You can also take advantage of predictable declines in costs by setting pricing below your initial costs, but making sure that its more than made up for over the life of the subscription as your costs decline faster than your pricing drops. You can be sure your competitors will take advantage of this.
1. I like to know that my service will improve. No sense in getting a service that prices below initial cost and won't see improvement for 4 years because of that.
2. It makes it impossible for people to buy equipment if they don't have capital. These services either need loans, VC, or cashflow to continue expanding and the last is the best.
my capital right now comes from my consulting gig... if you can spell Linux, you get huge amounts of money for sitting in an overpriced chair in the bay area, and between interviewing well, and having some impressive experience, it will be a while before the hosting revenue passes the contracting revenue. (the real problem here is burn-out, which needs to be carefully managed. But right now, good cheap people are easy to find, so it makes sense for me to work for the client and then hire several other people to work on what I care about.)
