Discussion Thread - Details on the Q2 2008 Island Price Change

Read the original Post here
http://blog.secondlife.com/2008/04/09/details-on-the-q2-2008-island-price-change/

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Details on the Q2 2008 Island Price Change
Wednesday, April 9th, 2008 at 7:34 PM by: Jack Linden

As promised in yesterdays post, here are the fine details for the price reduction and how this affects those that have purchased recently. Before getting into that, I’m going to repeat my final comment on that previous post.

Several have asked if this is in some sort of panic move in response to poor sales. This is absolutely not the case, in fact sales of islands have been very consistent through Q1; we sell between 100-110 islands per week plus a fair number of Openspace regions.

Technology and service costs vary over time and we as a business have to respond to that in sensible ways. In addition, we have to continually assess our business model and make changes where we need to. By and large we have worked hard to keep prices static for long periods, and when we have had cause to increase prices in the past, we allowed grandfathered monthly fees to continue because we value the time and energy those people had put in. Nearly 18 months on and that grandfathered pricing is still in place for many island owners.

This was the right time to reduce the setup price of an island. As any business would, we will review the effects of these changes over the next period and make adjustments or leave them unchanged according to how it goes. If we are able to make savings, then we feel that passing those on to our customers is a good thing.

We believe we are on course for an April 16th/17th launch of the new Land Store, so that will be the day that the price change goes live. If for some reason we have to push that back a week, then the new island prices will move back too. Regardless of what happens with the Island price change, the Mainland auction start price will drop on April 16th.

When the new Land Store launches, setup fees will be:

* Normal Islands: USD$1000 setup
* Normal Openspaces: USD$250 setup
* Educational Islands: USD$700 setup
* Educational Openspaces: USD$175 setup

These prices exclude VAT.

The monthly maintenance fees for Q2 will not change from their current levels.

For anyone that has bought a normal island in the seven days prior to Mondays announcement, including any awaiting delivery now (so any orders placed in April PST), you will be offered a choice between:

* Your order cancelled with a complete refund of the amount paid, allowing you to re-order when the price drops if you wish to, or:
* Keep your order and get a free Openspace region with it. The Openspace would have no setup fee and no monthly fees for a period of 6 months after which normal monthly fees will apply.

For those that purchased a normal island between 11th and 31st March 2008 you will be offered a free Openspace, with no setup fee and no monthly fee for a period of 3 months after which normal monthly fees will apply.

If you have had an Openspace region delivered on the 1st April 2008 or later, you may cancel that order for a full refund.

If any of the above offers affect you, please let us know your preferred option before 16th April by contacting the Concierge team.

An further FAQ article will be added to the Knowledge Base shortly.

If you’re a prospective or existing island owner and have any questions or concerns, please direct them to the Concierge team via the support portal.
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As the comments are about to close, I open this thread for us to talk more about this price change.

Feel free to post your opinion on the new pricing and how it is handled, but don't do anything that "busts the rules"!

Well, I guess they just made another mistake in handling their money and customers. :0
Way to go, Linden! I'm about to lose my hope.

omg! it's nice like boobies! LOL, at least that is more positive then most of the sl blog's comments!

i just bought a sim a few months back, but hey . . . no biggie. If this is my biggest problem. *me checks to see ig i get my set-up fee back on satellite tv . . .*

and I do understand that some peeps have lost a lot of value in their sims, nut it's like rl real estate or anything. a diamond is only worth it's appraisal if someone is willing to pay the price.

the island cost has always been a setup fee, and it's so diff than rl real estate. i mean, we buy a sim, sell parcels to cover the setup fee, charge mortgage (tier) fees and the person that bought it never, ever owns it.

it's like I buy a house, I sell it, then I collect mortgage, yet i am always the owner, i guess it's like subletting? anyway, i ramble, maybe the boobies comment summed it up far better than my blabbing :0

I used to teach Customer Service 'and what it can do for you' to a large us corp. The tag line was 'how to stop the buck walking past the window and into the store'.

Now I never became rich, but iI had a great deal of fun for 6 Months.

