The concept of democratic pricing is a topic i’ve revisited a couple of times.

In the industrial mode it was “big is beautiful”. The larger your purchasing power, the better prices you would get. You needed to get big to be competitive.

For a couple of years i’ve been trying to spread the meme of doing it the other way around. Especially in the digital field with no inherent costs pricing is much more dynamic. A great web app is more valuable to a large organization than a small. (and no i’m not talking stuff like per-user pricing – i’m talking have different rate cards for different sizes of organizations). Basic stuff – but tough in the real world and very much value-based.

The launch of Amazon S3 made me realize that in the services age democratic pricing is a real possibility if not an inherent core part of it. Since it’s a total self service model there’s almost no transaction costs that makes the deal sweater for the customer with the large volume. It’s democratic pricing that levels the playing field.

Same with Google AdWords that to some extent is levelling the playing field since volume won’t give better prices (not really sure of AdWords since i keep hearing rumors that Google is being squezed to give 5-20% percent discount to existing middlemen, large accounts, etc).

So what does all this mean?. It’s a pretty symbolic testiment to “Small is beautiful”. Not only in creation mode where nobody will disagree that small organizations are much more agile and innovative – but in operations mode where large organizations won’t have many, if any, pricing advantages due to volume/size. It’s a levelled playing field – the big corps will have to get busy because their “easy advantages” isn’t making it into the digital world.