well I guess call me a confused noob

mrresch
mrresch Posts: 6 Arc User
edited May 2012 in Cash Shop Huddle
well I guess call me a confused noob, but, all these itemes that PW sells are virtual, and really don't cost them anything to make, right? Now logic( I use that word loosely here) would dictate that they would want to make as much cash as possible, as well as making their client base happy. Now I'm as guilty as anyone else for cash shopping, (mostly for fashion) but what I don't understand is the logic of the pricing, inflated prices reduces the amount of clients PW has, true profit per item is greater but if you are only selling a small amout of certain items, then whats the point? I know from my own business that selling in bulk for a reduced price, yields me greater profits, there by making me more cash in pocket. Now I know I'm going to be Flamed, and thats ok, everyone has an opinion to share, so Flame On! :P
Post edited by mrresch on

Comments

  • Jeremied - Sanctuary
    Jeremied - Sanctuary Posts: 2,259 Arc User
    edited April 2012
    :( PWI seems to run on the notion that no matter how high they price something, someone somewhere will buy it.

    I secretly like to think they overprice stuff so that it doesn't flood the game with OP-ness, but I'm just a diluted optimist that's still stuck way back in 2008, so my opinion is nil. b:chuckle
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  • mrresch
    mrresch Posts: 6 Arc User
    edited April 2012
    "I secretly like to think they overprice stuff so that it doesn't flood the game with OP-ness, but I'm just a diluted optimist that's still stuck way back in 2008, so my opinion is nil."

    Lolz I have had that same thought, trying to give the benefit of the doubt, but the game is so loaded with OP players as it is, as well as being 4 years old, that I would think they would want to re-think their financial strategy" but thats just me...
  • PotatoHeadQR - Dreamweaver
    PotatoHeadQR - Dreamweaver Posts: 2,507 Arc User
    edited April 2012
    first, while "making" the objects costs nothing, there are plenty of costs (servers, stuff, etc) to pay for. so all these sales cover these expenses and make some profit (hopefully).

    just because in your business reducing the price results (?) in more sales and greater profit doesnt mean that this is universally true. there is a point after which it doesnt really matter if you reduce the prices more; you will still get the same or jsut a bit more sales resulting in lower profits.

    last, there are other reasons and strategies that dictate a short-term loss or lower profits to maximize profits in the future (omg, orbs are 20$ again, i should charge asap or they'll go 50$ just like last month)
    you only purge once #yopo
  • Cut_Bait - Heavens Tear
    Cut_Bait - Heavens Tear Posts: 29 Arc User
    edited April 2012
    PotatoHeadQR - Dreamweaver wrote: »
    first, while "making" the objects costs nothing, there are plenty of costs (servers, stuff, etc) to pay for. so all these sales cover these expenses and make some profit (hopefully).

    The only expenses they have to worry about now are monthly items like payroll, rents/leases and utilities. The cost of the servers and hardware was obviously capitalized so they have been depreciated either on a 3 or 5 year basis. They also took the largest hit in the first year (probably 50% or more of the cost in most cases). PWI has long since paid for those servers with the cash they've filched from the players. So with little to no depreciation expense they need less than ever now to cover their monthly expenses. The OP has a legitimate complaint.

    PotatoHeadQR - Dreamweaver wrote: »
    just because in your business reducing the price results (?) in more sales and greater profit doesnt mean that this is universally true. there is a point after which it doesnt really matter if you reduce the prices more; you will still get the same or jsut a bit more sales resulting in lower profits.

    There are fairly simple mathematical equations to determine that "point" to balance sales volume and price. Do you really think that PWI wouldn't know what that price point was before they sold orbs at $20/orb? Do you think they'd sell them at a loss at ANY point in time? I, for one, would have a very difficult time believing that, and so if PWI was willing to sell the orbs at $20 per orb before then $50/orb now is pathetic and absurd. They are assuming an ignorant marketplace despite the evidence in front of them.
    PotatoHeadQR - Dreamweaver wrote: »
    last, there are other reasons and strategies that dictate a short-term loss or lower profits to maximize profits in the future (omg, orbs are 20$ again, i should charge asap or they'll go 50$ just like last month)

    You have a point here, but the spread between $20 and $50 is simply too large to indicate this strategy. If the spread were $35 and $50 I'd be more inclined to agree with you on this one. The reason is that the "less profits" or "losses" incurred by the $20 price point would have to be recovered by 150% more sales volume than the $50 sale provides. If you sold 10 items at $50 you get $500. If you sell 10 items at $20 you get $200. You would have to sell an additional 15 items (150% more!) at $20 (a total of 25 items) to get your $500. That spread is too risky... At least in my opinion.

