If you're at a company that's quite open about how the business gets run (a lot of well-run companies are), you might notice something particularly...
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This is not really true. I am not saying pay is low, in generally it results in a comfortable living style.
As the article points out, engineers create current and future business value. They produce the source of income.
Going up the hierarchy and side stepping to sales and marketing, you see people earning much more than the engineers. Yet, the are not the source of the business value. You cannot manage a diamond out of coal. You cannot sell coal as diamonds (and see the light of day).
Important to note here is that without proper leadership and sales, coal will not turn into polished diamonds or into high-profit sales either.
Leading a team is at least as valuable as being a contributor in the team.
And selling is at least as hard of a job than creating things to sell.
Maybe in some fields sales is more difficult than building the product. But I do not agree that generally sales is harder than development. And certainly does not justify significant differences in rewarding performed work.
This is very true - it doesn't matter how talented the team producing the "raw resource" of the software is if they lack the necessary supporting teams. I'm totally guilty of falling into the "but Engineers can do anything" trap and now try to remember the necessity of leaders to choose the right product, marketers to reach and convince the customer, and operations to charge the customer and deliver the product.
To extend the running metaphor in this threads: it doesn't matter if you can create diamonds from thin air if you're doing it in a warehouse, no one except HackerNews knows about it, and everyone wants rubies anyways.
Engineers who can also sell things are a goldmine. Rare as anything though I find.
And even with diamonds, the ones who dig it out of the ground and even the ones who polish them get paid less than those who find ways to sell them. This is capitalism - the value paid at market is often unrelated to the reality of the situation.
The diamond analogy does not go that far.
Software developers do not dig out diamonds. Anybody can dig out diamonds. Developers make diamonds mostly out of thin air.
@Daragh, what you said is totally true. I worked for a startup in the beginning of my career, created a web application for blog posting, which was a huge success, then guess what! the SEO analyst(marketing guy) earned 2% of the profit from the product, when I demanded at 1% of profit, I was told that anyone can code what you did but not every one can sell what you have coded. Hence he was paid more than I did.
Being able to point to other people and say "well those people get paid more" doesn't negate the fact that engineers do, in fact, get paid a lot. The median engineer in the US makes $84k per year, which is 1.5x the median whole HOUSEHOLD income and easily enough to put these engineers in the top 10% of the country.
"...You're acceleration, not fixed velocity...." Excellently stated!
Good read, thank you. I agree that engineers are not factory workers and that they are acceleration. I dont see how this alone has a significant impact on negotiating an offer though. Should bridge engineers feel entitled to more because a lot of traffic will pass on their work for years to come?
Yes, if you want to take some risk and be a partner or shareholder of a company you believe has potential. Otherwise you get paid market rate for your profession. Or if you do get paid more its because you did an awesome job at convincing the employer how great your contribution will be.
Great article.
It is insightful that most developer work is investment and not production.
You have a glaring error however: you consistently misuse the well-known term, "fixed cost". en.wikipedia.org/wiki/Fixed_cost
In your dev-shop example: where hours of developer output has a direct effect on revenue (time and materials billing), then this is the definition of a variable cost (varies with units produced).
It is not the major point of your article to answer the question of "why are developer expenses not included in margins", but I think the actual answer to that is probably some boring accounting stuff having to do with depreciation. Or really, it isn't so arcane: investors want to know the cost to scale, and as you pointed out, scaling a software product is not dependent on hiring more developers (at least not on a smooth curve). So, for an investor to understand the company, investing in development must be classified as capitol investment ( and depreciated over time ) and a clearer view of the operation to move units is given by excluding that cost from both fixed (overhead) and variable (cost of goods) costs.
Ah! Good point.
Many people are already familiar with the term "technical debt", however I believe that a far more important part is "technical capital" which is what developers create and grow within an organization. It's easy to overlook when you only think of your developers only as operational expenditure.
Good read 🙂
Thank you...
This is only true for some Devs. Big group of Dev do a custom applications to clients. This type apps are expensive.
thank you for the explanation, Evan!!!
Other than that, well said
Good catch 👍