the race to the bottom. Price is only one factor SaaS buyers use, and it’s like #4 on the list. It can even be a negative sign — if you get 3 quotes and one is way lower then the other 2, the lowest usually gets eliminated.

Negotiation over pricing for SaaS products often comes down to who can put in enough time, or who is willing to ask for lower prices.

There are cultures where asking for lower prices is not culturally acceptable, and many people feel uncomfortable doing so. This does not mean the product is worth more to them.

Having more information here is a good thing.

OK but it may lead to such a conversation:

Hey, company X pays less! I want to pay the same!

But Company X files very constructive bug reports and has called support only 2 times this year whereas you only whine and call support every other day, so, sorry.

> A fair price is whatever a seller and a buyer agree upon

I think there is an is/ought distinction here. What the price is is your definition here: what they've agreed upon.

There are numerous oughts that should be considered as well:

1. Did the seller coerce the buyer (or vice versa)? Without this ought, the mafia gets a fair price when it charges for "protection" services, both parties agree!

2. Does the seller know more than the buyer (or vice versa)? If they both knew the same things, would the price be different?

It depends on how you define fair: suppose you can save $80M by spending $60 million on software, which the supplier costs $2 million to produce and sell.

What is fair? That the supplier makes $58M, on an investment of $2M? Or is it more fair to buy it for $4M, and the buyer has a benefit of $76M?

The fact that you're paying way more than what it costs to produce doesn't mean it's not fair. Depends on the benefits that you get.

Another company may only get a benefit of $40M when buying the software, so it would make sense for the seller not to ask $60M.

So one way to define fair, would be to base the price on the value it brings you, not on the amount of money it costs to produce. But this varies per buyer.

Fair pricing would mean everyone is charged the same price. Sellers could easily accomplish this by refusing to “discount”, but they don’t. So the current situation must be to the advantage of sellers.

With business software it's more complex...it isn't just a download link being sold...it's support: help choosing the right products, getting things set up, having someone to call when things go wrong, continued updates, possible customization, etc. The actual "fair price" depends quite a bit on what the buying company looks like.

Exactly. The most demanding customers easily cost an order of magnitude more in business and support resources.

Volumes, updates, support could all be part of a uniform published pricing, which would mean everyone pays the same price. But vendors prefer to extract as much as they can from each customer.

It’s not right and wrong, but it does reflect that this the sellers choice.

"Fair" is a value judgement and a weaponized word that people use during negotiation to anchor something to their interests. (Source on this idea is, um, that famous negotiation book by the FBI hostage negotiator)

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