Pricing the Hardware that Runs GNU/Linux

W.Rebel Creative Commons Attribution

GNU/Linux belongs inside an Audi, BMW, Jaguar, Mercedes-Benz, Lexus, or Holden but needs to be at the price point of a VW Bug.

We are doing the final testing on zareason.co.nz and have one final beastly bug: pricing.

Pricing in the US and Canada is fairly easy. We look at our costs, then look at competitors, then set it as low as we possibly can and still make payroll.

In the US and Canada I have mass suppliers and mass competition to help make pricing easy. We need to stay in business and we need to keep it as low as possible to highlight the free and open aspect of what we do. Simple. 

Pricing in Australasia is far more difficult. Prices can cover the map. The two problems we face with pricing in Australasia are:

 Diego.toranzos Creative Commons Share Alike

1. Fewer points of comparison and incoming costs we don't fully understand yet.

2. The BF, Bleed Factor. We can't bump prices down to "let's make payroll this month" because we have no payroll. The Australasia base is being started by a team of five people, all volunteer. We are building and shipping out of large rental home on Mount Victoria in Wellington. It's a personal residence, no overhead. We need to invest in stock ahead of time, but other than that, no overhead.

The temptation to price ourselves into the ground is quite alluring. FOSS is free. We dearly want the hardware to be as affordable as possible because:

1. It allows more people access to high-end (not refurb!) computers that are built to run many GNU/Linux distros flawlessly. It's the same thing as the car you own. GNU/Linux belongs inside an Audi, BMW, Jaguar, Mercedes-Benz, Lexus, or Holden but needs to be at the price point of a VW Bug.

2. It highlights the, "Hey, I didn't have to pay for the OS license," point. We're building for free and open here.

So, since I would prefer to be a philanthropist than a business person, and that's a dangerous attitude for someone who decides pricing, I am considering putting two failsafes in place so that, a year from now, ZaReason is still alive and kicking in Australasia. Two steps:

1. Price things as close to normal as possible.

2. At the end of each month, add up profits and losses, cutting a "check" to all customers in that month when there is surplus. It's similar to what REI* does (outdoor adventure gear).

Notes: We will be using Paypal for payment processing (accepts all credit cards / debit cards) so we can easily send customers a payment. The process is simple and sustainable.

snowflake on zareason.com

For example, if next week you purchased the Blue Snowflake, a high-quality but affordable sound recording device with a USB plug (I love mine) and there was a profit at the end of the month, we would cut you a check (Send Money back to you through Paypal) as a type of co-op rebate. For small items, the rebates would be small; for larger items like high-end desktops, laptops, or servers, it might be a nice chunk of change. It's not guaranteed; it's just something we can do to make sure everyone comes at this from a community standpoint.

We can always adjust pricing as we go, but that doesn't help the person who bought something last month and now it's cheaper. Doing a group refund / rebate / whatever-a-business-person-would-call-it seems to make sense.

The first 100 days is the initiation period for any project. During that first 100 days we will be doing the refund / rebate, hopefully balancing out the prices and getting ZaReason on a strong footing in the area. ("Footing" is a pun. Read on...)

* A month ago I got a $83 rebate check from REI. I was blissfully happy because my boy needed shoes. I could have gotten cheapy shoes from Walmart, but instead went to REI and got a pair of Hi-Tec hiking boots for my boy. Every time I look at those shoes I am grateful that REI isn't just giving back to the world at large, but is giving back directly to me. That check was a big deal for me personally. So, I'm thinking that this idea might turn into a permanent good thing. If NZ and AU work well and show the rest of the world they can see the value behind hardware that's optimized for GNU/Linux then who knows, maybe the rebate at the end of the month will become a habit. Here's to hoping.

Cheers.