Selling singles and the profit ramifications of that action

[Tokimo]

So this is something I've been struggling with the theory behind (because it's fundamentally very difficult but simple math that don't have a degree in). The fundamental thought I've been playing with is this: Sell singles.

There remains a strong question of how you price those singles you sell (do the most popular cards go for $10? As much as you need to keep them balanced in printing? The same amount as the least popular card?). I'll come back to pricing specifics.

What we stand to lose:
Perceived Value: If we make it easy to get cards at a fixed price, I feel that some people would lose the anticipation of buying and collecting cards when they are price limited. Additionally, since more can be printed there's no hope that your cards will get more pricey.

This might also negatively effect your revenue with more players buying cards JIT (just in time). Players buying cards JIT are susceptible to spending their money on other things that catch their eye instead, quitting the game before they buy that super cool deck, and other such revenue lacking options.

I have absolutely no clue what level of revenue I'd be likely to lose here. Probably very little, but it deserves recognition as a threat.

Singles Inventory Profit: Since Zendikar has Arid Mesa which goes for over $10, there's a business to be made buying Zendikar packs, opening them, and selling Arid Mesa's (and all other other cards of course). The person buying those packs is making money on it, but so is the game developer.

One of the biggest numbers to think about is what revenue do you lose from this guy selling Zendikar cards. Remember that he opens a few cases of boosters and only sells one of those cases right off, he also has a working inventory which is preemptive revenue for the game developer. On an emerging game you're unlikely to have massive singles speculation, so this may or may not be significant revenue (it might even be insignificant if you are established).

Game Store Boycotts: If you tell the singles market to move over, will they be less likely to stock your product? I'm not sure about this. GamesWorkshop has a long history of messing with profits of game stores and having the game stores sell their product anyways. I imagine the revenue lost here will be 0%.

What we stand to gain:
Singles Profit: This is one of the big kickers. What are the profit margins on singles? There's both an expectation of percent return on investment and hourly rate. I'm going to guess that one can sort a booster pack in about 1.5 minutes (6 seconds per card, pretty darn fast), which is going to be close enough to an hour that we can assume you'll take some breaks. You're going to be expecting $12+ for that hour of sorting. You also need to list auctions / update your catalog / ship product / etc. We're going to assume that you only spend 20% of your time sorting. We might extrapolate this to a profit of $60 per booster box (spending plenty of hours doing this though, this money isn't free, Domino's delivery pays $12 around where I live). If my numbers are even close, you're looking at profits in the range of $1.5 per booster (certainly I bet it's no lower than $1 per booster, and I can certainly imagine that from crack to ship the entire booster box takes you 10 hours instead of 5).

Wizards of the coast probably makes $1-$2 per booster pack. If they had a way to siphon out the singles market then, we're talking about potentially doubling profit from the card games (a lot of that catalog stuff is one time costs that amortize to nothing, shipping also gets easier when you do a massive amount of it, and of course booster opening is nonexistent when you're printing the cards direct). This section of potential profit increase looks massive to me.

Sales Volumn: If you make it easier and/or cheaper to reliably get the cards you want for your deck, you might encourage more players. The increase in players leads to more sales. More sales leads to more money. This theoretical revenue boost is contingent on players appreciating you undercutting the singles market though (and I guarantee that you will have some people get mad when they see you selling a 2.5" x 3.5" piece of cardboard for $8, although I wonder how these people feel about the same card being $8 on the used market).

Thoughts on pricing specifics
One of the largest advantages we're looking at is the potential to increase revenue/decrease cost to the player. Done incorrectly, this would just kill your revenue. If WotC just sold a booster for $3 and sold any single for $0.25, there's a massive number of cards people would just skip. People would end up buying 180 cards for 3 decks and a grand total of $45, significantly down from the 2 boxes of boosters that some players are grabbing.

The other danger is if WotC was the one asking $12 for an Arid Mesa. What would players do? Would they resent it and boycott the game? My inclination is that people already demonize WotC in this way and that if they're okay buying from WotC now, they'd still buy if WotC offered Arid Mesas as direct print.

The specific system I was thinking of:
The price model I think I might try is an automated system (cut down on time, and be a more intelligent--cause computers are smarter than me). For simplicity we'll make up bad numbers. There's a 100 card set, you can buy the set for $100. You can buy the set as singles for $200. The system starts with each card at $2 and with 1000 ghost transactions (10 of each card). When I log in to buy a Card 41 the system increases the transaction count for Card 41 to 11, now there are 1000 transactions (the transactions will start 'fading out' at 1000 back). Card 41 increases in price to 11/1000*$200 (or round that to $2.25). All of the other cards but one don't change (one card was loaded into the database with the first ghost transaction which will reduce it's price to $1.75 now).

2000 card sales later (after everything from the initial data has had a chance to phase), Card 77 has the last 50/1000 transactions and no transactions before that. Card 77 costs $10. Someone logs in and buys another 77. Now instead of pushing the last transaction off, we remove the last Card 77 in the logs and add a new Card 77 to the beginning (simply a function to maintain a price cap).

This demonstrates an automatically adjusting system that responds to the what players are willing to pay while trying to maintain a relatively constant price ratio of singles:bulk. A price cap would have some interesting effects, namely that it would distort the market for exceedingly good cards (and as the developer you'd end up printing more Arid Mesas and Lotus Cobras than other cards because at $10 people would be purchasing them happily). Obviously you'd try to keep the sample size large enough to create stable prices and small enough to respond to changing conditions (because if you sell 2000 copies of a card at $2 when people would have been paying $4 happily...)

