Calculating the True Price of Software
Subject:   Sorry, but I don't fully get your math
Date:   2005-07-22 01:55:51
From:   llogiq

In your first example, you set the estimated first year failure rate for a mac at 8%, but compute a value of $225 for the first-year guarantee, which is about 15% of the computer price tag.

Did you use the overall failure rate of 15% for all computers?

Or is the guarantee worth more than the failure percentage times the price? I would assume it being less, since not all failures are killing the whole machine.

On the other calculation, you completely lost me. (Ok, that's my fault, too. I was too lazy to look up the math. So be it.) I think the article might be more convincing if it included the steps to arrive at your results, at least in a sidebar.

Otherwise good article. Thanks.