    Regardless, they have less depreciation expense than ever and yet they refuse to repeat a sale. In fact, the sales they've been offering across the board are nothing compared to what they have offered in the past when they truly did have depreciation expenses. PWE exists to make money. I just think their methods are not sustainable.
  • PotatoHeadQR - Dreamweaver
    PotatoHeadQR - Dreamweaver Posts: 2,507 Arc User
    edited April 2012
    Cut_Bait - Heavens Tear wrote: »
    snip

    (i think i read an announcement regarding new servers)


    well, they did try with 30$ or was it 25$? perhaps they found out no significant difference to amount of sales and decided to try raising the prices even more (after all, they did sell for 75$ a long time ago (but quite different conditions back then ofc)). wouldnt be suprised to see a further discount if they dont sell good enough (it did happen with the original r8/9 sale)

    in any case, I am by no means an expert in the field; merely suggesting what could probably be their reasoning; without actual numbers i dont think that we could deduce whether their strategy is optimal (woudlnt be suprised if they did not always follow the optimal strategy either).

    btw, considering your theory of reduced expenses, wouldnt it be probable that they are not focusing on short-term profits at this period and trying to make sales special again? while 50-20$ is certainly a wide gap, perhaps they are planning to put them at ~30$ next time?
    you only purge once #yopo
  • mrresch
    mrresch Posts: 6 Arc User
    edited April 2012
    wow, thanks for the great discussion. I was expecting to get flamed for my comments.
    I understand the day to day business costs, and I understand the need for profit, what I was suggesting is PW doesnt have consumable materials coming in from suppliers to create virtual items. I know all their overhead lies in the servers, maintainence, and payroll. I also understand their stock has taken a huge hit. Typcally a company would rethink its strategy at that point, not keep barreling ahead as if nothing is wrong. If they want to bring stocks back up, make the game more marketable again, so if that means lowering prices, then do it. I mean the alternatives are not good. Persoanlly I love the game I'd hate to see it go away, but if it does so be it, I'm not one whos so addicted that I couldn't move on.

    and potatohead: "just because in your business reducing the price results (?) in more sales and greater profit doesnt mean that this is universally true. there is a point after which it doesnt really matter if you reduce the prices more; you will still get the same or jsut a bit more sales resulting in lower profits." your point is valid, but not concrete, it is most certain they would get a huge influx of sales based on the statements made in the forums, there are a lot of peo[ple just asking for lower prices, they want to spend their money here, but they have certain requirments, all commerce is based on the one simple rule, "Supply and Demand", if you know this rule, and stick to it, as all great companies do, you will see a profit. PW has to look at this if they wish to continue to make money. What would you rather have a large group spending money more freely, or a few spending hesitantly?
  • Sagek - Sanctuary
    Sagek - Sanctuary Posts: 1,156 Arc User
    edited April 2012
    it's the elasticity of demand.

    Simple example is with Medication, If the Pharma company decides to raise the prices, that does not change the demand. People will still buy because they deem it necessary

    Same could be said about PWI's players and how they are willing to spend the money because they think it's necessary.
  • ploypetto1
    ploypetto1 Posts: 0 Arc User
    edited May 2012
    hey i was wondering if anyone can help me...i've accidentally sold this thing on Perfect World and i was wondering if you can get it back, plz someone reply b:shocked
  • Sticky_Paws - Raging Tide
    Sticky_Paws - Raging Tide Posts: 16 Arc User
    edited May 2012
    ploypetto1 wrote: »
    hey i was wondering if anyone can help me...i've accidentally sold this thing on Perfect World and i was wondering if you can get it back, plz someone reply b:shocked
    OOOps. Then its gone.. forever.
    Product: 1361 ZEN
    Amount Paid: 100000 GBP b:shocked

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