WHy is there no set pricing for items in SL?

Is there no set pricing for items in SL? I see things that are way overpriced if you use the RL standards for priced items. I know this is SL and what ever someone will pay is the price you sell, but when you see one store selling shirts for say under $100L and another sells them for $900L (no set standards) you see this in everything in SL. See example of quote/ post below



I would buy a lot more and stop looking for all the free places if others would set prices at a reasonable rate, why would I pay $900L for a shirt when you see a house sell for $1200L how does that make sense?

First keep in mind that set prices have never helped any economy, ever. They are counterproductive and stifling to competition.

Another major factor is that anyone can travel anywhere, for free. That may sound trivial but it's actually crucial. See, in real life people of like economic status tend to live near each other. The prices wherever you live seem standardized because everyone is charging what the market will bear, and there is a limit to how far you're going to travel when you shop. Now imagine if instead of going across town to shop you could instantly go from New York to Beverly Hills to Chicago and then end up in Paris. Those prices aren't going to look so standard now.

Finally the complete absence of a raw materials cost skews things. Without a raw cost to use as a baseline people are only charging you for their talent and their time. Some people (justly or not) think their time is more valuable and charge accordingly.

So you keep right on shopping around and looking for freebies. You're doing your part to regulate prices when you do that.

SL is a real economy. The market price is set by supply and demand.

Expensive? Really? A L$300 item costs you about a dollar in real money, and probably took the designer a day to a week or even or more of labor to make it. Most content creators in SL, if you compare their hours of effort to their monthly profits, are working for sweatshop wages that you would never consider working for in real life. Would you feel it was so 'expensive' if the item cost L$1 each, but at the same time purchasing L$ was on a 1 for 1 exchange rate with US Dollars? If a premium stipend was only $4 USD per week?

Designers price their items based on what people seem willing to pay for similar items, on the details and features offered, and based on the time and effort it took them to create it. If you price an item too high, no one will buy it. Price it too low, and people think it has no value, or you don't get a decent return on your efforts.

Content Creators DO have some materials costs. It costs money to upload custom textures. It may cost money to shoot RL photographs and get film developed for using those images in making your creations. And there are other costs as well, from the applications like Photoshop that they use, to the power to run their computer. And their labor is certainly a very real expense. Yes, once an item is designed, it costs nothing for that designer to sell hundreds of copies of it instead of just one copy. But they may well have to sell hundreds of copies before they begin to make a profit on their labor. For example, when I design a L$300 dress, I might have to sell more than 100 copies of that to make my profit even equal to working for minimum wage for the amount of time that I spent making that item. And in many cases, a designer never sells that many copies of each item. Some may turn out to be popular, while others get flatly rejected by the consumers.

Well said, Ceera.

Also, just want to point out that I think this is why many top builders and designers rarely, if ever, do custom work.

The amount of time necessary to do a quality job on a single item that is not to be resold (as many custom jobs are not resold), versus what someone is willing to pay, is often pennies on the hour at best.

Comparing RL and SL is like comparing Apples and... well, you get the point.

In SL, items' pricing is generally determined by two things: the time it took to make the item, and what other people charge for the same thing. Houses really aren't that hard to make: compared to making a good piece of clothing, it may actually take more time and energy to make a great top than a small house!

As far as the actual pricing: I've seen shirts for over L$1000, and i've seen stuff for L$1. Just like in the real world, sometimes something is valuable only because it cost a lot.

Take diamonds, for example. Mechanically and asthetically speaking, there's nothing special about diamonds. THey're only expensive because the market has determined that they should be.

I can be mistaken, but am under impression "Strokerz couples picnic blanket" isn't a shirt, but literally a picnic blanket with set of few animations built into it, and these animations would cost you something like 150-200 L$ each if bought separately... that's not including the cost of the main item and the scripts powering it? ^^;;

And of course Diamonds are a Girl's best friend.. hehe Agree, this is simply supply and demand and the Free Market determines the price. You'd better shop around

SL items are priced in exactly the same way as RL items are priced. In both worlds, it's simple supply and demand. It's the balance between what the seller wants to charge and what the buyer is willing to pay. It's been that way since the dawn of time in RL, and SL's no different.

