It's easier (both psychologically and financially) for users to budget for $x per period - with an explicit or implied promise that it won't ever be more than that - and it's easier for the org to plan for y users at $x, than it would be for either to adjust to paying / chasing $z period.
It's a fairly common pricing strategy, which offers stability to both clients and organizations surviving on shoestring budgets and good-will.
If you want to be protected against unexpected costs, you buy insurance, you don't overpay "just in case".
All I am saying is that the coop (at least cosocial.ca) is not more capital and resource efficient than any good old service provider. We are talking here at a 250% price difference for less functionality. How would you justify that for orgs on a shoestring?
What I am saying is that part of entering a contract with a service provider is insurance, e.g, SLA.
The middleman (in the case, the business providing hosting services) also has a vested interest in pricing risk properly and in reducing the costs of accidents.
I don't think that's quite the way to look at it. Insurance is for disasters. Unexpected costs should be covered by a reserve fund - so, in effect, you self-insure for that kind of thing.
Neither of us know anything about the financials of this group, but I can imagine a scenario in which they catch on, and their userbase scales 47x overnight (I mean, they're hoping for that, right?) and they need to spin up new resources right now. Good luck getting someone to write a "we got really popular" insurance policy, let alone pay out within the matter of hours / days they'd need the money. The "extra", right now, could be going towards filling up their reserve fund. Or not - we don't know - but that would be one of any number of legit reasons for asking for more than marginal-cost contributions.
Anyway, people supporting this aren't doing it out of an entirely economic cost / benefit calculation. They believe in whatever mission the org has, and have a high-trust relationship with it, so "paying" more for whatever "product" won't be a concern for them (at least right now). The contribution model the organization has chosen is ideally suited for that sort of (not purely business) relationship.
This group likewise doesn't interest me, but I can tell you stories about organizations I've belonged to and / or helped run that have worked that way more successfully than they would have in any other.
No, insurance is the basic tool for anyone dealing with risk management and financial planning under chaotic variables. One class of these variables are "disasters", but "people get old and less productive in unpredictable rates" is also something that warrants insurance (pensions) and there will be plenty of people making a living by buying and selling options trading in the commodity markets, which also can be seen as "insurance"
> and their userbase scales 47x overnight (I mean, they're hoping for that, right?)
Why would they? They are not looking for boundless growth, just a sustainable operation for their servers.
> They believe in whatever mission the org has, and have a high-trust relationship with it
But what is this mission? "Run a service sustainably, without profiting of user data and contribute to the development of an open social web?" To me it seems there is not much else they can claim beyond what I said, and if that is the case then I can report that all of that is achievable through my run of the mill service that offers more services while costing 40% less.
Everything you say about risk-management is correct, but none of it scales down to non-profit organizations without employees. Pensions aren't involved, commodity trading is irrelevant, and insurance for four or low five-figures of "float" isn't practical.
Your services look great, and I don't "get" these guys either. The people who do are (for now) happy to contribute at whatever level for whatever reason. Not being a "competitor" (as you seem to be?), I'm happy to wish them well.
It's a fairly common pricing strategy, which offers stability to both clients and organizations surviving on shoestring budgets and good-will.