Am I the only person who sees flat "$X/mo" prices and rapidly adjusts their trust in the provider downwards? It simply doesn't make any sense to me that my backup provider (or my bandwidth provider, or my transaction processor, or my Internet company) is providing me "unlimited anything" for any flat amount of money: the pricing is clearly not related to my cost, so either there is some massive flexible margin (which I should now be trying to strongly negotiate against) or their business is based on something I don't understand (or worse, that they don't understand), neither of which makes me want to trust them with anything seriously important.

I want my provider to make money, but I also want to understand their business enough to know whether I'm a customer that is making them money or one that they are likely to want to drop in the near future. To be clear: I am not complaining about things being expensive (I like paying for things!), and agree that Tarsnap sounds like they aren't charging enough for the value that they could provide me, but I want their business model to be transparent (again, so I know they are making money off of me, so I know how to and whether to negotiate, and so I feel comfortable they won't shut down their service in a few months when they realize their customer's needs changed and suddenly they aren't making money anymore), and putting up the standard three price tiers hides all of that from me in a way that makes me nervous.

It also isn't like most of the really basic services people buy for their businesses are priced like that already: I pay for power by the kilowatt, phone calls by the minute, and bandwidth (for my servers) by the gigabyte. Sometimes the base rate is thrown in (I get 5TB of transfer included with a virtual unmanaged server, for example, not that I'm using many of those anymore), but very few services I pay for have a fixed flat rate like this. I thereby am having a difficult time appreciating the argument that it would be easier to get a company to pay $100/mo than $5+/-$2 (although maybe the idea is that these numbers are both simply "too small to think much about", which would be an argument I could appreciate). Most services similar to Colin's are priced by usage, not in fixed tiers.

To put this in perspective: I seriously have over fifty thousand dollars a month of service costs for my business that I pay based on some variable cost that Patrick is claiming I am somehow not going to be able to calculate and would keep me from using these providers. In addition to the things already mentioned, I pay by the hour for computers (EC2), by the message for e-mail delivery, by both the amount and number for credit card charges (the bulk of my costs), by the sheet of paper and drop of ink for printing, by the gallon or mile for travel, and again by the gigabyte for content delivery (which is somewhat different than the variable bandwidth I'm spending for my servers). Almost all of the costs of my business are paid for on some variable cost basis, and this is not strange :(.

I can actually go further: my "right hand man" is paid by the hour, so a good percentage of my human resource costs are variable as well. This is somewhat strange, sure, but when I was a consultant I was amazed at just how many companies seemed to be entirely staffed by consultants... we'd go to the business and find out that the don't even seem to have employees anymore, they now just are contracting work out to three different consulting firms. Again: billing for time and materials doesn't seem to cause companies to go running for the hills, and at this point most of my friends are consultants, they all bill this way, and they all have so much work they are quite picky about their clients. The legal and accounting firms I work with are even more examples of this (and ones where I've spent immense amounts of money over the years).

So, I just can't get behind this idea that pricing by the byte is somehow a fundamental flaw in Tarsnap's business. Maybe it should be 10x more expensive than it is: I can easily see the idea that the price of the service is not commensurate to the value. Maybe it should have some lower tiers with fixed pricing for entry-level usage: but then then top-level tier should be open-ended, "talk to a sales associate", and negotiated on the gigabyte (again: this is how most services I've seen that are targeting businesses are operated; they don't have unlimited tiers, they have limited tiers and then "pay by the X" at the high-end). Maybe it should also have a way to price differentiate different kinds of customers: SLA, support, and purchase orders, all make perfect sense to me. But I just don't understand why billing by the month should be considered better than billing by usage.