I can't agree with this. You are assuming a cost-plus model. Many things are market-priced. If you are the only game in town, and you have a great product, you sell it for the most you can. You aren't a charity. The customer always has the option to not buy your product. ----- Original Message ----- From: Valdis.Kletnieks@vt.edu <Valdis.Kletnieks@vt.edu> To: David Miller <dmiller@tiggee.com> Cc: nanog@nanog.org <nanog@nanog.org> Sent: Tue May 01 18:18:48 2012 Subject: Re: CDNs should pay eyeball networks, too. On Tue, 01 May 2012 18:03:06 -0400, David Miller said:

From an accounting perspective, every R&D effort that I have seen or been a part of was not billed to any customer. R&D has always, in my experience, been an internal charge against a company's own profits.

RIght - and when pricing the result of the R&D, you take into account the internal charges and estimated sales volume to determine a target price point. R&D was $316K and you estimate you can sell 100 of them, you're going to have to charge at least $3,160 a copy to make a profit on the project. You sank $150M into R&D and think you'll sell a million units, you'll need to charge $150 to break even. And so on. The point is that if you already got *paid* the $316K, it's morally wrong to include it in the calculation of "sunk costs we need to recoup to turn a profit".