Economy Change During Sales

mattcupp

New Member
May 5, 2020
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IGN: mattcupp
Idea: Change Exchange Rate

I would assume that the Server Shop Sale serves two purposes. 1: to help people get the rank or upgrade that they have been waiting on, and 2: to bring money into the server.

I believe that the sale is achieving this first goal well among players who are buying upgrades with their own USD for their own account. The second goal however needs a change in order to maximize the money that is brought into the server. I propose that for the duration of the Sale:

1 USD = 500k In Game Money (IGM).

At this price, USD Providers (Buyers) are incentivized to spend their money while IGM Providers (Sellers) have the same amount of buying power that they had pre-sale.

We currently (as have for as long as I have been on the server) have more people who are looking to sell IGM for server upgrades than we have people to buy. If we do nothing to change the exchange rate during this sale, there is nothing that will bring more Buyers to the table. Currently, the entire benefit of the sale is only being felt by the Sellers, when in reality it is the Buyers that we need to cater to. If we have no Buyers (or even just not enough of them), it does not matter how many Sellers we have. More Buyers means more money coming into the Server.

In each transaction, there are three parties who are affected:
  • Seller – Individual who sells their IGM to the Buyer, and who receives reward from Server.
  • Buyer – Individual who buys IGM from Seller in exchange for a payment to server.
  • Server – Entity receiving money from Buyer, and giving reward to seller.
For this example, we will be looking at an unranked player who is buying a Sovereign Package before and during the sale.

Before Sale: Sovereign Kit 80 USD, Exchange Rate 350k/USD​
(Before cont.)​
During Sale: Sovereign Kit 56 USD, Exchange Rate 350k/USD(During cont.)
Party
Pays (to)
Gets (from)
Pays (to)
Gets (from)
Seller
28 mil IGM (Buyer)​
Sovereign Package (Server)​
19.6 mil IGM (Buyer)​
Sovereign Package (Server)​
Buyer
80 USD (Server)​
28 mil IGM (Seller)​
56 USD (Server)​
19.6 mil IGM (Seller)​
Server
Sovereign Package (Seller)​
80 USD (Buyer)​
Sovereign Package (Seller)​
56 USD (Buyer)​

At first glance this might look like every party is benefiting from the Sale; the Seller gets a Package for less money, the Buyer spends less money and still receives in game money, and while the Server gets less money for the transaction, the lowered cost makes the trade more likely to happen, right?

In actuality, the Seller receives a benefit, the Buyer gets no benefit, and the Server takes a hit.

The Seller gets their kit for 70% of what it would usually cost them. While the Buyer does spend less money, they also receive a proportionately less amount of IGM. The incentive now is the same as the incentive prior to the Sale. What is the point of a Sale if it will not bring the people who are spending USD to the table? The Server just sold a Package for less money, and while this is not an issue if the total number of Sales is increasing, there is no reason that this would be the case.

Here is a comparison to the current setup, as well as how I propose we make the change:

During Sale (Current): Sovereign Kit 56 USD, Exchange Rate 350k/USD​
(Current cont.)​
During Sale (Proposed): Sovereign Kit 56 USD, Exchange Rate 500k/USD(Proposed cont.)
Party
Pays (to)
Gets (from)
Pays (to)
Gets (from)
Seller
19.6 mil IGM (Buyer)​
Sovereign Package (Server)​
28 mil IGM (Buyer)​
Sovereign Package (Server)​
Buyer
56 USD (Server)​
19.6 mil IGM (Seller)​
56 USD (Server)​
28 mil IGM (Seller)​
Server
Sovereign Package (Seller)​
56 USD (Buyer)​
Sovereign Package (Seller)​
56 USD (Buyer)​

In this setup, the Seller receives no benefit, and the Buyer benefits. While the Seller did give more IGM for each USD spent, at the end of the day, they got the Sovereign Package for the same amount of IGM as they would have before the Sale. The Buyer now gets about 42% more IGM for each USD spent.

While this might just look like the benefits of the Sale have been shifted from the Seller to the Buyer, it the outcomes of this have very beneficial results compared to the current situation.

As I stated earlier, we seem to constantly have more people looking to sell their IGM, and not enough people buying it. We have too much supply, and not enough demand, and this will not change if we give all of the benefits from the Sale to the Sellers. In fact, we will increase the number of Sellers without giving Potential Buyers any reason to commit at this time, compounding the saturation of IGM supply.

If we instead give the benefits of the sale to the Buyer, more people will be willing to become Buyers, as there will be a limited time incentive to get out there and make deals. With more Buyers on the scene, the total capacity for amount of money spent on the server shop will increase. This will bring more money into the Server, and no party is taking a loss.

TL;DR
Currently we have more people looking to sell their IGM for server upgrades. The current Sale does nothing to bring more IGM Buyers to the table, and will actually exacerbate the issue as only the Sellers see an effect of the discount, making more people look to sell.

If we temporarily increase the exchange rate to 500k IGM/USD, IGM Sellers will have the same buying power that they currently have (ie. 5 USD upgrade before the Sale would be 1.75mil IGM, while that same upgrade during the Sale is 3.5 USD which is still 1.75mil IGM), while Buyers will be incentivized to pump money into the Server Shop.

More Buyers = More Money for the Server.

Note:
This will have no effect on people who are trading IGM for virtual items that are not found on the Server Shop.
 
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