Property Taxes/Maintenance (tier fees) versus Product Sales ratio question

I'm trying to compute tier fees into something that can be compared to RL property taxes and property maintenance, then compare those amounts to income from product/custom order sales....and see if the values and ratios come out about the same.

It seems that the cost of tier fees (property costs) versus income from product sales is significantly higher in SL than in RL.

Have you ever tried to compute that? Is this Accurate?

For instance....in a RL retail store, as a rule of thumb, it took me about a week of sales to cover the cost of property/maintenance.....same with a property/tenant situation and rental income. But in SL, it seems to take about two weeks for retail, and even longer for a tenant/rental situation.

Question is based on any business that has fallen into it's groove....meaning not a business just starting out, where you have to put out much more in expenses to get into your groove.....considering that stage passed.

Without doing any promotions, additional advertising, etc., it takes me 10-12 days to cover my tier (private estate rental.) My pose store has been in business for 19 months, so i would say it is in its groove.

My Sculptees store covers its tier almost every day, but it is a much smaller store, and 90% of my sculpty sales come from XStreet, so I don't really put much faith in its numbers.

In SL my land costs me about 60% of what I make in salary at my SL job as a real estate agent. In comparison... in RL my trailer costs me roughly about 25% of what I am pulling down as a greeter at WalMart.

That's a fine ratio, Cheree....that would make it "worth it." It's when it slips past the halfway mark, that I start computing and evaluating again.

LOL Eli! See what I mean?

To really factor these things, one would need an actuary...

... for instance, say you spent a billion dollars to make 1.01 billion a month.

Well, that's still making 100,000 USD every month! Not a bad deal.

But the *consequences* of things changing by a mere five percent overnight could be devastating. Isn't this how Wall Street got into trouble?

grins


...as a content creator, I was making 700/month which at the time was 1750% of my tier charge (40 USD/month). I made tier by the third of each month, handily.

But I gave up that business, to make a mere 36% margin over costs in land. Meaning, the first three weeks or so of a month go straight to tier.

But let's just say it's worth it. Of course, I look at risk factors every single day. I have to.

I make tier by the end of the month. If I start making much more than that by the end of the month, I'll buy more land. My store is there to pay for my land and occasional avatars, that's all.

How many different versions of the rodent avatar are out there?



/me ducks, runs and hides

I knew someone would point out that the "worth it" factor depends on the numbers

....but was just considering the concept in a raw, very simple generalization....that perhaps....

Tier fees are a tad high? Considering?

Desmond, you're at the "in your groove" level easily....you're cool with that margin?

Considering that SL has always just been my entertainment, if/when I ever start selling stuff, if I could manage to cover tier by the time it was due, I would consider that a win. But then I have never had the intention of trying to make any RL money here.

Including jerboas, hamsters, rats, and mice, I have at least a dozen rodent avatars.

Argent - I'm talking about if you are working it for optimum performance/profit - no sidetracking (as in collecting ferret avs and alphabetizing ferret photos by subject matter - you forgot the ferret pic, by the way) - concentrated effort on maximum performance - and what a reasonable ratio would be - and maybe the current tier fees make it really hard to come up with a reasonable ratio....more so than the ratios that you experience in RL.....ultimately, that perhaps it actually costs less to do business in RL than in SL? If you try to reduce both lives to an even playing field? Did that make sense?

This is something I remember seeing some discussion of on the old Land and the Economy boards.

Basically, it goes something like this:

If x% of SL users are making tier from sales, then the remaining 100-x% are paying it.

That means that the amount each of those people must pay - regularly - as a percentage of average tier, is x / (100-x).

That ramps up really rather quickly, meaning that it's rather tricky for many people to make tier ultimately.

That's one of the cutest ones I've seen yet - thank you.

Yumi - "trickier" yes...more so than RL...we're not going to discuss whether or not this is "fair" are we?

Wasn't going to analyze it to the point of "fairness"....just maybe say that if tier fees were a tad less....that it might be a different sort of environment? Perhaps more productive for those in business? Possibly even "grow" the experience? In a better direction?

