Economics of the Cartel Market: Bioware should lower prices to increase profits

Another factor is: can you attract and retain F2P players? Bioware will have a better idea than us about that, but the restrictions are _awfully_ severe. They appear to be designed to encourage people to *subscribe*, not *buy coins*. Is that the most profitable goal? There are other F2P models that are rather loved by players that still increased company profits: LOTRO stands out, for instance.

TLDR: There's more going on here than the supply/demand curve, but the meta-arguments support a less restrictive model as well.

Sweet copy/paste job bro - see 4th paragraph: http://en.wikipedia.org/wiki/Monopol...sic_Definition

That's intro getting owned on a forum.

Also, marginal cost is zero, so maximizing revenue maximizes profit.

Another thing to consider is what lowering the prices of items (especially armor) does to the item's appeal. If prices are significantly lowered, every person you run past on the fleet is going to be wearing the most recent addition to the Cartel Market. That would ruin it for me and I'd lose all desire to spend my balance of Cartel Coins on these items. I don't think I'm alone in that. So, there really is a balance to be considered here. Lowering the prices enough that the masses can afford the sexiest items might be counterproductive. Sounds elitist, but it's something to consider.

Sounds elitist or not, it's the truth.
Humans are known to always look up to that which they cannot achieve or do not have/own.
I'm pretty sure the Aston Martin or the newest model of god knows what car would loose it's value both as an item as well as price if everyone could get it.
Exclusivity has its place in our society, hate it or not it's here to stay.

No demand curve is entirely elastic. You are assuming that the price is set on the elastic portion of the demand curve.

Yes, based solely on conversations with friends who play the game.

I think we can BOTH agree that is an entirely unrealistic point to start from when creating arguments for this kind of debates.
It's an enclosed circle and the sample pool is extremely small. It's like saying " a friend of a friend said that..."

Yep, with effectivly $0.00 production cost on Cashshop items it is not about the mark up, it is about the maximum sales.

With real goods you have to cover all your expenses so it can't work like this, but in a cashshop.


$18.00 Santa mount sells 100 units = $1800 profit.
Same mount at $2.00 sells 100,000 units = $200,000 profit.


Personally I think the Cashshop prices should be slash across the board by at least 50%, and even then I think some should be account-wide not per character.

There's plenty of research going into this field, analyzing on per country base what sort of levels of investments players do on average and also showing the steep climb in income generated through it.

For example in European countries the top 10% of paying players spend an average of 100$ on F2P titles, the next 40% spends like 20$ or so I believe it was and the remainder 50% spend like just 1$ on average.

In other words, roughly half of the average playerbase to these sort of F2P titles is willing to pay roughly 20$ or more (I'm not sure whether that includes subscription costs or not, but I would assume so). Whilst the rest, pays practically nothing.

Now if you sell for 20$ to 50 people, and sell nothing to the other 50 as they do not want to pay that much, you still make 1000$. However, if you now lower the bar to 1$, so everybody is willing to pay, you sell for 1$ to 100 people. You make 100$. It doesn't take an economist to realize 100$ is less than 1000$.

What you ought to do next is play in on human psychology. Sure, that single 10$ item is something the 1$ person is not willing to by. However, if suddenly it's up for 50% or 75% off for a limited time offer, many of them will strike.

TL;DR permanent lowered prices are bad for business, however flash sales may do its charm.

Quote: Originally Posted by Fornix

There's plenty of research going into this field, analyzing on per country base what sort of levels of investments players do on average and also showing the steep climb in income generated through it.

For example in European countries the top 10% of paying players spend an average of 100$ on F2P titles, the next 40% spends like 20$ or so I believe it was and the remainder 50% spend like just 1$ on average.

In other words, roughly half of the average playerbase to these sort of F2P titles is willing to pay roughly 20$ or more (I'm not sure whether that includes subscription costs or not, but I would assume so). Whilst the rest, pays practically nothing.

Now if you sell for 20$ to 50 people, and sell nothing to the other 50 as they do not want to pay that much, you still make 1000$. However, if you now lower the bar to 1$, so everybody is willing to pay, you sell for 1$ to 100 people. You make 100$. It doesn't take an economist to realize 100$ is less than 1000$.

What you ought to do next is play in on human psychology. Sure, that single 10$ item is something the 1$ person is not willing to by. However, if suddenly it's up for 50% or 75% off for a limited time offer, many of them will strike.

TL;DR permanent lowered prices are bad for business, however flash sales may do its charm.

Flash sales may work (in that they increase sales - so for say a game on Steam they may be sensible), but looking at the DvD and MP3 market you cannot beat sheer VOLUME OF SALES (and DvDs actually have production cost too! ), especially with something with a $0.00 production cost.

DvD and MP3 have pushed new profit records not by being expensive, not by fire sales, but by simply being cheap enough that a vast amount of people think "eh, why not?".