Sim owners increasing tier

First off, I don't claim to know a lot about business, that being said, I can't grasp why many sim owners are increasing their prices to customers now, when the LL increase isn't set to go into effect for 2 months, if even then.

Maybe they are doing this to determine whether their residents will accept the fee increase and thus determine whether they should continue on with their open sims.

As for me, I am being very frank with the few residents on my open sim - I am trying to find them nice places on my full sim. It is not easy, I assure you, since they are used to having wide spaces separating them from their neighbours, even though they are getting 25% more prims for the same price.

I had a tenant storming off in a huff.

He was on a small island on an openspace sim. On that sim I was paying most of the tier and left my section as open water and the guy had 350 prims. Lot's of open space. Heavily subsidized. I was charging him break even cost - what I would pay to Linden Labs for those prims.

I want to get rid of the sim and move him to my full prim sim. Gave him an island surrounded by public water, more prims and cheaper rate (since prim cost on full sim is cheaper than OSR) and the guy said "this is way too close" and stormed off to pack up his stuff without another word.

I don't know why I try to be nice to some people.

Raising the rental rates on existing open space sims in advance of the rate hike?

It is called capitalism.

In this case capitalizing on the pandemic of hysteria going on and the apparent ignorance of the announced dates for the rate increase.

I would take it as a neon sign warning people to stay away from dishonest land barons.

There are profiteers in every crisis.

.d

Consider it this way...

Every reasonably dedicated and responsible landlord will have a certain "cash reserve" set aside, to ensure that they can continue to make tier if their occupied tennant percentages drop unexpectedly. To not have any reserves is an incredibly iresponsible way to do business - running a very real risk that all their tenants may be forced to be homeless if just a few leave unexpectedly, and are not replaced right away. The amount that each landlord sets aside will vary with their own business plan and personal ability to absorb financial loss, but an ability to pay the next two to three months tier on all their holdings is a number I have heard quoted by some of the most well-respected landlords in SL.

If tier goes up in January, (and it is a virtual certanty that it will, regardless of how much residents whine and complain), then that means the number of dollars of cash reserve that the landlord needs to set aside needs to increase. That money has to come from somewhere. So where can they get it? One way would be by raising their rent now for their tenants. In a few months, they would build up some additional reserves. If they hold off on raising the rents until the last minute, it will take far longer to build the reserves up enough to adequately cover the new tier rate.

Look at that in a climate where a LOT of tenants will leave entirely because the new rates are not financially possible for them. Where the landlord is facing transfer fees or conversion fees to get rid of or consolidate OpenSpaces sims that no one is willing to rent any more. What would YOU do? Accept a higher risk, and possibly lose everything, for everyone? Take out a second mortgage on your real-world home? Or raise rents now? The options are fairly limited. I'm glad it is a choice that I, personally, do not have to make, nor does my sim owner.

I resent these remarks. As someone who has put US$6000 into SL and got NONE of it back, I can hardly be called a land baron.

I have told my residents that tier will increase from 1st December for two reasons. First, as a previous poster said, I need to guage who will stay and who will go BEFORE the price rises kick in. If people leave (and they are entitled to do so without any animosity on my part) then I will have time to try to find new occupants. But that is far from guaranteed.

Second, I only just break even each month, and last month I had rather a large drop in business due (I assume) to the RL credit crisis. People gave up their land and I lost money. Raising prices from December gives a little breathing room.

That's "breathing room", not "profit", not even "positive cash flow". I'm still technically LOSING money.

Just curious, will you refund the money when it doesn't end up happening? When you realize that the people who don't stay were run off needlessly, will you weep?

Anyway, how are you not doing more than breaking even? Are you running a charity? Do you only charge what LL charges you? If so... um... why? If they do come to their senses and deal with how openspaces aren't being used correctly instead of raising prices, you realize that people turning them into residential neighborhoods is gonna be on their to-deal-with list, too, right?

I won't be raising my rental price for my tenant but then I only have one openspace so that's not so bad for me to take a loss on.

Landlords who are raising prices now need to take a good long hard look at themselves. Notifying residents that tier will go up in January is one thing but raising them now is pure profiteering.

more likely eeking out one more little bit of cash before they dump the openspaces in January.

