There is no inflation

How do you determine inflation in RL? You have a group of products where you monitor the price. If the price level increases, we are calling it inflation (living expenses increase).

Now let me ask you: Has anyone increased the price of your products? Well I haven't seen any changes in the last few weeks so there is no inflation. You can still buy a pair of glasses for 100 L.
If we leave out the L$ and just consider the value of the goods in US$, we see a massive deflation! We can buy more things for $1 than a few weeks ago.

We must hold the value of our goods which means we have to increase the price of our products. Because of the stipends, people have too much money anyway, so it wouldn't hurt if they have to pay more.

Increasing the price will increase the demand for L$. People have to buy more L$ to live in SL.

There something called "Monetary Inflation" Read Up...
This is the problem with the SL economy.

Too many Linden Dollars floating around in the economy.

I for one am considering a price increase, and am wieghing how it would affect my business. The problem is if you sell a particular product that has competition, and you are the only one increeasing your prices to compensate for the deflating L$, you will soon price yourself right out of the market and then you are really screwed.

it's earning it's milage already!

In a perfect free market prices will always fall towards the marginal cost of production, as competitors see ways to reduce the overhead through improved methods, lower development costs, lower risk, and higher economies of scale. In Second Life, the marginal cost of production for most products is zero.

The only way to effectively increase the price of a product in this kind of market is to produce a better version with more features at a higher price, since your competitors can duplicate your existing products while spending less time on development and taking no risks... you've done the market research for them... and can continue to sell at your original price.

Thus you really need to continually produce newer and better products, even if there's a growing market for your goods, and counter

This is not a bad thing, incidentally. It's one of the things that makes an efficient market work so well for the consumer. It's rough on the producer, of course, but contrary to the opinions of many an efficient market does really favor the consumer over the long term... and where it doesn't there's some kind of inherent or imposed inefficiency in that market.

And the market in SL is very efficient indeed, subject to the limitations imposed by the existence of the rights system.

If Widgets produced in SL had a cost basis, then everybody
would have to respect the linden dollar revaluation. But since
there are no commodities that go into producing SL Widgets,
nobody is being forced to change their prices..

SL Economic reform requires that commodities be created and
used to manufacture all the widgets which are produced...

Thats capitalism baby! Get used to it!

More like Socialism if the cost basis of all widgets is equal
because the state has fixed to be that way...


The means of production in private hands is capitalism.

capitalism:
An economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market.


socialism:
Any of various theories or systems of social organization in which the means of producing and distributing goods is owned collectively or by a centralized government that often plans and controls the economy.

The marginal cost isn't zero. You have to consider that a lot of us are paying tier or rent. Those costs have to be calculated into the price too. If you sell your things for 1 L, I highly doubt that you can pay for your tier.

Anyway, i'm voting for prims as a natural ressource which you have to buy.

And I'll always vote agaisnt such an idea. It was done before and failed horribly

But those cost you mention can be marginalized with the
ability to manufacture unlimited volume of widgets. Just like
in the real word, costs decline as production increases.


The problem with SL is that each widget produced doesn't
have an intrinsic value, based off the materials required to
produce it (ie: prims).

If prims had to be purchased to produce a widget (not the land
the widget sits on), then every widget would have a basic cost
associated to it. If prims prices rose or L$ values fell, the retail
price of the widget would be adjusted accordingly.

But without all that, prices remain flat because there is no
economic incentive to change them for most people. This is why
the fools who proclaim " there is no inflation" are ignoring this
fact. They fail to see the Monetary Inflation of the ever growing
money supply...

Shame on me!

Sounds like land tier and prim allotments to me!

That's Capitalism baby! Get used to it!

I have seen significant variances in products. There seems to be a whole new class of new users that have a lot of L$. I have seen increases in products like furnitire, quality clothes, and, of course, land (outright purchase as well and land rentals). This does not suggest an across the board increase - but some areas are going up. There is some inflation.

I have been slowly raising my prices to more realisstic levels - I have been selling at a loss for a couple of months. How can I sell at a loss? I sell things that took me hours or days to create for only L$100 (forget the L$/USD exchange rate - L$100 is *very* low). Sales have slowed down as a result; however, I'm gambling on the influx of new users to help sales pickup again.

Land Tier and Prim Allotment would be incorrect.
Because you have manufacturer an unlimited amount
of widgets, you just can't res more than a plot of land
allows.

What I'm saying is that regardless of the land, your widget
factory is limited by the number of prims you can buy off
the commodities market.

As the price for prims and linden dollars fluctuate according
to the market, the price of widgets in-world will follow in step.
Creating a balanced economy which has its own braking system.

If prims become expensive, then widgets become expensive,
which then creates demand on the Linden dollar, pulling it up
from the deepths of hell. Instead of talking about linden labs
and their stupid sinks... The economy should be designed to be
self-supporting with various factors that provide self regulating
checks and balances...

You really need to get off this "cost of prims" thing.

The cost of materials, even in real life, is insignificant compared to the cost of labor. In fact, most of the cost of materials IS the cost of labor.

Items made in second life must sell many, many copies before they even begin to cover the cost of labor. The cost of texture, animationl, and sound uploads is an added cost, but still not significant compared to the creator's time.

There will always be variable 'production' costs. Some people produce widgets with none, some people lease land and hope to make enough to clear their tier fees.

The first businesses to raise prices will be the landlords naturally as they have higher costs of doing business. Has anyone been tracking what land leases for in SL?

--
I did not believe the information,
I just had to trust imagination,
My heart going Boom boom boom...

Those are fixed costs, not marginal costs. If you sell 1000 widgets instead of 100 widgets, your tier or rent remains the same.
They are, they're why the cost of a product tends towards marginal cost, rather than immediately dropping to marginal cost.

There is no spoon

Indeed, but the only marginal labor cost in second life is customer support, and if you reduce the price enough you can abandon customer support because people will continue to buy your product even if you don't provide any customer support.
Those are not just fixed costs, they're sunk costs. Sunk costs have even less of an impact on the long term cost of a product than other fixed costs do, because they're non-recurring and so over time they can be discounted to zero.

The fixed costs in SL are advertising and rent or tier.