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TOPIC: Token Cost Discussion

Token Cost Discussion 1 month 6 days ago #13

Matthew Hayward wrote: Doubtful - in fact tokens may get cheaper (it has happened before - 10 packs used to be $10), addition of dragon orbs made tokens “cheaper” (or at least you get more for the same price), adding an option to get 2 more PyPs in exchange for the onyx c/ic/r set made tokens “cheaper” in the same way.

TD would know it is time to raise prices when 8k auctions are routinely selling out their pieces for 10k or more (or one can see that the value of their components is up there). Another sign would be that they run out of tokens much sooner than expected.

Raising prices when that is not the case seems likely to reduce demand to me.

In any case - if td is seeing their customer numbers rise and their token sales increase they may have no reason to even contemplate it.


It's faulty logic to assume that if demand were higher that auctions would generate $10K+. Everyone know more auctions are coming, when prices go above a certain point, you stop bidding and wait for the next one. We've seen comments backing that like, "PYP's are over $110 in that auction - I'll get into the next one..." If you don't get what you want at the price you want, you wait.

If anything, the vast increase in the number of auctions is proof the demand is there. If there wasn't, by the same logic, these auctions wouldn't get to the $8K level. If we only had 5-6 (or fewer) auctions per year like 5 or 6 years ago, you definitely would see auctions going up to $10K. Instead, we have 25+ auctions being run per year and people outright saying they don't buy $250 packs anymore because of the auctions.

9 years without a price increase is a lot.

Even with improve manufacturing capabilities reducing the cost to build, other costs are relatively flat such as raw materials and international shipping. The average annual increase in costs to manufacture in China (mainly due to improving wages there) over the past 3 years (without adjusting for inflation) is 5% per year (it was flat for a while before that). Without tariffs, the cost of the average manufacturer in China has gone up in 2019 by as much as 10% (tariffs impact an entire supply chain so even exempted industries are hit in other ways). Assuming TD has a contract with their supplier at a locked in rate - after that expires, they'll have to deal with the new rates (I'd be surprised if TD was able to secure more than a 1 or 2 year contract with fixed pricing terms).

I would expect to see costs go up. If anything, the best place to start is with the $8K deals - raising that to promote more people getting the $250 deals individually (increasing TD's margins). I'd work my way down to the smallest orders (i.e. newest players) last to help drive growth.

The reality is that we'd still see 20+ auctions at $10K price points but PYP prices would jump up to $150 or so (or people would do auctions for less than the full cost). The end result would be TD earning more money (and hopefully not raising the prices on the starter level purchases for a while because of it).

Fred
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Token Cost Discussion 1 month 5 days ago #14

Fred K wrote: If anything, the vast increase in the number of auctions is proof the demand is there. If there wasn't, by the same logic, these auctions wouldn't get to the $8K level. If we only had 5-6 (or fewer) auctions per year like 5 or 6 years ago, you definitely would see auctions going up to $10K. Instead, we have 25+ auctions being run per year and people outright saying they don't buy $250 packs anymore because of the auctions.


Increased auctions demonstrates heavy demand for $110 PYPs, but this doesn't mean the same level of demand would exist for $150 PYPs, or $250 packs.

I personally have never bought a $250 pack; I went from spending $0 extra on tokens to buying one or two individual tokens on the secondary market to buying $110-ish PYPs in auctions, which is a substantial increase in the amount of my money I spend on TD and therefore great news for TDA. Thanks, auctions!

Some people would keep buying and spend more money if the price jumped. Others might sell off their tokens and leave the game. You have to be careful how quickly you boil a frog if you want it to stay in the pot. (Ribbit.)

We've seen this already with ticket prices; the difference is that the ticket price is necessarily tied to the real-life actual cost of putting on an event, whereas the price of a token bears almost no relation to the cost of its manufacture. Just like the price of soda at a restaurant bears almost no relation to the cost of producing the soda, which is why they can offer free refills.

