Ken,
I am so glad you asked that question.
The example you stated is different because you are comparing something with both hard and soft costs (I/O cards) to something that is soft cost (programming software) only.
It all depends on your perspective.
First let's start by stating that there are three parts to the PLC.
1. Hardware
2. Operating System (firmware)
3. Programming software
Many manufacturers believe that the software is a profit center. Because there is a cost associated in developing it...they must recoup their costs and also be profitable.
They also take the view that the PLC and software are separate development projects.
If you take this view, then you are basically stating that the programming software is its own product...which is false. The software is designed for one purpose and one purpose only...to program the PLC.
Those of us who believe that the above three items are one product, means that we have decided to incorporate our costs under one development and not separate them, in order to recoup our costs. The costs are recouped in sales of product.
You also have to take into account the operating structure of the organization. More people more cost...but you should be selling more to support the size of your infrastructure. Also, you should probably take into account if the company is publicly traded. Public companies are beholdened to their stock holders to squeeze every inch of value out of the company in order to maximize shareholder wealth. How do they do this...charge for everything that has a cost associated with it. Because these companies have set up their structure, relying on payments from software and support, they are now beholdened to continue. Remember...Social Security was supposed to be a temporary program as well...now look at the beheamoth it has become.
Then there is the belief that purchasing the software supports the cost for support. If that were the case, then the hardware would cost less. However, that doesn't seem to be the case.
If you state that AD's hardware is less than others, it is not because of this but because of their selling model. They have eliminated distribution and representation and gone with a direct model...similar to Dell. They do have some value added resellers, but it is nowhere near the same model.
My intent is to make a fair profit. I have no desire to squeeze every cent possible from my customers. You need an extra cable...no problem...you need a few extra fuses...no problem. It is all about enhancing the customer's experience. So you net a few dollars less because you gave away some parts...big deal. The end result is that the customer is satisfied.
In attending a marketing seminar recently, the speaker mentioned that in order to get something, you need to give something away. One way to attract new customers is to give something away...no strings attached.
And Tim, those were excellent points about Phil.
Hope this helps.
God Bless,
.