The bottom line, was understand customer motivation. "Why did the customer buy from you, and how are you gonna keep them coming back". In my case, there were several similar stores in the same area, the customer had choices of several stores, with about the same price for about the same product. The difference was the experience the customer had in a store or with the store people.

Be surly, not interested and the customer has nothing but ill feeling to remember, be nice, smile, be interested, and the customer enjoys the experience and will return.

You can actually charge the customer more than the competitors and they will return.

To do this, you learn your customers, listen to them, take ownership of their problems (for the goods, not their kids), you make things better when things don't work. The better you are at learning your customer, the more you get, and the more you can charge.

Look at Disney* I would say, they charge quite a lot for an 'experience', but they never run out of customers.

I offered to work with Lindens Customer Service when they were staffed with friends and helpers as those folks had good LL skills, but no more Customer Service Skills than the local Air Conditioning Store. ( A product everyone around needed, was charged too much for and complaining about only degraded the service considerably) I was warned after a heated discussion, that if I continued, My Account would be suspended.... ( Yes, I am a customer..)

Now, I have several islands rented out at minimum tier to enable others to enjoy building, living , having the experience, and I offer concierge service to all my renters with a happy 'can do' attitude.

If the tier isn't changing then my business model stays the same, and my partner and I will continue. Generating the income stream, turning pixels into pennies is one thing, but doing it in a way that hurts the sensibilities of customers, is plain crazy.

Discussion thread? We used to have those, I recall.

So many people are viewing this as some sort of gift from LL. What it is is a concerted effort to drive up the tier fees they are collecting, first by selling as many full price islands as they can by chopping them into openarea sims and creating what amounts to a land rush over the past month, and then by cutting the feet out from under everyone they just gave that great deal to by lowering the price, so that they can follow one land rush with another.

You can buy islands, full and openarea, at the higher price right now, even as we speak. They will not tell you that they have already devalued the land that you are about to order. Thats the problem with all this that nobody seems to noitce when they are saying thank you to LL for lowering prices. If they were looking out for their customers they wouldnt be discussing the discounts here at the backdoor while not mentioning them to the people at the sales counter.

At least, PonygirlSarah Clapper's
suggestion,

"2) Credit the existing island owners the difference between the price they
paid and the new price. For example, someone who paid $1675 should get a
credit of $675 that can be used to purchase another island."

should be adopted.


Regards,

M.A.Link



http://blog.secondlife.com/2008/04/09/details-on-the-q2-2008-island-price-change/#comment-595997

LOL!

Incase someone has trouble figuring out the discount they are getting on the openspace sims here is the breakdown
If you bought a sim between 11th and 30th march: free setup and 3 months no tier, this comes down to 250 usd and 2 time 75 usd (the first month is included in the setup) for a total of 400 usd, you could return the sim and reorder, this would result in a refund of 1575 usd(1675 usd - 100 usd restock fee) and cost of 1000 so that option is cheaper by 175 usd but can be a marketing pain because of exsisting tennants having to be evicted.

If you bought a sim in april: free setup and 6 months no tier, this comes down to 250 usd and 5 times 75 usd (again first month is included in the setup) for a total of 625 usd so this option is 50 usd cheaper then canceling and reordering.

I took delivery of my last sim 5 days before april so I fall in the first group, still I'll just take the 175 usd because I don't want to evict my tennants.
I already got a use for the openspace sim so that works fine by me, people without a use of an openspace sim have a problem though.

Someone wrote this in the official LL blog ...

"THANK YOU SO MUCH LL! I will be buying several sims at the new low price to start my
rental business... "

Wherever you go in SL you will find hundreds and thousands of empty rental homes, even now with the more expencive sims from the past ...

Do you really believe it will be easier for you to run a rental company in the future ? - OK, the one time purchase will be lower, but for that now MANY MORE people will think the same and buy more and more sims, building more and more rentals and shops and malls and clubs and whatever ...

