Steve D (d_fuses) wrote,
Steve D
d_fuses

It's 2007 and gamers still don't understand basic economics

So here we go again.

Point the first: the price of an object is determined primarily by what the customer will pay. Not by the seller. The seller tries to set a price which allows him to make a profit but he is limited totally by what his market can and will pay.

This is NOT how the gaming market works: Company A creates product B which costs X dollars to produce. They estimate that if they sell 100,000 units at $Y each, they will have some money to take home at the end of the day. IE Y*10,000 - X = profit.

This is how it actually works. Company A produces product B at a cost of X. Customers will pay $Z a unit for it. If the company is lucky, they'll sell enough units so that Z*units sold > X. If it is, the company survives. If it isn't, the company goes broke.

Customers, being human beings, tend to want Z to remain steady, while the quality of game B goes up and up. If Company A makes product C, which is nowhere near as shiny as B, nobody will buy it because it doesn't look as good. Companies therefore have to convince customers to pay for the increasing cost of producing better and better Bs.

In roleplaying games, the price Z has been pre-determined at least part by history: games used to be very cheap indeed. It has also been set by the fact that the market in general does not value the written word. And finally, the target market is relatively poor and unwilling to tolerate large prices or large price jumps.

However, since around 1990, games have reinvented themselves from monochromatic saddle-stitched low-art textbooks into high-quality full-colour art books. This hugely increased the cost of production. Meanwhile, the set price of Z has only just kept pace with inflation. The result is that, in general, gamers are paying for books with WFRP v2 standards of presentation using a WFRP v1 price.

So what happens is this: Z remains relatively constant. The game sells about the same amount as always. But the cost X increases greatly. The company makes a loss.

Now, a very large company with a lot of infrastructure, advertising and product loyalty can hedge against this loss. Smaller, newer companies cannot. And there are about four companies large enough to do this hedging - Wizards, White Wolf, Mongoose, maybe Palladium depending on Kevin's mental state at the time. Smaller companies can, thankflly, rely on some loyalty and the collectible mindset to get them through. They can also take steps to reduce X, the cost of producing the game.

They can't reduce the cost of production, because people only buy shiny things. They can't really reduce print and distribution costs because those things have a stranglehold. So they skimp on everything else. They hire freelancers for prices that most other authors would laugh at. Thankfully, the industry is full of schmucks who like RPGs so much they happily work for peanuts. They do in-house editing. They don't draw a salary themselves sometimes. They divert whatever cash they can into pleasing the fans so that they can inch prices higher without losing sales. They sleep on the floor at GenCon, and drive their themselves with the books in their car rather than pay shipping.

Of course, game companies aren't roaming the streets begging for scraps. They're smart enough to charge enough to stay alive, although typically without enough cash to grow their business, ensure against unforseen disasters, or to expand the hobby in general.

HOWEVER, if a game ever dares to raise its price by $5 or $10, the customers accuse the company of being greedy, of trying to line their pockets so they can afford that diamond-studded swimming pool and the solid gold hum-vee. Yes, the company would like to do better. But better means "paying their employees a decent wage". It means "being a stronger force for the industry and hobby".

Accusing an RPG company of being greedy is like Scrooge accusing Bob Cratchit of greed for wanting an extra piece of coal on the fire. Here I am, working for chump change so that games can cost half as much as they should, and then you stand there and say "I'm sorry, you can't have five more cents a week, I need my cash to buy an X-Box". It's arrogant and it's extremely insulting. It devalues my work and my creativity and it devalues the industry and the product it creates. Plus it's entirely ignorant of the state of the industry and basic economic facts.

If you don't want to pay a price, don't pay it. But don't insult me by saying I'm trying to cheat you because I want to earn a living. Not, that is, unless you want me to punch you in the goolies.

Hereendeththelesson.
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