IMVU Economic Frenzy is a laughable non-event
For those of you that aren’t involved in IMVU in any way, skip this post, I’m about to ramble on about things that probably won’t make any sense to you. However, if you’re a fan of economics and/or human nature, you may just find something of interest. You see, IMVU (the 3D Chat community that I create virtual products for as a sideline business) is currently in the process of raising the base pricing of it’s virtual goods. Their reasoning follows, as stated by the CEO in a blog post:
We are raising prices for virtual goods today. I want to explain why we are raising prices.
- To increase growth for IMVU and Creators. Higher prices means more credits for you and us.
- To make pricing more fair. It is harder and more complex to create rooms and furniture products, so we want to ensure the reward for creating those products is higher.
How do we know that IMVU members will accept the higher prices? Because we did pricing tests with IMVU members, and these tests showed that demand for goods in the catalog will stay the same at these prices.
In the forums, a staff member broke it down for us this way:
1) Base price for rooms will increase to 500 credits, if the current price is less than 500.
2) Base price for furniture items will increase to 350 credits, if the current price is less than 350.
3) Base price for all other items will increase by 10%.
4) Creator profit for the first direct IMVU Inc. derivation will increase automatically by the same percentage as the base price increase for that product – as long as it is derivable.
5) Profits for other items in the derivation chain will stay the same, and Creators can adjust them to suit their needs as necessary -but only if the item has not been derived from.
6) Creator profit for items that are non-derivable will not change automatically even if they are direct derivations of IMVU Inc products.
We cannot instantly change all the prices in the catalog, but they will all change within the next 2 days starting now
The laughable (and very predictable) thing is the community reaction. There are currently 58 pages of forum post replies to the announcement, and the posts just keep coming. Outrage, threats to strike, threats to leave the site for good, and a variety of other angry responses go on, page after page. I’ve seen maybe 3 members post realistic and non emotional replies (not counting moderators).
Welcome to 2010, folks. The US economy is, and has been in the toilet for some time now. Gasoline prices soar daily, food prices are astronomical, and heating your home this winter is going to be much more of a drag on your wallet. Why this increase to IMVU base pricing is a surprise to anyone is beyond me.
Personally, I think there are a few different reasons for this, none of which would be popular with the people trying to scratch together a few dollars from their virtual goods catalog income.
- The infamous “credit sink” that a lot of members have been wanting. Be very careful what you ask for, because you’ll get the full blown out of proportion version when dealing with online companies.
- The completely out of hand saturation of IMVU products in the catalog. Much like anyone with a computer pre-loaded with an HTML editing software thinking they’re web designers… every member of IMVU that’s downloaded the Chat software now has the same software necessary to create their very own virtual goods – artistic talent be damned! Raising the base pricing makes it a little more difficult for new “creators” to build a catalog on a whim, it’s going to take more of an investment than that now. (This is the bottom line that’s generating all the angry responses.)
- Creators that undercut pricing to compete are going to find this whole “developing” gig a little less attractive now, and may even be forced to find a different marketing strategy.
Overall, I think IMVU is trying to minimize the number of creators adding products to the catalog. Increasing the cost of creating will no doubt decrease the number of new items submitted, and hopefully increase the quality of the products that do get submitted. Let’s hope so, there’s so much garbage in there now, shoppers really have to dig to find quality products.
Why am I not upset? I’ve always valued the work I put into creating products for IMVU, and have priced my items accordingly. Business is business, and as a creative professional, I’ve made sure to include a healthy profit on my items to compensate for my time and what I consider to be a reasonable amount of artistic talent. Truth be told, I’m considering raising my prices once the dust settles from this latest “catalog maintenance”.
Why would I raise my prices? First of all, because my items are well worth it, and second of all because I hope to prove that people will in fact pay for quality. My cost of living’s gone up, so economics being what it is… there ya have it. 😉