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Token Cost Discussion 1 month 5 days ago #15

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David Zych wrote: We've seen this already with ticket prices; the difference is that the ticket price is necessarily tied to the real-life actual cost of putting on an event, whereas the price of a token bears almost no relation to the cost of its manufacture. Just like the price of soda at a restaurant bears almost no relation to the cost of producing the soda, which is why they can offer free refills.


Except that tokens sales have always been said to help support the events, which is why they have been such great rewards for purchasing tokens. We have been told time and time again that without token sales TD would not be where it is today. So I don't know that you can separate the two as easily as that. Without the Dungeons there would be little to no desire for tokens. Without tokens we wouldn't be where we are today. So shifting more of the event cost to token sales wouldn't be a surprise.

NOT saying that is going to help just that the relationship between the two is more complicated. Lastly tariffs on gaming supplies will have a direct cost on the tokens for Jeff and Co. He can choose to eat that additional cost (less profits or less to throw at events) or pass it on to token buyers or ticket buyers or both.
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Token Cost Discussion 1 month 5 days ago #16

Not everything in an auction would go up in price and some may drop.

If everything but PYPs balance out, then in order to absorb a $2k increase PYPs would be around $150-$170 with desirable onxy URs averaging around $200.

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Last edit: by edwin.

Token Cost Discussion 1 month 5 days ago #17

If the pricing went to $10K, break even auctions would require $150 PYPs if the pricing on nothing else went up in the auction. Edwin is correct that PYP prices wouldn't necessarily go up to eat the entirety of the difference. If you assume an inflation of 10% on trade goods, etc - the PYP increases would only be half or less of that increase. Ultimately, I don't think it would have a big negative effect. My guess is you'd see maybe 5 less per year as people running them would likely have to be willing to eat $1K to run one from time to time if their timing isn't good on when to run it. The first auction or two might also not succeed if the person holding it is waiting for it to be fully funded before committing.

I agree that massive price increases would be bad on tokens - a 20% increase on just the largest section of orders doesn't fit that description. It's common now for companies to just pass the price increases they see to their customers (especially in a trade war). Yes, you innovate to reduce costs but there is a limit to how far you can go. Jeff hasn't increased token prices in, at least, 9 years. What other company do you know that has a substantially similar product at the same cost? In this case, a product that keeps improving in overall quality and functionality (adding RFID for security and game-effects, better art and printing, etc.) (I'm both looking forward to and dreading how RFID can make our sliding interact with the boards - I'm envisioning a baddie using the shield spell, the board detecting the RFID tag and my slide bouncing off to the side rather than to that 20 it was destined for...)

Tokens are where TD makes it's money, not the shows (even after increased ticket prices). Just the space for TD at GenCon is an ungodly amount of money - add actual staff, cost to design and do initial building of the sets, shipping, and 100 volunteers with lodging, etc and you have a good place to introduce people to the game but you'd be hard pressed to charge enough to earn any real profit. It is, however, a great place to get them hooked on the real market - buying tokens.

David - you are spending $110/year on PYP's now. That's great. Would $130 or $140 really make you quit the game? Alternately, if PYPs were $160 or $170 and you get a bunch of other tokens and a shot at a golden ticket - wouldn't a $250 order look more appealing? As-is, you made it clear you'd never buy a $250 - something the auction markets has reinforced. Having that come closer to parity between PYPs and the $250 orders is probably a good thing.

Ironically, the biggest challenge I think TD will see in selling tokens is that combinations of rare tokens are extremely competitive with UR builds. You can have a +10/+10 AC 25 fighter with just rares. Next year you will be able to have several paths to that or more with just rares or lower. The power creep at the rare level is a definite thing (whetstone plus the bliss hammer being better than most 1 handed weapons is very strange).

I don't know if pricing will be going up but would actually be worried for Jeff if it didn't. I just encourage everyone to be supportive if it happens.

Fred
What do we want? Evidence based science! When do we want it? After peer review!

