Why Does Software Cost So Much?

So my sister-in-law recently discovered that the computer a "friend" built for her has an illegal copy of Windows XP installed on it. (Big surprise, that.) When she asked me what she should do about that, I told her, quite simply, that she'd need to get a legal copy of Windows. When I told her what it cost, she was flabbergasted. She looked at me with disgust on her face and demanded, "I don't get it! Why is software so expensive?"

I looked her dead in the eye and said, "Do you really want me to explain it to you?"

Now, she knows that I write software for a living, and she still, in her naiveté, had the temerity to ask that question of me. She's well aware of how constantly stressed out and tired I am from the work I do. So she backed up a second, swallowed, and said, "No, I guess not."

In hindsight, however, I think she posed a fair question. I hear it alot. It's probably a fair statement that most folks have no real grasp of why software costs as much as it does. So I will try to point out some of the reasons why I believe that it is. These are my opinions, mind you; your mileage may vary.

Software is expensive for one very important reason: the people who make it have to live, pay their bills, and feed their families. Beyond all other reasons, that's probably why it's so darned expensive. It's a job, just like any other. And, like any other field, it's not just a simple task: it's a very complex task that requires lots of people, lots of resources, and lots of time.

(There seems to be this preconception out there that writing software is easy because using it is easy. It's just a game, right? How hard can it be?)

I can't speak for the open-source community who do everything over the Web, and develop software on a volunteer basis. But then again, this article doesn't necessarily apply to them. But certain things must be in place in order to develop software in a corporate environment:

• You have to have somewhere to do it. If you're a freelancer, working out of your house, you have rent or a mortgage to pay. On the other hand, if you're a business, it means you need a lease.
• For businesses with a building, you need insurance, so that you're covered in case your employees are injured on your premises. You need flood and fire insurance as well.
• You have to pay utility bills (heating, cooling, electricity, water, etc.). 
• You have to pay your local, state and federal taxes.
• You have to have office equipment. Depending on how many people are involved, you may need LOTS of it: desks, chairs, bookshelves, computers, printers, fax machines, extra toner, phones, paper, notebooks, file folders, filing cabinets, trash cans, pens, and all that other jazz. You'll probably need whiteboards for collaboration. If you don't think that stuff is expensive, start browsing your local office supply store web sites. You'll be in for a big surprise.
• You have to employees. Employees get paid. Depending on how complex your product is, it can take anywhere from a handful to hundreds of employees to develop your product.
• You have to provide your employees with benefits (medical, dental, 401k, workmen's compensation, etc.), unless they're contractors. If they're contractors, they have to cover their own benefits which means they get paid more than W-2 employees.
• You have to have lawyers to ensure that your intellectual property is protected from copyright infringement.
• You have to spend money and invest time to develop a plan for what the product will do. This is often a long, arduous process that involves a lot of arguing, shouting, frayed nerves, and confusion.
• You have to spend money and time creating mock-ups of what it will look like. This mockup goes through several revisions as people heatedly debate why they hate it, what they want changed, and what a crappy job you did in the first place. They'll want to know why you didn't understand that by "circle" meant an ellipse and that by "square" they meant a beveled rectangle with a shadow in the lower right-hand corner. They'll send you back to the drawing board. Repeatedly. What one user demands another will despise. No one will ever be completely satisfied.
• You have to spend money to finally start developing the actual software. You'll do this with a severe shortage of time, money, and hands, and the developers will want to kill the management. They'll be unhappy because the specs will likely be hastily put together, the time will be insufficient, and they'll be grumbling about the likelihood of "crunch time scheduling" that requires overtime that they won't be getting paid for.
• You have to spend LOTS of money testing the solution once it's put together. This is the hardest part of the whole thing. You will have made the mistake of thinking that it works. It doesn't. It never does. Just when you think you know what you're doing, a user is right there to prove you wrong. The system will have to be ripped apart, rewritten, retested, over and over and over again. And all of that takes time. An adversarial relationship will develop between the testers and the developers. Finger-pointing will rule the day. Some people will quit, costing you money as you have to replace them unexpectedly and retrain them. The schedule will slip, costing you further. And as long as you're doing that, you're paying for rent, utilities, taxes, payroll, benefits, office supplies, insurance, and everything else that goes with it.
• You have to spend money to develop a marketing campaign for the product.
• You have to spend money to package the product (put it on disk, print the materials that go inside the box, put it in the box, shrink wrap it).
• You have to spend money to ship it to the retailers who will carry it, or negotiate deals with online resellers who will carry it for you.
• You have to employ a customer support staff after the product ships. (Benefits, payroll, etc.)
• You have to pay to support the customers when they call to complain about the product after it ships, or when they can't figure out how to install it or find the icon to start it up or find the CD ROM drive on their computer. You have to deal with irate customers who think it's your fault that the software has too many features when they're the ones that demanded them. You have to deal with customers who are angry and seem to think that it's okay to scream at you because they made a mistake and spilled soda on their keyboard, or the dog yanked the laptop onto the floor, or they didn't pay their cable bill and they want to know why your Web-based software doesn't work anymore. And you have to smile through it all while the bills keep piling up.

These are just a few of the reasons that software is so expensive.

And let's bear in mind one very important fact: writing software is not like writing an essay, or building a house, or fixing your car. Writing software is damned hard to do. Hell, I seriously suspect that disarming bombs is easier.

From where I sit, the computer is just a stupid box armed with the vocabulary of a three year old. It will do exactly what you tell it to do, very quickly, and very efficiently. If you tell it to do the right thing, it will do it very quickly, and very efficiently. Tell it to do the wrong thing (like, erase all files in the My Documents folder) and it will do it very quickly, and very efficiently. This is why I get irritated when someone says, "Oh, the computer hiccupped!" or "The computer screwed up." No, the computer did not. The computer did exactly what some programmer told it to do.

You have to teach a computer everything. Consider a simple task that we take for granted, such as "Transfer $100 from my savings account into my checking account." In its simplest state, a computer is completely incapable of doing that. It doesn't know what a transfer is, what an account is, what savings is, or what checking is. It doesn't know what a dollar is, or a bank is. It has to be taught everything. Software is about teaching that dumbass box with a 3-year-old's vocabulary how to do extremely complex tasks without making any mistakes.

In short, a computer programmer is an individual who sits down at a computer every day, and figures out how to handhold a mechanical idiot through tasks simple and complex, mastering the task of tutoring that idiot through those tasks until the idiot becomes a savant. It's grueling, frustrating, and infuriating. It takes time, and it's expensive. Depending on how big the task is, it might take lots of programmers to teach the idiot how to do the task.

So there you have it. That's why I think software is expensive.

Coincidentally, I also think it's why I and a lot of my peers in this field are psychotic (or very close to it).