I should also add, because I forgot to make this point explicit: there are two types of costs any service has, fixed costs and usage-dependent costs. Fixed costs are "you're going to have to pay this no matter how much usage you have", usage-dependent costs vary based on how much, well, usage you have.
To some extent, it's difficult to fully categorize some costs as fixed or dependent: salary is the usual example of a fixed cost (ideally, you will be paying your people every month no matter how much usage you have), while server power is the usual example of a usage-dependent cost (because how much server power you need to make the site go depends on how active the site is and how many people are using it), but "how many people you need to get the necessary work done" increases with increased usage and there's a baseline level of server power you need no matter how much usage you have. Also, there's fixed "make the site go, technically" costs like domain registration, SSL certificates, minimum spend requirements in order to get the prices you get from your various service providers, the amortized costs of upgrading the equipment we use at home to work, etc, and other costs that are only indirectly usage-dependent: the exact percentage of the federal and state taxes we pay depends on the amount of money we make every year because the US has, on both a state and federal level, a progressive system of taxation where different buckets of income are taxed at different levels, which means that the business taxation is an indirectly usage-dependent cost. (For non-US folks whose tax system works differently: I wrote an explanation of marginal tax rates in my personal journal a while back, because it's a really misunderstood concept even here in the US.)
But even with the difficulty of categorizing some costs as purely fixed or purely usage-dependent, another of the issues that we've been seeing is that our fixed costs are rising at a faster rate than our usage-dependent costs. The professional services we need to pay for no matter how much usage we have at any given time have gotten a lot more expensive, and I have quite a few things that are in the "we should do this sometime in the next five years or so" bucket that I've been postponing because they do require professional services that we'd have to pay for and they're not cheap. For instance, the global legal and regulatory landscape has changed considerably in the last 15 years, and there are a few minor tweaks we need to make to our Terms of Service and Privacy Policy in order to protect everybody, both us and you, better -- not to change any of the conditions of you using the service, but to make sure the phrasing complies with changes to various laws, etc. (I'm also a little grumpy about a few of the clauses not being restrictive enough about what we can do with your data! We would never do any of those things, but like, I want an actual clause in the ToS saying that we can never sell access to even public data to anyone for commercial purposes. Not because we ever would, ever, not in a million years, but because it reassures people to look at a Terms of Service and see "not only don't we sell your data, but the legal agreement we have with you says that we can't".) But lawyers' time is expensive, and so I've been putting it off, because it's not necessary (our existing ToS is "good enough") and it's a cost that we don't urgently need to pay. That sort of thing.
The part of our hosting costs that are fixed costs (ie, we would need to pay those costs every year no matter if we had 10 active users or a million active users) have also been rising faster than the part of our hosting costs that are usage-dependent (ie, how many web servers we need to have running at any given time to cover the amount of traffic -- although that's been rising too, because no matter how performance-tuned our code is, the amount of garbage traffic has been on a global increase across the internet, and of course the systems that help you filter garbage traffic beyond a basic level also cost money). We run in a really, really small financial footprint, server-wise, but the cost for the incidental services that are necessary to make the site stable (a lot of which are fixed costs) have also, you guessed it, been increasing.
Basically: when we started DW, the annual fixed operating costs to usage-dependent operating costs ran around 50% to 50%; these days, it's crept up to about 75% to 25%. That means our costs are less usage-dependent, and fixed costs increases are a lot harder to absorb when your income is primarily usage-dependent the way pretty much all social media platforms' income is, whether that income is from user subscriptions or from advertising. (Which, just to be clear, we will never do.) Fixed costs are also much more inflation-influenced than usage-dependent costs, which is a major reason why we're looking at the reduced purchasing power of the basic payment unit as the primary driver of the issue here.
no subject
To some extent, it's difficult to fully categorize some costs as fixed or dependent: salary is the usual example of a fixed cost (ideally, you will be paying your people every month no matter how much usage you have), while server power is the usual example of a usage-dependent cost (because how much server power you need to make the site go depends on how active the site is and how many people are using it), but "how many people you need to get the necessary work done" increases with increased usage and there's a baseline level of server power you need no matter how much usage you have. Also, there's fixed "make the site go, technically" costs like domain registration, SSL certificates, minimum spend requirements in order to get the prices you get from your various service providers, the amortized costs of upgrading the equipment we use at home to work, etc, and other costs that are only indirectly usage-dependent: the exact percentage of the federal and state taxes we pay depends on the amount of money we make every year because the US has, on both a state and federal level, a progressive system of taxation where different buckets of income are taxed at different levels, which means that the business taxation is an indirectly usage-dependent cost. (For non-US folks whose tax system works differently: I wrote an explanation of marginal tax rates in my personal journal a while back, because it's a really misunderstood concept even here in the US.)
But even with the difficulty of categorizing some costs as purely fixed or purely usage-dependent, another of the issues that we've been seeing is that our fixed costs are rising at a faster rate than our usage-dependent costs. The professional services we need to pay for no matter how much usage we have at any given time have gotten a lot more expensive, and I have quite a few things that are in the "we should do this sometime in the next five years or so" bucket that I've been postponing because they do require professional services that we'd have to pay for and they're not cheap. For instance, the global legal and regulatory landscape has changed considerably in the last 15 years, and there are a few minor tweaks we need to make to our Terms of Service and Privacy Policy in order to protect everybody, both us and you, better -- not to change any of the conditions of you using the service, but to make sure the phrasing complies with changes to various laws, etc. (I'm also a little grumpy about a few of the clauses not being restrictive enough about what we can do with your data! We would never do any of those things, but like, I want an actual clause in the ToS saying that we can never sell access to even public data to anyone for commercial purposes. Not because we ever would, ever, not in a million years, but because it reassures people to look at a Terms of Service and see "not only don't we sell your data, but the legal agreement we have with you says that we can't".) But lawyers' time is expensive, and so I've been putting it off, because it's not necessary (our existing ToS is "good enough") and it's a cost that we don't urgently need to pay. That sort of thing.
The part of our hosting costs that are fixed costs (ie, we would need to pay those costs every year no matter if we had 10 active users or a million active users) have also been rising faster than the part of our hosting costs that are usage-dependent (ie, how many web servers we need to have running at any given time to cover the amount of traffic -- although that's been rising too, because no matter how performance-tuned our code is, the amount of garbage traffic has been on a global increase across the internet, and of course the systems that help you filter garbage traffic beyond a basic level also cost money). We run in a really, really small financial footprint, server-wise, but the cost for the incidental services that are necessary to make the site stable (a lot of which are fixed costs) have also, you guessed it, been increasing.
Basically: when we started DW, the annual fixed operating costs to usage-dependent operating costs ran around 50% to 50%; these days, it's crept up to about 75% to 25%. That means our costs are less usage-dependent, and fixed costs increases are a lot harder to absorb when your income is primarily usage-dependent the way pretty much all social media platforms' income is, whether that income is from user subscriptions or from advertising. (Which, just to be clear, we will never do.) Fixed costs are also much more inflation-influenced than usage-dependent costs, which is a major reason why we're looking at the reduced purchasing power of the basic payment unit as the primary driver of the issue here.