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Token Cost Discussion 1 month 5 days ago #18

$250 order would have to increase to $312.50. Otherwise, I would just make 32 $250 orders, get the bonuses and do an $8K auction. As it is I eat around $700 per auction to make an $8K viable. Even the last couple of auctions the auctioneers ate around $500 per auction. Another $1K makes it dead on arrival.

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Token Cost Discussion 1 month 5 days ago #19

Fred K wrote:

Matthew Hayward wrote: Doubtful - in fact tokens may get cheaper (it has happened before - 10 packs used to be $10), addition of dragon orbs made tokens “cheaper” (or at least you get more for the same price), adding an option to get 2 more PyPs in exchange for the onyx c/ic/r set made tokens “cheaper” in the same way.

TD would know it is time to raise prices when 8k auctions are routinely selling out their pieces for 10k or more (or one can see that the value of their components is up there). Another sign would be that they run out of tokens much sooner than expected.

Raising prices when that is not the case seems likely to reduce demand to me.

In any case - if td is seeing their customer numbers rise and their token sales increase they may have no reason to even contemplate it.


It's faulty logic to assume that if demand were higher that auctions would generate $10K+.


It may be. But your comment is a complete non sequitur.

My statement was:
( IF: (Auctions of 8k order items or their secondary market valuations) > $10,000
THEN: TD would have strong evidence they should raise prices. )
AND
( IF: Demand increased to the point of rapid token stock outs
THEN: TD would have strong evidence they should raise prices )

Your statement is that: It is faulty logic to assume that:
IF: Demand were higher than it is now.
THEN: (Auctions of 8k order items or their secondary market valuations) > $10,000

These two statements have nothing to do with one another, in a logical sense. The can both be true, or both be false, or either can be true and the other false independently of one another.

If anything, the vast increase in the number of auctions is proof the demand is there.


I pointed this out elsewhere, but this "vast increase in the number of auctions" you refer to doesn't demonstrate anything substantial about token demand, because they are simply displacing prior methods of selling to the secondary market.

It used to be, say 4+ years ago, that various token resellers would offer various kinds of fixed price sales of URs, maybe Teeth and stuff, and then make orders. For over 10 years this was how UR demand and supply met on the forums. Then over a few years 2-3 of the main people who did that stopped, and also auctions were introduced.

Now auctions run more than they did when they started.

However it's not even clear to me there have been more 2019 PyPs sold in the forums than there were in say, 2015, when there were exactly zero 8k auctions.

9 years without a price increase is a lot.


9 years without a price change is a lot. In the last 9 years 3 additional incentives have been added to the 8k orders (Dragon Orbs, +2 PyPs if you skip the Onyx Set, Patron Pins and access).

I'm not saying prices won't/can't go up. I'm saying that if you insist prices have to go up soon, I'm not sure what you could possibly be basing that on, when the only historical data points we have are of TD increasing the contents of 8k orders.

Even with improve manufacturing capabilities reducing the cost to build, other costs are relatively flat such as raw materials and international shipping. The average annual increase in costs to manufacture in China (mainly due to improving wages there) over the past 3 years (without adjusting for inflation) is 5% per year (it was flat for a while before that). Without tariffs, the cost of the average manufacturer in China has gone up in 2019 by as much as 10% (tariffs impact an entire supply chain so even exempted industries are hit in other ways). Assuming TD has a contract with their supplier at a locked in rate - after that expires, they'll have to deal with the new rates (I'd be surprised if TD was able to secure more than a 1 or 2 year contract with fixed pricing terms).


Have you considered the possibility that TDs cost on these tokens might be like, 8 cents per token? And if that's so, all the increases you mention above would only push the cost per token up to 9 or 10 cents per token plus whatever tariff impact you imagine?

Have you also considered that by TD offering "super condensed" order they have radically reduced their costs on some 8k orders to a small percentage of what they were a few years ago? (Non-condensed ~10,000 tokens, condensed ~3,000 tokens, Super Condensed ~600 tokens)

In other words: it's possible all the concerns above about 5%-10% increase in manufacturing costs and tariffs are completely trivial to TDs operating expenses, and would be dwarfed by something like a hypothetical decision by TD to offer Chipotle catered lunch for their staff on Fridays.

