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It’s a numbers game
By Celebrity Trollop | October 2, 2006
Linden Lab released economic data for September 2006, including two new metrics, transaction count by amount and monthly Linden spending distribution. I’ve graphed these two metrics to the left.
I don’t know how much of a numbers nerd you are — but if you’re a content creator looking for some guidance about how much to charge for your designs, the sweet spot seems to be a price under L$200. That price range captured about 85% of the total volume of transactions. If you bump the prices up to a max of L$500, you’ve covered about 93% of in world spending. If your prices are over L$500, you’re only selling to approximately 7% of the in-world population. I doubt that’s very surprising — you have a classic pricing response curve here, where as the price goes up, sales volume drops.
But there’s something a little more interesting in the second graph. That chart shows the number of accounts (on the Y axis) spending a certain range of Lindens (shown on the X axis). Once again the peak is toward the left, with the first four ranges (up to a max of L$10,000) capturing around 78% of the total number of accounts. But — and this is the interesting part — look at the spike around L$10,001-L$50,000. That is the second largest spike on the chart — so I’m going to call those accounts “in-for-a-penny-in-for-a-pound” users. I wish there was a little more granularity in the statistics — maybe for October 2006 — but for now, it’s somewhat remarkable that the first and second along with the surprising fifth cohort account for over 70% of the accounts in Second Life during September 2006. That suggests that people who are on a budget are really on a budget, and those who aren’t tend to spend quite a bit more Lindens per month than the average user. *cough* Like maybe a certain fashion addict I know.
Topics: Business of Fashion |
Wow. Lot’s of food for thought. I found one thing quite puzzling, though. Assuming I am reading the data correctly, the spreadsheet for the monlthy customer spending distribution shows that only 84051 spent even L$1 during the month of September. Could that possiby be accurate? It seems like an incredibly small number of spenders versus the number of active residents (those who have logged in within the past 60 days).
Posted by: Choice Sliter on October 2nd, 2006 at 3:48 pmThe numbers make sense to me. For my sake
Posted by: CronoCloud Creeggan on October 2nd, 2006 at 6:11 pmInteresting analysis :)
Now, I may have the wrong end of the stick here (it’s still early, and I haven’t had my first coffee of the morning), but doesn’t your L$200 sweetspot only work if these spenders only buy a single outfit per month?
My own first instinct is that the $200 peak occurs thanks to the folks who still pick up a $50/week stipend … average that over the course of a month, and you get a monthly all-in/all-out spending budget in the $200 ballpark.
Posted by: Shep Korvin on October 3rd, 2006 at 12:53 am[...] Celebrity Trollop’s post over at our sister site prompted me to take a look a the Second Life statistics page. Her entry is an interesting discussion about spending patterns and retail pricing. [...]
Posted by: Men’s Second Style » SL by the Numbers on October 3rd, 2006 at 5:59 amYeah, clearly there’s a large population who only spends L$500 or less per month, but it seems to me that the largest group of spenders goes out to a max of about L$2000 and up to L$50,000.
Posted by: Celebrity Trollop on October 3rd, 2006 at 6:34 amI take back my earlier comment. I’m awake now :)
Posted by: Shep Korvin on October 3rd, 2006 at 6:43 am[...] Alright, so how do I make money in Second Life? Learn to build. I think that’s the most fundamental way to earn money virtually… by building interesting items useful to anyone. There’s a whole designer fashion industry in SL as reflected by the beavy of SL fashion mags available (e.g. SecondStyle and LindenLifestyles), but you can also make eBooks, music, vehicles, houses and so on. There’s a very good pricing guide on the Fashionista blog where author Celebrity Trollop graphed and analyzed economic data for September 2006, which included two new metrics, transaction count by amount and monthly Linden spending distribution. If you’re lost, the author essentially realizes two pricing points: “If you’re a content creator looking for some guidance about how much to charge for your designs, the sweet spot seems to be a price under L$200 [… and …] people who are on a budget are really on a budget, and those who aren’t tend to spend quite a bit more Lindens per month than the average user”. [...]
Posted by: theory.isthereason » Second Life gets millionth user = Increases in worth? on October 18th, 2006 at 1:02 pm