By the way, here's a RL $900 shirt:



And here's a RL $1200 house:




I didn't find a house you could actually live in for $1200 for more than a few months, but I'm sure if you look hard enough you could.

that's not quite true, Chosen. Pricing in SL is NOT based on the law of supply and demand, because the supply is, in effect, infinite. Prices are based on demand and on what the creator wants to charge.

In real life, we have a limited supply of most items: other than things like air and seawater, nothing comes in an unlimited supply that costs nothing to produce once it has been designed. In other words, everything in the real world has a finite supply. Therefore, everything in the real world must be based on two things: the desired profit, and the cost of manufacturing and distribution.

Items in SL are effectively infinite and cost nothing to produce. It costs no more to make a million diamond bracelets than to make one in SL, but in the real world, diamonds are expensive and relatively rare.

In SL, the cost of manufacturing (after R&D) is zero. The cost of distribution is minimal. The only true costs are things like land rental, advertising, and R&D. So there is no per-item cost for the manufacture or distribution of any created item in SL.

According to any equation involving supply and demand, the price must decrease as the cost decreases and the quantity sold increases. If the cost approaches zero or the quantity approaches infinity, the price must approach zero. This is simple algebra.

So how can the law of supply and demand prevail when the supply is infinite? The simple answer is that some other factor is present or that some factor is missing (supply or cost). In this case, we are no longer dealing with supply and demand. We are dealing with something else. I don't know what, exactly, but I am sure there are econ majors who can state what that truly is.

Why should there be set pricing in SL?

No one has the right to tell any creator how much he or she should sell their items for. If the consumer is happy and willing to purchase the products, then where is the harm?

Just my L$2 worth.

Best,

~Ari

"because the supply is, in effect, infinite"

Not true. If the supply was infinite, you would not have to pay for it.

"cost nothing to produce"

You are forgetting labor. Try making your own t-shirts. I make my own, not for resale and sometimes it is not worth the time and I go out and buy instead.

"but in the real world, diamonds are expensive and relatively rare."

Diamonds are expensive only because they are hoarded by DeBeers and because of brilliant (no pun intended) marketing. Diamonds in fact are plentiful and if the market was not controlled by DeBeers and people were not so vain as to want to spend thousands for a rock, they would be nearly worthless.


"So there is no per-item cost for the manufacture or distribution of any created item in SL."

Again, you are forgetting labor. Don't attorneys, doctors, mechanics, cooks and tons of other people in RL charge you for their services? They are not manufacturing anything but yet, they require compensation for their time and effort.



And finally, the most wonderful thing about free markets is, its your choice!

If you think the L$900 shirt is too expensive, don't buy it! Go and buy one of the L$1 shirts available all over the place.

If nobody buys at L$900 the seller will have to lower his/her prices or he/she will have no sales.

But then again, there are quite a few people that because of vanity or a multitude of other obscure psychological reasons, will gladly pay the L$900. Let that be their problem, not yours.

Why should there be set prices in SL? Unregulated markets have done so much good in RL after all, I mean, that's why everyone has them. No, wait, only countries in general societal chaos do... okay. Well.

There's no set pricing because LL don't want to arbitrate pricing. This is all a big economic experiment, where people aren't going to really get burned too much because the sums are generally too small. Even the most hardcore SL shopaholic won't build up the same debt as if they spent their evenings on shopping channels. As well as that, all the economic parameters are different and the rules don't work in the same way as they do in RL.

I'd say: just go and buy stuff if you want to, and make it yourself or do without if you don't feel like spending that much money on it. Either way you're contributing to the great economic experiment.

