What goes down

What goes up must come down.  We all know this.  It is something to do with Newton’s law of universal gravitation.  Yet recently I have found that what goes down must also come up.  Especially when talking about licencing costs.  It seems that despite falling budgets and decreasing numbers of users the cost of some of the software products that we buy are going up, not just by inflation but up up.

Now, I am no economist yet my brief understating of Keynesian economics is that, at least in the short run and especially during recessions, price is heavily influenced by total demand.  Low demand will lead initially to falling prices which, in turn will lead to a decreased supply which, ultimately, will lead to rising prices again.  On the flip side, if the market is oversupplied then prices will fall (the current oil price is reflecting this) which in practice tends to restrict supply leading to a recovery.

In my own market demand is falling.  Supply, if anything is growing.  This should lead, at least in the short term to a drop in the cost of products and services yet in many cases, especially in the cost of software and operating systems the reverse is true.  I understand that companies need to maintain revenues and, given the opportunity, they may well be tempted to cover their losses from customers who could struggle to go elsewhere yet all this does it create a bad feeling between supplier and customer.

Is there a freer market than technology?  Then why are licencing costs behaving in this way?  I guess it is because on a global scale prices are reflecting the state of the market but suppliers are trying to balance revenues across all of their customers and they think that we have no choice other than to pay.

When I was out on the road selling I found that the worst thing you could tell a customer is that they had to do something.  Just watch them.  They will move heaven and earth to find an alternative, even if it was something they would rather not do.

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