One Size No Longer Fits All

OK, assuming the EU VAT situation is legitimate - and the more I read about it, the more it appears that way - shouldn't LL introduce a variable pricing system that is more befitting an international community such as their own?

There is good reason multi-nationals charge different prices for their products in different countries, simply because one size no longer fits all when your end users sales tax varies dramatically. Where a set product price might generate demand on one continent, it will fall on another. If LL introduced such a system their profit margins might be impacted, but isn't that better than a massive drop in demand should a significant proportion of customers from its second largest userbase* reduce their holdings, or worse: sell-up and downgrade to basic?

* Europe, population 730 million, is surely their largest market outside of the US?

My understanding is that Europe is their biggest market.

Not sure this would be to our advantage in any case, since the cost of living, and wages, are generally higher in the EU than the US, so prices based on the local market would probably go up in Europe (and still have 17.5% added).

The cost of playing SL is ridiculously cheap anyway, I pay £3 a month for a premium subscription - thats roughly 30 minutes work at minimum wage, even the annual cost is less than one day's pay at minimum wage, and you can play perfectly well without spending anything. Compare that to the average computer game.

If you choose to own land it's more expensive, but that's a choice not a requirement.

Land owners create all the content that makes Second Life worthwhile. Without them, Second Life is nothing. We've already seen amazing sims like Svarga threatened with annihilation due to the expenses involved. How many sims owned by Europeans are now going to vanish because the tier just rocketed by somewhere between $52 and $73 US dollars per month? ...and not all interesting attractions are in private island sims of course. Plenty more on regular parcels could suddenly vanish.

With regards being able to play Second Life without spending anything - well maybe that finally has to change. Making everybody pay _something_ towards the resources they use, could help reduce costs overall or just limit the profit hit if a variable pricing system was introduced.

Good point Walker. It may very well be time to consider requiring some level of payment from everyone using the system.

/me agrees and waits for the howls of protest.

I'd pay extra just to get the Goddamn Forum to work again.......

It's about flippin' time, sez I. If everyone had to pay for a basic membership (aka 'Premium') then LL could rework the cost to EU customers to figure in the VAT and keep the tier charges the same. I have 3 EU acquaintances who own private islands and told me that they're selling out altogether. I'm sure there are plenty more who have tiered down and will tier down in the near future. LL seriously needs to restructure its entire billing system or it stands to lose a LOT of money really quickly.

Unfortunately I don't think making _everybody_ pay to use the platform sits nicely with Philips dream of the 3D Web...but hey, I can dream too.

Well it's pretty obvious Uncle Phil's dream has been diverted, anyway. The 3d Web is still a ways off I think.

yeah. I think LL need to forget about drawing parallels between SL and the WWW until at least the server software is open sourced. Until then, this is a closed environment with very high costs (compared to the WWW) for those creating the content. Until we can host our own servers at home, every user should be contributing _something_ towards the costs of running & maintaining platform.

How much of a discount are you thinking, Walker? The VAT is the EU's ridiculous tax, and discounting because your collective governments are deep into your pockets undermines LL's bottom line. You basically want LL to eat the tax for you, or some of it, or effectively raise the prices for the rest of the world so that Europeans can compete in the business market.

I feel for you all - especially those of you who are raped by your government for up to 25%! But your tax is your tax - and I'm sorry, but I do not expect LL to pay my sales tax for me when it (eventually) arrives. Your anger at LL about communication is dead on. But complaining about the tax itself - sorry, but that energy should be focused on your governments. Just saying.

I couldn't agree more Cristalle. Taxes are taxes........and not a price increase. Lobby your government if you are not happy.

most taxation in the UK is based on the price advertised ..... not additional tax added to POS. Prices which do not inclide the tax generally have to state Exc VAT @17.5% failure to declair that tax is not acceptable ... not sure about legallity.

BUT .... it wouldnt suprise me if USA gets the tax pretty soon ... but Im not sure what tax rate they are charging europe in generall but if they can tax based on a users IP address ... its easy but the US is harder seeing you are all one country but have different taxation ... USA might end up with a generic tax ... good for some .. not so good for others.

I am one of these people who this will hurt, but I accept the fact that unless theres a very clever legal person who knows otherwise im just going to have to suck it up.

I don't have a figure in mind Cristalle. I was floating an idea based on how other businesses operate in the international market. Few companies have a fixed pricing structure for customers in different countries. They take into account the various rates of income, general taxation, cost of living, and demand for their product and work out a price accordingly. The point here is that demand could drop substantially because LL has setup a HQ in the EU without thinking through the taxation consequences.

The VAT rules introduced by the EU affecting non-European businesses are pretty much unenforcable unless they setup in the EU, and then the onus is on the business to collect the VAT. So we have reason to be annoyed at LL for more than just poor communication. If they hadn't setup in Brighton, this situation is unlikely to have unfolded at all.

With regards one set of users subsidising another: That is not an untypical pricing model. My ISP uses its business packages to subsidise residential packages. Most residential ISP users have relatively light bandwidth demands, but actually pay over the odds because they're subsidising the very heavy users.

Besides, if all land owners are subsidising free basics anyway, is this really such a controversial idea?

I heard that World of Warcraft has always added VAT to its monthly charge for EU users, so I decided to look into it. Here are the prices according to Wikipedia, the UK & EU figures include VAT, and their US dollar equivalent (at today's exchange rate) is listed to the right in brackets:

RETAIL PRICE
=========
Europe €19.99 ($28.51)
United Kingdom £14.99 ($30.6
North America $20

MONTHLY FEE
=========
Europe €11 - €13 ($15.69 - $18.54)
United Kingdom £7.70 - £9 ($15.76 - $18.42)
North America $13 - $15

So their monthly fees appear to take VAT into account pretty closely ($13 + 17.5% is about $15.27), but they're downright ripping us off as far as the retail product is concerned (50% more!) - which isn't surprising at all really.

Problem with Second Life is, the product is _very_ expensive for a lot of users so the VAT has much more impact, and I suspect it's addiction rather than a sense of product value that feeds the demand.

Hmm, reminds me that governments like to tax things to which we're addicted and according to this research paper (http://tobaccocontrol.bmj.com/cgi/content/abstract/14/2/86):

"Substantial scientific evidence shows that higher cigarette prices result in lower overall cigarette consumption."

I guess we'll see in a few months time if the words 'cigarette' and 'private island' are interchangable.

I laugh at the idea of LL giving us money.

For someone who's unavailable you're making an awful lot of sense Walker

Actually I am a freebie (no copy, no mod, no transfer)

I wouldn't mind paying a nominal fee and in fact think it would make sense. Mind you it would help if there was some form of benefit to it, like 503 errors disappearing.