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Technology Costs Rise Over Time

Technology Cost DisplayThere’s a popular myth perpetuating that the price of technology goes down over time. You can even hear it on Sirius from Paycom about how their technology is better and more efficient, with customers never having to face a price increase. Somehow it’s not only popular to bash your competition, but never is a long time to not have a price increase or a technology glitch.

The main premise of this myth is Moore’s Law and the fact that fixed costs generally decrease with more customers or transactions. Paycom is banking on new customers improving their margins more than anything about technology.

Here’s why your technology costs don’t go down over time:

  1. New technology demands a higher price. Apple drops the price of iPad 2 by $100, but the new iPad Air costs as much or often more than the original price of iPad 2 because of more features or options.
  2. Competition forces new technology purchases. Companies with old technology are perceived as offering less value by customers and employees. If the competition’s sales people have new Surface tablets, then we better have something comparable or better.
  3. Technology proliferates exponentially. In 1989 Bill Gates’ goal was to have a PC on every desk and in every home. Now companies have various servers and employees have a PC, notebook, tablet, smartphone, GPS, and more.
  4. Knowledge and maintenance tend to increase. Not only do the things you personally must know continue to increase, but the cost of specialized knowledge to keep things running continues to go up.

The cost of technology is as difficult to escape as death and taxes.

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2 Comments »

    • Sure, we can pick legacy hardware as an exception. CD drives weren’t quite that expensive and it’s pretty tough to get anything but a DVD drive now that also reads CDs. Comparable technology to the CD drive of today is a SSD (Solid State) drive at your listed cost. The knowledge required and support needed for technology definitely has not gone down over time.

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