How would you react if a company did this?

[europeanmatt]

I like the idea, kinda. I don't think I would boycott a company for trying this, and if it made cards more affordable for the kind of decks I want to build (social, casual) I would be very happy. it would still allow for speculative buying, as with any stock-market arrangement, and people could still operate their own singles market by buying when the price is down and selling when the price is up.

when a set is released, a savvy player could spot the cards that will get high demand and plump down a lump sum for a chunk of these power cards.

the investment they have made (in say, a thousand copies of a single card) then drives up the price, so they can sell them independently for less than the company and make a profit. So an automated system for controling price changes would need to pay less attention to bulk buyers.

God knows what happens when multiple speculators are all sat by their computers waiting for 0:00am and the set release to order as many as they can before the prices shift. I guess you'd have to refrain from previewing cards to make artificial manipulation of the market more difficult.

I'm not an economist, so sorry if my interpretation is totally bat's arse.

It is a fascinating idea, and one I hope someone experiments with soon.

[reelhotgames]

The prblem I perceive in this is that a company would either have to sell cards individually, or select to choose to sell in boosters etc... Doing both I believe would be tantimount to price fixing which is not strictly legal. And if you choose to sell as singles and have a fluctuating / speculative price scale you are stuck with the ramifications, if the "stock" price falls dramatically, there you are. If your pricing / game doesn't appeal you may be giving it all away.

However you could look at the cost to print - let's say as an example it costs you 2.3 cents to print each card, that's common, uncommon and rare, regardless every card costs the same to print. You could base a singles price value off volume / rarity printed and sell at a fixed price. 5 cent commons - 50 cent uncommons and 1 dollar rares, and you would own that price, as after market / speculative pricing becomes irrelevant. Where this falls short is that once a person has a play set the purchasing is over.

This is where random packs keep the market moving for companies - you need card X and buy packs to find it rathert than spend $15 for the single, this flows the free trade market as well.

As a game publisher I know that I literally have no interest in the after market value of what we produce, our system is that no card will ever go out of print, (there will be numbered print runs - much like books) but the functional card itself will always be available - this helps prevent rich kid syndrom)

However if the popularity of the specific print run warrants singles . after market pricing, that is what drives the economy of the FLGS in many ways, then bully to them. But I would rather the FLGS sell the boxed product than break it down. JMO. Cheers.

[sneaselx]

Why charge by cards at all? What about say a subscription based system. Every player pays a monthly fee, and in return receives that months release, as well as maybe a newsletter, etc. This eliminates rich-kid syndrome, because no matter how much they pay, everyone receives a set number of cards per month. Maybe a catch-up offer too, as a one-time price to get all non-special offer cards that have already been released. However, some rares would be offered to people who joined the game in the beginning. Sub-rares would also be offered randomly in each release.

[legend zero]

Well I'm guessing this was maybe brought to light from my mentioning of TGC?? Seems odd on timing.

Here is the method we're going with.

Each set will have about 100 cards, from that we will create 4 "Tactical" or "Theme" packs, each with 24 cards. That will rotate out in avaliability. This keeps the concept of rarity to a point. We then also will hav four cards NOT in these sets, they will be seperate as the Special Cards of the set and sold seperatly. (Or included in a full set purchase)

That's our plan. Thoughts on it?

[Tokimo]

Europeanmatt:
If you increase the price on them as they buy cards (they place an order for 1000 Skyship Captains, and you give them a $10 price on Skyship Captains), I'm rather confident people wouldn't try to spike prices to corner the market. Especially when you consider that someone tries to spike Skyship captain and it's now a $10 card instead of the $4 it usually is: Now people stop buying it and before you know it it's back down to $6, while the spiker paid on average $8 per card to get the price up to $10.

Reelhotgames:
Price Fixing requires collusion. Monopolies and the price fixing that comes with them due to copyright is fully legal. Price fixing the price of sugar gets you in trouble (as it should). That being said, I see plenty of reasons to sell both boosters and singles. Singles cost more, but are more precise in what you get (you do this because people who buy singles are going to buy less, so you need to get more per card you give them).

Legend Zero:
Nope, this thread is a follow up to wheels in my head that have been turning since January 12th after I made a post in Rarity of Cards. http://www.lackeyccg.com/forum/index.php?topic=166.0

[Howl]

i personally believe if the cards are cheeper then the game will flourish.  weve all had moments when there is just that one card u need but its just too much $ and far to hard to get in boosters. so if a company makes cards literally easier to get and collect than more expensive games u may see a larger player base. th eonly problem i could see is that to keep players into the game companies would need to commmit to the game whole heartedly meaning constant releases of sets and constant events for the game. yugioh used to do a great job witht his and .. vs system i believe did to. oh and wow.

[Tokimo]

An interesting note: I've been looking around it seems that indeed the profit on a split up booster pack is around $2-3 (from the wholesale cost of somewhere around $2 or $2.5). So a company that doubled the price of the cards in single form might manage to do very well (as long as the prices were fluid and didn't sell all cards for the same low fixed price, at which point people would just skip the so-so cards and only buy the good ones).