But that does not mean that there are also more and more renters and customers now ... Who the hell shall rent all the houses ?! - It will be much harder, the rent will go down to the bones and all you will do with your new rental sims is changing money ... As soon as you try to make a win someone else will be cheaper ... Good times for renters, BAD times for rental owners ...

Then don't try to be cheaper but offer more value instead, good terraforming and convonant enforcement will mean you keep your renters longer while those cheap rental plots will be empty 75% of the time and give you more nagging newcommers to the rental market who have no idea what a rent box is and how to keep track of their prims.

Oh an other benefit for the established landlords, within a few months time those newcommers will find out they can't stay afloat with their poorly managed sims and sell them cheap.

There you go, Value Added Service. (tm) My landlord has always been offering great services. Responsive, ellicts input from the tenants, very light covenant, terraforming, resell and sublease rights, 1.5 prim multiplier....Just as in RL, the bargain basement sellers will get a certain percentage of the market, no matter what. but a lot of people , myself for example have no qualms with paying extra for a better product or enhanced service.

The following is not only a prediction, but a Garuntee!! With the new pricing many unsuspecting people will see this as a windfall, the number of island sales will climb higher through the rest of this Q and in Q3. Then once we hit Q4 thousands and thousands of new islands will have sold, and after reevaluating the situation tier prices will go up 100-200USD a month for full sims, and will increase accordingly for smaller parcels. ALL land owners will be stuck, they wont be able to raise rental pricesto cover because renters will move to where its cheaper no matter the services provided, and they will take to big of a loss on selling. There will be 1-3 choices, cover the increase yourself, sell your land and take the loss, or abandon the land.

If this works so well for them, it would be a successful business model, they could in fact reduce tier, and sell even more 'thousands and thousands of new islands' and reap in more income, also it would increase new players retention rates and we could be seeing 100,000 on line most days by end of Q4. Just a guess.

I never thought I'd ever see so many people complaining about a price going down.

Don't you all have computers? Don't you know how it works when it comes to the tech industry and IT equipment? (Sims are IT equipment; you're basically buying space on a server)

STUFF GETS CHEAPER. DEAL.

This is a good thing; it allows more people to buy sims and enjoy SL. Surely you don't complain when you buy a new laptop and the same model is half the price in a year, right? It's the SAME THING HERE, people.

Did you really think virtual land was a viable long-term investment? If you did, I have some ice cube factories in the arctic to sell you. Great local market there, after all.

Enjoy the lower prices. Buy more sims, have fun in SL. Second Life should be about fun, not making a quick buck. Really.

Trust me, tier prices will not go up - they never will. Not for private islands anyway, and unlikely for mainland. If anything they'll drop, but will likely remain static.

Most people are not complaining so much about lower prices, it's more in relation to the bombshell manner in which the decrease was implemented. It shook people up.

Does LL really expect us to believe that this price reduction is due to lowering costs of hardware etc....hmm I don't remember an occasion in RL where companies dumped 40% off of the price of technology or services except for special offers or closing down sales.

Would it not have been more prudent and made more business sense to reduce the prices in stages??

Nah, thats thinking out of the box........I will shut up!!

)))

EXACTLY. It would have been much more prudent to have dropped prices of PIs back to perhaps $1250. Then maybe 1K next quarter. Unless of course they are desperate, and even if they aren't, this bold reduction sort of implies that they are, hence all of these posts regarding the situation...

So you think LL would make many sales if they told everyone 3 months ahead that they were going to drop the price of sims??? - Somehow, I don't think so.

Six US$ auctions not bid on as yet, someone's got the message.

It wasn't a comment on how they make commercial decisions (if thats what they are) it was a comment on Jack Lindens comments in his post.

Do you think that companies Normally react in this "sensible " manner?

Deal with it. No matter what the idiot teaching assistant in philosophy, who has never been in the real world, told you LIFE IS NOT FAIR. Prices were dropped, for many of us it is a good thing.

Prices Have Dropped??????


Where ))

see, i took delivery of my island on may 20, so i am assuming i am eligeble for the free openspace deal.
i better ffs. i havent even reached my first tier payment.
technically i believe i can still cancel though.