Hacker News Reader

Comment by schumpeter | Hacker News Reader

I can say after years of negotiating with enterprise software vendors, the reason I feel prices are being hiked, is that they finally have to show revenue growth to Wall Street. I don’t believe they’re inflating prices “just because”. I’m seeing companies (looking at you, Datadog), that are raising rates while their stock gets pummeled. I may be drawing a false correlation here, but I suspect prices are up because the era of cheap money and frothy stock valuations is ending and now it’s time to show revenue growth.

View on HN

I am not sure why this is getting downvoted, but this is exactly the situation.

Enterprise vendors are raising prices to show growth but customers want to cut costs. As a result, lots of customers switch to a lower cost alternative. But that means that the original high cost vendor will have to raise prices even further to serve their wall street overlords.

If the vendors were happy with sustainable slow revenue growth, none of this would be a problem. But these vendors are public and are priced as growth stocks. So the revenue must also grow like growth stocks.

I haven’t heard of any big companies switching away from DataDog. They have a product that is both genuinely valuable and very sticky. Once you’re in it’s hard to get out and they know that.

That comment was not specifically about Datadog. Datadog is a pretty good service so they will survive, as long as they don't go ballistic with their prices.

In general, someone will have to take a haircut in order to keep stock prices up. Either it will be execs, or customers, or employees.

The first shot is always fired at employees with layoffs. Next shot is fired at customers with raised prices. Last shot is a tussle among the execs (yes, even execs have hierarchies among themselves)

It’s hard to leave, but very feasible to cut cardinality, add sampling, and reduce costs once they cross the line

100% and that hike in prices and clinch on labor effects regular people the most. It's also one of the biggest drivers of inflation. Infinite growth in profits isn't sustainable and it doesnt lead to innovation, it leads to squeezing people to death slowly from all angles.

Reply on news.ycombinator.com