I'm not saying the costs of tokens necessarily are trivial: TD hasn't shared their costs with us. But given that poker chips retail for around 10 cents each its plausible that a ~10% change in TDs cost of tokens is not relevant to TDs operating expenses.

I would expect to see costs go up. If anything, the best place to start is with the $8K deals - raising that to promote more people getting the $250 deals individually (increasing TD's margins). I'd work my way down to the smallest orders (i.e. newest players) last to help drive growth.


I'll make you a bet, for one 2021 PyP selection:

Matt pays Fred if: TD increases the per-pack cost of tokens in the 2020, or 2021 token season, or if the 8k orders are discontinued and replaced by a higher price point, or if 8k orders start including fewer than 960 token 10 packs.

Fred pays Matt if: TD offers additional, substantial incentives Fred agrees are worth more than $50, or which are shown to sell in auction for more than $50, to 8k orders or preorders in the 2020 or 2021 token season, which are either entirely new or substantial upgrades from prior offerings.

No one pays if both things happen or neither happens.

Loser pays shipping.

Deal?

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Last edit: by Matthew Hayward.

Token Cost Discussion 1 month 5 days ago #20

edwin wrote: $250 order would have to increase to $312.50. Otherwise, I would just make 32 $250 orders, get the bonuses and do an $8K auction. As it is I eat around $700 per auction to make an $8K viable. Even the last couple of auctions the auctioneers ate around $500 per auction. Another $1K makes it dead on arrival.


By 'ate around $500', you mean they paid about $500 for 9 random current-year URs with a chance for a 10th?
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Token Cost Discussion 1 month 5 days ago #21

kurtreznor wrote:

edwin wrote: $250 order would have to increase to $312.50. Otherwise, I would just make 32 $250 orders, get the bonuses and do an $8K auction. As it is I eat around $700 per auction to make an $8K viable. Even the last couple of auctions the auctioneers ate around $500 per auction. Another $1K makes it dead on arrival.


By 'ate around $500', you mean they paid about $500 for 9 random current-year URs with a chance for a 10th?


More than once you add in losses in shipping cost. If they sell the URs it is gamble it can be a good set, bad set or mixed. Plus the cost of time to run auction, repackage, etc.

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Token Cost Discussion 1 month 5 days ago #22

Matthew Hayward wrote:

Fred K wrote:

Matthew Hayward wrote: Doubtful - in fact tokens may get cheaper (it has happened before - 10 packs used to be $10), addition of dragon orbs made tokens “cheaper” (or at least you get more for the same price), adding an option to get 2 more PyPs in exchange for the onyx c/ic/r set made tokens “cheaper” in the same way.

TD would know it is time to raise prices when 8k auctions are routinely selling out their pieces for 10k or more (or one can see that the value of their components is up there). Another sign would be that they run out of tokens much sooner than expected.

Raising prices when that is not the case seems likely to reduce demand to me.

In any case - if td is seeing their customer numbers rise and their token sales increase they may have no reason to even contemplate it.


It's faulty logic to assume that if demand were higher that auctions would generate $10K+.


It may be. But your comment is a complete non sequitur.

My statement was:
( IF: (Auctions of 8k order items or their secondary market valuations) > $10,000
THEN: TD would have strong evidence they should raise prices. )
AND
( IF: Demand increased to the point of rapid token stock outs
THEN: TD would have strong evidence they should raise prices )

Your statement is that: It is faulty logic to assume that:
IF: Demand were higher than it is now.
THEN: (Auctions of 8k order items or their secondary market valuations) > $10,000

These two statements have nothing to do with one another, in a logical sense. The can both be true, or both be false, or either can be true and the other false independently of one another.

If anything, the vast increase in the number of auctions is proof the demand is there.


