I'm new to KittyCats, in that I've only been breeding since January, and am still working on getting a sense of what is fair/reasonable when it comes to pricing. However, I do understand basic economics, and the Law of Supply and Demand. (It's good to actually get some use out of my Business degree. :-))
When a product is new and rare, assuming the demand far exceeds the supply, the price will be very high. Then, as production gears up to meet demand, the price naturally drops, often assisted by economies of scale (the more you make, the less it costs to make each one). In a healthy economy, pricing will find an equilibrium point where demand meets supply at a given price. However, if a lot of suppliers suddenly start producing the item because they see there is a high price and strong demand, the market can then be flooded so quickly that the price drops through the floor, and it can take a long time to recover to a more healthy level - if ever.
In RL, patents and copyrights are ways of protecting the developer so that they can hopefully recoup their research & development costs before the prices drops, and hopefully also have revenues to put into developing even more good stuff to sell us in the future, whether it is another life-saving medical technology or the next best seller. But we don't have those protections in the KittyCats world. That is why I don't begrudge those who find new traits charging whatever people will play for them. They put money into finding them, and probably into many more attempts that didn't find anything new or special. Let's also not forget that the folks buying these traits, whether at auction or in stores, are responsible for their own choices in regard to what they are willing to pay.
The above is also why I'm not personally paying thousands of L$ for certain new or recessive traits that I like: I'm afraid the value will drop before I can do anything useful with them, and I'll never get that return on investment. They may be pretty, but not THAT pretty! This could happen because everyone quickly gets that trait, or it could be because a newer and/or more recessive trait is introduced and the trait I got is no longer "hot". There are no guarantees. So I'd rather leave those uber expensive traits to more experienced breeders, and/or those who are collectors. If I still want them when the price goes down to something I can afford, I'll get them then.
Along those same lines, varying prices until you see what people will pay makes good sense. It can be hard to know how valuable something new is, and the way you do that is by testing the market.
The "Fair market value (FMV) is an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the market. [So if someone is going out of business, leaving SL, or broke, what they are asking can't be considered the fair market value. Likewise, if a newbie buyer pays more than an experienced one would, that isn't the fair market value. And yes, I've been there and done that... see below. But, let's face it, if no one is buying your cats, then, by definition, they are overpriced - or you may need better visibility - or both.] ... Fair market value differs from the intrinsic value that an individual may place on the same asset based on their own preferences and circumstances.
- From:
http://en.wikipedia.org/wiki/Fair_market_value, with bracketed comments added
Personally, I try to price based on the fair market value, but set the minimum based on the intrinsic value - whether it would bother me if that cat sold for less than a certain amount. There are a couple collectibles in my own MP store that I now feel are probably overpriced, but they are priced based on what I personally paid for them, and am not ready to discount them... yet. As I get more experience, I'm finding that I'd often rather just buy an older past-breeding collectible with a beautiful costume than deal with getting a ton of cats that I don't like while trying to pull traits from a newborn. These are cases when I bought the box, then found a live cat much cheaper, so decided to get it and sell the box.
One of these cases is actually the only thing that bothers me. I paid a ton for a 2012 boxed collectible to a well-known, established seller with a huge store because it was the only place I'd actually seen it for sale, and I kept really wanting one. Of course, then I found a live, sick one that was past breeding age for over L$5000 less! I got it and immediately permapeted it, deciding to sell the boxed one. Then, in talking to other sellers, I found out that the seller that I bought the original box from intentionally overprices her cats. Apparently, she has a loyal following who come back because she uses things like gift cards to draw them in, but the cats are still often overpriced, even after the discounts. So, do I sell the box for what she charged - or what she charged, minus the discount, plus seller fees - to get my money back, or do I discount it down to what I think it's worth? Or do I leave it there for a while, see if it sells, and if not, at some point, slowly drop the price? For now the intrinsic value to me is what I paid plus seller fees, but the fair market value is what someone else would pay. Maybe if I wait long enough, it won't matter, and I'll drop the price -or- it will become rare enough that the fair market value to someone else will equal the intrinsic value to me, and I'll sell it.
Speaking of pricing, I've found the price calculator to often be much higher - someone told me it's usually double - the fair market price of a box, and that seems to be the case, based on the current market. I am using L$50 - L$100/trait as a guide as well, but I'm finding that - perhaps because I'm not chasing market trends - even my 9T's are closer to the L$50/trait end. I do intentionally breed cute low-T cats to sell for L$99 - L$199, but am also working on a couple pure 9T lines that I HOPE I never have to sell for that.
