Or, "How not to make money selling software: a succinct illustration of cost-based and market-based (specifically, value-based) pricing in just two comment threads."

Why can Github charge FIVE THOUSAND DOLLARS PER YEAR for a local install of Github and succeed, impressively so, despite a small army of nerds pointing out how inexpensive it is to run one's own Git server and Gitorious? Why does 37signals have an office with walls made of 37signalsium (really, seen it, it's fuzzy) and trendy furniture despite selling software that the nerdosphere can clearly duplicate? Why does Yammer even consider publishing a $5/user/month price for software that is among every web geek's top-5-most-likely-personal projects?

Answer: they don't sell gypsum.

Cost based pricing, which works for gypsum sales but not so much for software, suggests that the price of a nice photo should be the price of the gas to get to and from the photo shoot, possibly divided by the number of people interested in buying the photo, plus maybe throw a couple bucks in there and buy yourself something nice, photographer.

Value-based pricing says, "how much it cost me to create the photo is irrelevant". YES YES A THOUSAND TIMES YES, say the nerds. THAT'S EXACTLY WHAT I WAS SAYING! But value-based pricing continues: "no, what matters is how much it would cost you to make that photo and how much benefit it brings".

How much it would cost you to make that photo: (say) $6000, perhaps divided by the number of different photos you'd take given the same setup (but then also scaled back up to account for the headcount or professional services required to take lots of pictures).

How much benefit? It depends. I could take 10,000 words listing out factors in figuring it out. Most importantly: what are the substitutes to this photo and how much do they cost? For some businesses, clip art of the Eiffel Tower suffices to bring 80-90% of the value. For others (like ad-sales print publications), comparables might also be very expensive.

Now, the extent to which the YOUR business benefit from my photo exceeds MY cost to produce the photo is MY ADVANTAGE IN PRODUCING PHOTOS (the extent to which your cost exceeds my cost is my "comparative advantage"†††, and if it's a positive number possibly suggests that I'm the one who should be doing the photos in any case, since you have better ways to put your money to use). Having an advantage is a good thing. Among other things, it's a key reason why software startups are lucrative, and why we don't all work on line-of-business software for non-software companies.

It's probably true that a photo of a sunset isn't worth $6,000. But, exclusivity aside, the value of the photo also has nothing to do with how much it cost the photographer to take each shot at the margin, and it has nothing to do with the cost to make each marginal sale. What matters is how much it costs the customer to replace that value with a substitute, and in that analysis the $6000 set-up cost, while not determinative, is relevant perspective.

The moralism in these threads is an irrelevant sideshow. Situationally, the nerdosphere oscillates between extremes when trying to compute valuations for stuff with intangible-seeming benefits. Today, the nerdosphere apparently thinks either (a) every photo is a precious snowflake or (b) photo costs should be scaled by the current price of hard disk storage. Yesterday, it was whether it's right for Github to charge per repo. Before that, it's whether it's fair to have markets for spec work like 99designs.

None of that matters. What matters is, is there a market for what you're selling, and will it clear based on the model you use to price stuff on the market. Clearly there is a market for high-quality photography. Clearly it is not a cost-based market like gypsum, or there would not exist sites selling photos with royalties attached, or photos costing hundreds of dollars --- which clearly those sites do exist. So instead of arguing about how much photos should cost --- because, again, they cost what the market says they cost, not what you think it costs to make them yourself --- think instead about how this discussion applies to your own work product. More than you think it does, is my guess.

††† (Actually this isn't all what comparative advantage is; comparative advantage says, if there's a market for widgets and a market for photos and you're better at widgets than photos and I'm better at photos than widgets, then I should do widgets and you should do photos, which is a subtly different idea, but the point stands either way.)