Think of the people who are borderline on profit, and might be able to jump to a full time business here? Maybe as worthy as a RL business....and those people making up more than a very small percentage....but a percentage that would be closer to the percentage who make it in RL?

It's not the margin that bothers me. It's the stability factor.

And yes, I'd sure like to see costs come down. Realistically though, I doubt it will happen.

I think if tier fees were lower, the _types_ of business would change - furniture and prefabs would have more sales as more people could justify building residences.

It's not so much a question of "being fair" as of looking at the experience those people were having. Content creators often say they have the most enjoyable experiences in SL and yet at the same time they want to avoid paying for it. So what experience do the payers have?

Stability doesn't bother me - I know it could be gone tomorrow (learned that recently in RL in a much harder way).

Realistically, the tier fees probably wouldn't come down....but if they did....would it have an effect in growth...and how dramatic. I just keep seeing yellow all over the board (meaning land for sale) - and if tier fees came down even a fraction, I could put that yellow to work, and it would pay off. Apply that across the board.

Who are "The Payers" Yumi? Not sure who you mean?

Please don't try and get Yumi to explain what she means. It'll just hurt your brain.

Well, I'm downloading Windows 7 MSDN at work, so maybe I can install Yumi 2.0 at the same time ("just as neat but less annoying"? )

The two major stability worries I have (and have had for a while) are:

1. It's not clear that enough people are buying L$ with US$ regularly;
2. Most social circles in SL tend to see people who _don't_ pay in money as more successful.

(2) is dysfunctional for the business because, with SL being a social game, people will naturally try to avoid doing things that carry a social penalty. Having lots of content is no use if your friends consider you a sell-out and don't respect you. And I was really surprised to discover recently that some business owners are creating alts with "no payment info on file" because a business run by someone with no payment info looks more successful (they must be making tier!) Other VWs have had to engineer ways around this (which don't involve forcing anyone to respect anyone else), and SL needs to start thinking about this too.

(1) is dangerous because if too few people are buying L$ regularly, the economy is dependent on user churn, which won't last forever.

So what would reducing tier do? It would encourage more people to buy land. Because, as I understand it, most cases where L$ are bought for US$ are to pay for land, this would probably energize the economy a bit. However, it would also make price competition tougher, since sellers could price lower since they have lower overheads. This might also energize things, but at the same time, it could make it harder for startups.

Gosh - I've not noticed the social circle thing.

Who are these people? What kind of social circles? How do they know who is paying in money and who is not? I don't recall bumping into anyone that seemed to make a judgment on where I was getting money from....you've run into that?

I don't understand this at all:



A social penalty? People give a rat's azz about that in SL? I don't ever recall running into someone that made any kind of a blatant judgment on people who run businesses, like that.

And the alt thing? People make a judgment on that? How can you run a business without payment info in file?

Where the heck have you been hanging out, Yumi?

I see #2 as being somewhat convoluted and out there. Are there really that many people here that give a crap what others in SL think of them, as far as whether or not they are seen as successful? I think you are either grasping here, or you really hang in some nor-so-much-the-norm areas of SL

Well, think about it. Comparing two people who both have a little bit of land, a nice house, pool, etc; but one of them has paid for it all with US$ from their own pocket, and the other has not, but earned it in-world.

Which is more likely to be able to build the world? Which is more likely to get greater opportunities, greater attention paid to them, greater respect from other people? Who is more likely to get people attending and paying attention to things they organise? Who has the actual right to consider themselves as more than a face in the crowd?

Now, ok, a fair reply is "that's not because they don't pay - it's because they're talented". But the correspondence between the two is exactly the problem. If you're talented, you don't need to pay; if you aren't, your SL experience will be limited by that fact. So in which of those scenarios is paying a good idea?

I know there's lots of arguments along the lines of "well, we can't do anything about talent.." but even if they are true, they don't make the problem of payers being under-rewarded go away. If we can't solve it, SL stays unstable..

I have no idea. Who?

People spend time in SL evaluating that?

I still don't understand what you mean by "Payers."

You mean people who bring money in? Are you including people who pay with their time?

Whoever they are - they feel unrewarded? Are you sure?