I pointed this out elsewhere, but this "vast increase in the number of auctions" you refer to doesn't demonstrate what you think it does, because they are simply displacing prior methods of selling to the secondary market.

It used to be, say 4+ years ago, that various token resellers would offer various kinds of fixed price sales of URs, maybe Teeth and stuff, and then make orders. For over 10 years this was how UR demand and supply met on the forums. Then over a few years 2-3 of the main people who did that stopped, and also auctions were introduced.

Now auctions run more than they did when they started.

However it's not even clear to me there have been more 2019 PyPs sold in the forums than there were in say, 2015, when there were exactly zero 8k auctions.

9 years without a price increase is a lot.


9 years without a price change is a lot. In the last 9 years 3 additional incentives have been added to the 8k orders (Dragon Orbs, +2 PyPs if you skip the Onyx Set, Patron Pins and access).

I'm not saying prices won't/can't go up. I'm saying that if you insist prices have to go up soon, I'm not sure what you could possibly be basing that on, when the only historical data points we have are of TD increasing the contents of 8k orders.

Even with improve manufacturing capabilities reducing the cost to build, other costs are relatively flat such as raw materials and international shipping. The average annual increase in costs to manufacture in China (mainly due to improving wages there) over the past 3 years (without adjusting for inflation) is 5% per year (it was flat for a while before that). Without tariffs, the cost of the average manufacturer in China has gone up in 2019 by as much as 10% (tariffs impact an entire supply chain so even exempted industries are hit in other ways). Assuming TD has a contract with their supplier at a locked in rate - after that expires, they'll have to deal with the new rates (I'd be surprised if TD was able to secure more than a 1 or 2 year contract with fixed pricing terms).


Have you considered the possibility that TDs cost on these tokens might be like, 8 cents per token? And if that's so, all the increases you mention above could push their cost per token all the way up to 9.24 cents per token?

Have you also considered that by TD offering "super condensed" order they have radically reduced their costs on those 8k orders to like, 10% of what they were two years ago?

In other words, it's possible all the concerns above about 5% increases in manufacturing costs and 10% tariffs are completely trivial to TDs operating expenses, and would be dwarfed by something like a hypothetical decision by TD to offer a Chipotle catered at lunch for their staff on Fridays.

I'm not saying they necessarily are, trivial: TD hasn't shared their costs with us. Given that poker chips retail for around 10 cents each its plausible that these concerns are trivial.

I would expect to see costs go up. If anything, the best place to start is with the $8K deals - raising that to promote more people getting the $250 deals individually (increasing TD's margins). I'd work my way down to the smallest orders (i.e. newest players) last to help drive growth.


I'll make you a bet, 1 2021 PyP stakes:

Matt pays Fred if TD increases the per-pack cost of tokens in the 2020, or 2021 year, or if the 8k orders are discontinued and replaced by a higher price point, or if 8k orders start including fewer than 960 token 10 packs.

Fred pays Matt if TD offers additional, substantial incentives Fred agrees are worth more than $50 to 8k orders or preorders in the 2020 or 2021 year, which are either entirely new or substantial upgrades from prior offerings.

No one pays if both things happen or neither happens.

Loser pays shipping.

Deal?


I dont like this bet as is, but I bet we could find a bet we both like.
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Token Cost Discussion 1 month 5 days ago #23

kurtreznor wrote:

edwin wrote: $250 order would have to increase to $312.50. Otherwise, I would just make 32 $250 orders, get the bonuses and do an $8K auction. As it is I eat around $700 per auction to make an $8K viable. Even the last couple of auctions the auctioneers ate around $500 per auction. Another $1K makes it dead on arrival.


By 'ate around $500', you mean they paid about $500 for 9 random current-year URs with a chance for a 10th?


I bet that is what they meant
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Token Cost Discussion 1 month 5 days ago #24

Wade Schwendemann wrote: ...
I dont like this bet as is, but I bet we could find a bet we both like.


Sorry - bet only good for Fred.

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