Conversation

Notices

1. Embed this notice
   lainy (lain@lain.com)'s status on Wednesday, 25-Jan-2023 08:33:18 JST lainy
   Here's the point of this poll: https://lain.com/notice/ARyzWr2yraC72Bgzbs
   
   Again, the interest rate is 4%. You are buying a piece of software and can either pay $300 once, or $1 every month. Which option should you choose?
   
   In an economic sense, the options are actually identical. If you put the $300 into your bank account at 4%, you'll get $12 every year, which you can use to pay the $1 every month. So, if you actually plan to use the software your whole life, there is no real difference.
   
   In this case it might actually be better to take the $1 subscription, because it will become cheaper than the $300 one time option if you ever change your mind, even if the sum payment is already above $300. Of course there are other considerations that might you lean one way or the other in real life, but the principle will still be the same.
   
   This illustrates how important the price of future money (the interest rate) is in making economic decisions and that it's not just enough to 'sum up' dollars that are being spend over time if you want to compare them to present dollars.
   
   It also shows how much more present money is worth than future money. If Microsoft gave you an xbox, but you had to give them $1 every month, until you die, would you do it? If not, why pay them $300 once?
   • Embed this notice
     zonk (nosleep@bae.st)'s status on Wednesday, 25-Jan-2023 08:40:27 JST zonk

     in reply to
     @lain the younger you are the more this makes sense too. unfortunately, most Big Software subscriptions are at least 30 bucks per month per user. i would 100% pay for, say, creative cloud monthy....... if it wasn't so fucking expensive
     lainy likes this.
   • Embed this notice
     lainy (lain@lain.com)'s status on Wednesday, 25-Jan-2023 08:42:39 JST lainy

     in reply to

     • Lambshank :blobcatAlien:
     @wasabi sure that's what i meant with other considerations that apply IRL that might influence your decision. In that case, it makes sense to 'lock in' the price.
     
     But also notice that the point doesn't depend on the product being an actual subscription product. If you could finance a fancy dinner by either paying up front or paying a small amount every month forever, the same logic still applies, even if the dinner is over after a few hours.
   • Embed this notice
     Lambshank :blobcatAlien: (wasabi@raru.re)'s status on Wednesday, 25-Jan-2023 08:42:40 JST Lambshank :blobcatAlien:

     in reply to

     @lain Interesting point but if I wanted to be a pain in the ass I would argue this :

     Who tells me that they won't pull an AmazonPrime on my ass and make their subscription's price rise up with some dumb justification?

   • Embed this notice
     lainy (lain@lain.com)'s status on Wednesday, 25-Jan-2023 08:50:42 JST lainy

     in reply to

     • zonk
     • Lambshank :blobcatAlien:
     @nosleep @wasabi This is just a thought experiment, default risk would make this more expensive indeed, although that could be priced in. I don't get what the cost of materials has to do with this though, this is purely financial.
   • Embed this notice
     zonk (nosleep@bae.st)'s status on Wednesday, 25-Jan-2023 08:50:43 JST zonk

     in reply to

     • Lambshank :blobcatAlien:
     @wasabi @lain @wasabi i think default risk makes this impossible. who wouldn't "subscribe" to a fancy dinner and then cancel their debit card? what happens if you have one a month? how will all these costs add up? how will a business get revenue from you if raw materials cost more than what they're getting from you in 12 months?