I buy the 20 packs of kibble, so the lowest incremental cost for me to produce a cat is at minimum:
20 food & water cost L$2980 = L$149 L per bowl when bought in bulk
Divide that by 4 weeks and then multiply by 2 parents = L$ 74.50 / box
I'd like to get at least this much back on every box I sell, but getting L$50 on a Menagerie Table is better than actually sending them to the Menagerie and getting the equivalent of L$20. (I do love the Menagerie tigers, and as a newbie, I bought a lot of cheap cats before realizing that it's more cost effective to buy the exact one that I want from a bid board than buy 200 - 300 boxes and gamble on getting the eyes & gender that I want.) When non-collectibles are past breeding age, well, that's another story, but I'm only starting to get some that are that old now... and some of those are also going to be the ones that have the most sentimental value, so we'll see.
Given, the above amount does not include the cost to acquire the parents (if you want to do the math, remember to subtract any amount you sell the cat for later and divide the difference by the number of boxes produced), and the food for the first 7 days, or while waiting for a partner to catch up to them in Love.
However, I do think that L$700 is way too high, unless you bought very expensive parents, but then I do my best to keep my costs down:
- I cuddle most of my cats, and only give them milk if they are in a position where I can't easily cuddle them (on a table for sale or in the online cattery). I cuddle them because I like to, but am obsessive about it to save money. :-)
- My In World cattery is on my girl's SIM. It does limit me to having about 25 - 30 cats in world at a time, but I'd like to get it back down to having about 20 who are breeding at one time anyway - plus several cute/gorgeous permapets running around. :-) When I have them out at my house, I would have the same house whether I had the cats or not, so that isn't a factor.
- I only rent prims in secondary markets when I need them for the special tables or bid boards, preferring to sell on the MP even though it's more work, because I only have to pay fees there when a cat sells. Pay L$550/week and only selling a few gacha kitties didn't work for me, and will put anyone out of business fast.
I do buy far too many vitamins because I'm impatient, especially Love Drops (L$30 x 2 = L$60 for love drops, or L$56 if bought in packs), which probably makes it more like L$135/box... sometimes a lot more, if I did something stupid like pair them too quickly and then change my mind two days later. :-)
The only cat that I don't mind giving more expensive vitamins for is the Fancie, because so far, it's worth it based on the value of the gems. THAT was one of those crazy purchases that I can't afford to make again, but hopefully the rewards from it will continue to help my SL budget.
Likewise, I hope that the profit that I make on the 9T's I breed, and on the collectibles I resell, covers for the additional cost of the food, vitamins, etc. that went toward producing the 2T boxes.
In fact, because of my RL circumstances, I do now need my cats, & entire SL life, to be self-sustaining. No... no fire sales... just trying to make good choices and watch my budget all the way around. It does scare me when I see so many people leaving and selling their cats ultra cheap because I don't want to be them.
It also bothers me when I see that someone has a collectible that I paid L$1000 for marked down to L$500 - or even L$200 - and it isn't selling. In the other hand, it would be insane not to get a cat I want at a great price, and a win-win if they need the Lindens. Also, if I buy clearance cats, they are no longer out there pulling the visible market value down. Those who know me, know that I'm not above buying cats from fire sales and then reselling them at the market price if I decide not to keep them - the profit helps feed my other cats, and hopefully it helps in readjusting the value higher back to what it should be.
When I started breeding, a friend told me that the market is flooded, and I'm hearing that prices are half what they were a year ago. I'm trying to ride it out on certain collectibles. Otherwise, I am trying my best to price everything fairly, so that there is money coming in as well as going out, but also so that I'm not underestimating their value.
(04-16-2015 12:19 PM)Nektuu Wytchwood Wrote: Food+milk cost to make 1 kitten box per 7days per pair for food+milk = 140 L (rounded up)
Thanks for reposting these. I have the notecard, with my own notes added, and refer to it all the time. :-)
I'm sure the final cost was food + plus milk and/or vitamins, if you use them + amortized cost of the parents + rent for any additional land/prims you rent for breeding divided by the number of cats, but L$700 still seems way too high - well unless you are buying expensive new traits or giving Love 10s all the time.
Also, the rent on a store or MP fees - which is really a selling cost, not a production cost - has to be factored into the selling prices if you're approaching this from a purely business perspective.
Kitty pricing!