Well to be fair there could be some mitigating circumstances come December if they charge by the month. Say for example they charge from the 15th but their tier is due 1st it could be that they raise prices, I'd give a discount for the first 2 weeks were it me and I'd decided to raise prices but there's no excuse for raising prices now.

Thank you Ceera for an honest and straightforward answer, this clears it up for me and makes complete sense for a sim owner to cover themselves in this manner.
Like you, I am glad this isn't a decision that I'll have to make,although, I will probably give up my OS personal sim and move back to my 18k mainland holdings. I will miss the terraforming options though.

It is acceptable if they refund the money when it ends up not being the solution LL ends up enacting. A lot of us think this will not happen, at least as it is stated now. If not, I would hope sim owners would refund the difference.

I'm raising prices right now on new renters because I want to try to find some people who will be willing to pay the new rate. I'm hoping to spend the next 2 months transitioning smoothly into this new price. Hopefully as old renters leave and new renters come in we'll be a half or maybe a third full of people paying the new rate. Then if I'm forced to raise prices on old renters (still think I might be able to get away with not doing this) it won't be a case of losing my entire population in one go and having to deal with relocations and evictions and whatever else so I can shut down sims.

What I expect will happen though is that the irresponsibly run estates that are going out of business Jan 1st will keep running until the last minute and then evict everyone by surprise. So instead of a smooth transition there'll be a flood of people looking for homes in January. At least some of us will do what we can not to mess with people's homes too much.

You really think that Linden won't raise the prices?

How many is a lot? I'd be interested in knowing.

Firelight

Will you refund the money if LL revises their plan?

Our own Policy on our close to 30 OSS.

http://tribe25.blogspot.com/2008/11/linden-labs-open-space-proposals.html

This wasn't a proposal by Lindens. It was an announcement.

They don't need to confirm it.

The only thing they would need to confirm are some of the maybes that Jack has mentioned in chats with people. And I don't know of anytime where he said they may reverse the decision.


Firelight

No, I'm not raising the price on existing renters. If new renters choose to pay the rate I'm asking then they'll probably be happy enough when I lower their rent back down to my regular price.

Regardless, LL won't revise their plan. They might delay the increase, they might throw in some concessions to quell the oldbie hoard but that's about it.

[12:55] Jack Linden shouts: ***** A little off topic, but we have made no announcements about the class 4 full regions. Any decisions we make will be blogged. So no news there at this time.

[12:57] Jack Linden shouts: so we're about at the end of this session. I understand the passion behind the feedback and we're taking this very seriously. I realise there weren't as many clear answers as you'd have liked but did you find this helpful? If I do more sessions like this over the next few days, would that be worthwhile?

[12:58] Jack Linden shouts: We do see this as a conversation, so lets keep talking sensibly about this until we have had a chance to digest all this feedback.

[12:59] Jack Linden shouts: okay, so I will try to add some more times to the calendar (the public office hours one).

This is an excerpt from Jack Lindens office hours full transcript on SLX.

We will not make any decisions until it is CONFIRMED even if that means seeking our own independant confirmation.

I do accept the title is incorrect and have changed it thank you

I agree. His last blog post ends with "More from us soon". Insinuating an adjustment to appease us is coming. This was my impression at first.

Now I remind You of resent the full region price drop. The first word was also the last. We(us and LL) had a "conversation" much like this. Little help it did.

Of course, I am in no way saying we should back off Jack to confirm.

I've read that conversation. I'm pretty sure that was the meeting I attended. Nothing in the conversation indicated that they might reverse the price increase. And they haven't said anything about needing to confirm their decision.

They just said they would talk about things with the residents and they were taking the feedback seriously.

Not sure why you included Jack's comment about the class 4 full regions in your response. That was not in the announcement. He was just answering someone's speculative question.

I'm certainly not suggesting that you make a decision for your own business too early. I just think that calling this a Linden proposal is not accurate and could be misleading to anyone reading your blog.

I'm glad you changed the title.

Firelight

A cutting and pasting error is all

Yes, I will reduce prices if any further changes happen.

I *was* making money and on track to get my investment back in about two years, but having outgoings rise suddenly by 67% rather prevents that. I'm NOT going to pass on 67% to my customers, that would be suicide.

Actually, in relation to your second point, I won't weep... I'll just commit suicide. And I'll make sure the media pick it up. The first RL death caused by SL.