IT – PRICE DISCOVERY
The capitalist world is known for its dictum of bringing buyers and sellers together and that demand and the supply decides the rest. This is the noble North Star. As things went to the functional mode, countries and companies devised their ways and means to calculate the price for the market and governments regulated it against the laid down parameters. From a pin to oil to motor car, prices were known and it was a public domain information facilitating business. With all regulation on pricing and regular checks in a variety of ways, en number of wrong practices also crept into the volatile world of pricing. At the receiving were always the customers.
If one sector has successfully beaten everybody in their own game, it has been the IT industry, notwithstanding huge gains by way of no regulations initially to tax holidays to preferential taxation and lots of freebies strewn all over to attract the IT companies. They have been able to ward the anti-trust laws and have played around with every single law in every single land besides keeping out of the taxation net on quite a few occasions. They have handled the most valued input data for free to this day. To the current discussion, it is very difficult to price the intangible and so also the tangibles enmeshed in a product. What is valued is the product, though the parts give some indication of its pricing.
The software has been brought to an effort and costing game, the effort is their calculation and the rates are also theirs. Then you have fixed cost projects and variable costing ones, where will you land with your crude financial visualisation of your project no one knows. Then you have licensing mechanism which can put the ill famed govt. licence raj to shame. Nobody has ever been to been to predict the licensing cost and every single customer is at their mercy. Many a softwares costing through the sky has become redundant because of this issue. You get tied to a company, functional interoperability ring a farce, it is something akin to a snake charmers skill.
The money and time invested in the product creation is flaunted over and over again. But can it not be calculated & spread across the product sale till it is recovered? Can it not be made transparent? Consultants and system integrators have added another dangerous element to at least large scale projects. The technology which brings transparency to this world, is itself opaque, both in its capability and pricing. It is difficult to guess the price of anything; hardware, software, project creation, operations or maintenance. MRPs are still not on the horizon. Companies and their paid experts will certainly work to their advantage. For govts to understand the digital world and create a workable price regimen might take a couple of decades.
WITHOUT AUTHENTICATED PRICE DISCOVERY IN THE PUBLIC DOMAIN, CUSTOMERS WOULD ALWAYS BE AT THEIR MERCY.