New land pricing announcement
Linden Lab announced in http://blog.secondlife.com/2008/04/07/quarterly-land-supply-and-island-pricing-update/ new land pricing, which is curious of nature.
Mainland sims minimum auction price is now 750USD, and new Islands are 1,000USD a piece. Mainland sims starting auction price was lowered by 500USD and Islands by 675USD. Tier rates remain the same. New mainland sims will be rolled out in 10 a day.
Aside from personally just purchasing 4 Islands, and going roughly 3 mainland sims total higher (from 180k to a peak of 350k), i do have my personal finances at risk here too.
It remains unseen how this will affect the land business, what’s definately sure is that mainland prices are going to fall. Because of lower prices, it’s highly likely that you also need to sell for lower margins, a 2L$/sqm margin for 8L$/sqm land is 25% while for 20L$/sqm land it is 10%. People WILL care. Furthermore, i do not think volumes will greatly rise because of lower pricing, tier pricing remains still very high. It’s understandable that hardware costs, and human time costs, but not even nearly that much.
In my opinion, Linden Lab should be concentrating on cutting costs, thus cutting the recurring price instead to increase the land usage by residents. I wouldn’t mind paying triple the amount i pay now, if running costs are cut into half. That’s my personal take on the matter.
200USD is a lot of money for many, and that’s the price you pay for Mainland sim monthly, think about having actually high quality estate, 300USD a month. Yikes! Finnish minimum wage is around 1100euros after taxes, per month, or 1660USD. Apartment costs roughly 755USD a month on average, and food for the month 226USD, for average Joe’s out there. The food price is actually under-estimated. that leaves you roughly 680USD a month for everything else, work travel, clothing, electricity, netconnection etc. In the end we are talking about 300USD left for “all the fun”. Considering this is Finnish guy, he has to pay 22% VAT, means he even CAN’T afford a sim! 359.9USD a month for a sim for Finnish person. 4096sqm costs 25USD a month + 6USD for premium + VAT 22%, 37.82USD a month. That’s in affordable range, but still about 12.6% of your monthly fun budget.
Because it’s cheaper to buy now, it remains unseen how this affect. In 2 months from now a good quality 4096sqm might cost ~104USD instead of ~179USD. Is it enough lower to make this Average Joe want to shell out that money? Especially when you pay in taxes that price every 3months.
Would you buy an apartment for 30,000euros (VERY VERY VERY cheap in our area, cheapest in our area goes for 60,000euros and even that is an EXCELLENT find, normal pricing is around 100,000euros) if you have to pay 10,000euros a month in taxes for it? Didn’t think so. However, rental of that would cost around 11,500euros a month, instead of 500euros a month. That extra 1,000euros is needed in case the renter does not pay up! Now, talk about INFLATION, we all would be homeless immediately if that happened, some businesses could afford a few month’s, but in the end we would have insane inflation, all prices would instantly skyrocket, and there we go, an inflation, even at the very best scenario. Just as a comparison, here you pay tax for your property only when you sell it. Construction companies would be in curious spot, material prices & construction prices would be inexistant compared to taxes.
Of course, Second Life is not the Real World, but it’s fun to see what would happen in Real World if something similar would happen.
Oh yeah, i believe Central Grid charges 75USD monthly tier at highest.