It might seem odd, but for the most part I don't buy something because I really feel it's worth what I'm paying for it (I know, it's only $1, $2,or $3 but that adds up to a not so low amount every month), but because a higher price does give me a reasonable assurance that I don't wear it, tp at random and see 3 other people wearing the exact same thing.

Call me vain, but when I buy something new, I like feeling that it's new and not just something everyone else I know is wearing already .

I agree that Pricing has nothing to do with Supply and Demand in SL. In Real World North America, Supply ALSO has less to do with pricing than most would think.
There is another Principle behind the economics of Retail. It's Called;
"What the Market will Bear."
Things are priced in SL first, Upon what the creator Thinks it Should be worth, then LATER on Customer Response to that Pricing Level. Item X is created, and it's owner sets it's price at $1000L (Maybe he saw what similar items were selling for, a Good indicator of Market Value, or perhaps he just pulled a Number out of his,,,head). Now, after a few weeks on the Market a Vendor will see how much money he is Making on Item X. If it's Profitable,, the price stays (And perhaps he creates an Improved model he can sell for a Little more) If however, the Item is Not making profits, the Owner can do one of three things.
1: Change the Location of his vendors to try a New Market.
2: Redesign the object to make it More Attractive at the price.
OR
3: Lower the Price.

The ONE thing to remember is there is no REAL Predicting How the Market will react to a Given Product, or Price.
You just have to See What the Market will Bear, and Go with it.

Angel.

If it takes an hour to make...it's worth $300L

I've seen very good stuff that should cost more than $1200L

After your skilled enough in design/applications and get a few things out, it doesn't take much time to do anything.

A t-shirt with a pic on it or a simple free script...takes 10 min and should be $100L at most.

A t-shirt with a pic on it or a simple free script...takes 10 min and should be $100L at most, if not free.

After your skilled enough in design/applications and get a few things out, it doesn't take much time to do anything.

If it takes an hour to make...it's worth $300L

I've seen very good stuff that should cost way more than $300L, I know that it took a lot of time to create. (Thats the fun of creating. Not the monitary value)

$300L is a freaking dollar US.

Give em' a break, thier time is worth at least dollar for most things.

And don't forget to "tip" people at events.

You are correct regarding speed, and were that true there would be some simply magnificent Homes, Clothing, and Objects out there for next to Nothing in Price, But what you have Overlooked is, when you gain that Experience, and Attendant speed, you Also gain Skill, and can execute ever more complex, and beautiful Builds in that shorter Time. My Girl alex has become VERY accomplished as a swordsmith, If your formula held, then her First relatively simple sword would cost Astronomicly more than her later, Far more beautiful, and detailed work.
There has to be More involved than simple speed.

Angel.

In RL you'll also find wristwatches that cost the amount of a small car. It's a phenomenon called capitalism and free market economy. I like it, since the same phenomenon also provides us with cheap wristwatches for $10.

What the Market will Bear.

A.

Well, if you think about it, you can get the same shirt in two places for a LARGE difference.

I went through Nordstrom's once on my way into a mall and there was a bikini for like 300 bucks.

I went through the 1/2 price store later, same bikini, same brand, same designer, same packaging for 25 bucks.

Some of it is doing business with people who know and love your product, some of it is saying where you got it, some of it is just plain unknowledgeable on what others are pricing similiar items.

Personally, I would pay a bit more for an outfit from a known designer in SL, who I know works with customers and such, than a random vendor in a mall that may sell it cheaper.

A picnic blanket is not a shirt first of all. 2nd of all 900 IS a lot for a picnic blanket, BUT 3rd of all, strokerz is that sex toys dude, so im assuming the blanket has nice couple animations built in and is worth the 900

When I make a product, I put a lot of love and attention into the model, and often days into developing the script. On average, an item will cost me about $L 50-100 in upload costs for me. while more uploads will affect my "building pleasure" (see below), the number of uploads, or botched uploads.. rarely enters into it. I generally scrounge for retail locations, and use SLExchange.. to sell my products.. so RENT (which no one has mentioned yet) is not much of a factor.

I guess I have some sort of inferiority complex or something. I use a simple formula for determining my prices. Look on SLexchange.. find out what the "average" price is for something.. and divide by 2. I then enter the market with a "bargain" version, that often looks and functions better than it's higher priced competition.

But my prices are also affected by the following questions

how many of these do I really think I'll sell? (more sales = lower price)
how much did I enjoy the build? (more fun = lower price)
how hard was it to write the manual? (harder manual = higher price)
am I getting a lot of compliments on the model? (may affect price in either direction)
what are similar items selling for? (see formula above)
how am I doing fiscally? (more on account = lower price)
is the competition's price outrageous / offensive?
is my item really complex with animations, menus, and features? (cooler = more.. sometimes)

Things that no one has mentioned.. that DO affect prices..

Store rental / land ownership costs
Fluctuating linden value
System stability
Difficulty / annoyance
Vendor costs involved
Advertising
Complexity / function

A classic example, for me.. of odd pricing decisions.. is BlogHUD vs SLUrlBlogger

Blog HUD is free if you want to post to a BlogHUD blog, and costs 900 if you want to post to Blogger, Wordpress, or whatever. (a price that, frankly, kind of offended me for a "gadget".

SLUrlBlogger is free.. for all of those. As far as I can tell, these items are functionally identical, or do the same thing in such a similar fashion as to be indistinguishableother than appearance. But I'll tell you.. the maker of SlUrlBlogger earned my respect big time, by giving that tool out for free.

In any adventure videogame, there are free items and items you must pay for. You can go beat up monsters and get a Really Spiffy(tm) Flaming, spinning, singing, candy-filled, +3 sword of protagonist antagonism if you get lucky. Yet you could go to town, and some Snidley Whiplash character will try and sell you a Crappy Lame-Ass(tm) dull, rusty, bent, slightly-smelly, -200 dagger of likely to trip and stab yourself for a ridiculous sum. ONly the noobiest of noobs is going to pay that price.. but in truth, snidely only needs ONE such sale to score.

SL has it's share of that as well. There's always some jerk out there who will try and sell you a freebie for $1000L.. and tell you that he made it, etc. But there's items out there that COST $4000... (skins for one).. and some are free. There's vendor software out there that costs $2000, and some that is free. There's cars out there that cost over $1000, and some that are free. There's guns out there that cost more than 1k.. and many many more.. that are free.

As I said, I underprice, but I try not to undervalue. I think of myself a lot like "Target".. you can come to me, and get perfectly serviceable items, reasonable customer service, and a bargain price. I've been poor in SL.. and I know that it's hard to scrounge the cash for really cool stuff. There is a certain threshold one has to reach, before people stop thinking "oh there must be something wrong with it".

Something else also affects sales.. and that's customer service, and ease of shopping. If you have a record for good Cserve, and your products are easy to find, then I'll pay more.. but going to sim-sized stores, with thousands of products, arranged haphazardly... where it may take me hours to browse HALF your selection... forget it. I'm more likely not to buy ANYTHING from you. Make it too hard for me to find your shoes, or your skins, or whatever.. make it too hard to find the "buy" button.. and when I do, that higher pricetag is going to put me off.

Wrong, you don't have to charge for it. That was a choice made by the designer. It's not required. You can give away the item for free, and you can do it an infinite number of times. And you can have the people you gave it to give it away another infinite amount of times. And you can look in you inventory and still have a copy for yourself.

Yes, there are upfront costs, and I'm not complaining when a creator tries to break even or make a profit. I hope to do so as well, someday. But it's not required, and that's part of why supply and demand laws break down. It's also true that there are back end costs, rent on your store front. for example. But because supply is unlimited you could price the item very low and get back all your fixed expenses if sales were high enough, and with a million avatars out there you could envision pretty high sales.