TOPIC: Token Cost Discussion

For my next auction I would be happy to sell folks the random URs for $100 each sight unseen to help close the cost gap. Any takers?

edwin wrote: For my next auction I would be happy to sell folks the random URs for $100 each sight unseen to help close the cost gap. Any takers?

If auctions are coming out at around 7500 to 7600, and there are 9.6 random URs, I would bid 48 for a random ur, sight unseen.

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 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 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?

You made a lot of the points I was going to.

One other one - now that R&D costs are spread across more cons, TDs profit should be going up on those fixed costs. I don't expect to see a token cost increase any time soon.

Endgame wrote: One other one - now that R&D costs are spread across more cons, TDs profit should be going up on those fixed costs. I don't expect to see a token cost increase any time soon.

R&D would be fixed. However there is an assumption that the other events are profitable or at least break even today. If they don’t the new cons are more costly until they hit that point. Which is fine for growing a business, but still that missing profit/proceeds may need to come from some where.

Endgame wrote:

edwin wrote: For my next auction I would be happy to sell folks the random URs for $100 each sight unseen to help close the cost gap. Any takers?

If auctions are coming out at around 7500 to 7600, and there are 9.6 random URs, I would bid 48 for a random ur, sight unseen.

I will bid 55 each on 2 of them.

Fred K wrote: 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.

I would like to see evidence of these claims. I have no idea what the basis for them is.

Is there some convention financial report that I'm unaware of?

I think it might matter on how the price increase was handled. If the price of token packs went up but the basic incentive structure stayed the same, I'm not sure the impact would be that great. For instance, maybe for $1K you'd get 90 packs instead of 120 packs, but you'd still get the 4 PYPs, Tooth, modules, etc.

If the price went up so that it took $1250 to get 120 packs, 4 PYPs, tooth, modules, etc, that would be more of an impact I think.

However, I'm not at all convinced that a price increase is imminent. Everything that has happened in the recent past is to make token purchases more appealing by adding more bonuses. Raising the prices on tokens would seem to be a reversal of recent history.

Arnold wrote:

Fred K wrote: 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.

I would like to see evidence of these claims. I have no idea what the basis for them is.

Is there some convention financial report that I'm unaware of?

I suspect not.

Also, Gen Con official reps have periodically come out and claimed they charge TD nothing for the space.

Subsequent to those claims there have been some back and forth between TD leadership and the Gen Con folks, because at least at the time TD had a special contract with Gen Con that apparently had some confidentiality terms. If you search the forums you can find it - Jeff from TD side, Marian from Gen Con.


TL:DR; Those who know aren't saying, but there is at least some reason to believe TD gets its Gen Con space for free, or in a heavily subsidized way (in general EOs at Gen Con get their space for free).

Fred K wrote: What other company do you know that has a substantially similar product at the same cost?

Many technology companies are offering superior products today at comparable prices or less to the products they offered ~10 years ago. Look at televisions for example.

Grocery store prices don't seem to have changed much - some things are more and some less than in 2009:

www.visualcapitalist.com/decade-grocery-prices/

I would think the relevant category here would be games and toys.

Can you make a compelling case that the cost of games and toys have increased substantially since 2009-10, with data? I think as this is a claim you are advancing, it would be good for you to support it.

Mike Steele wrote: I think it might matter on how the price increase was handled. If the price of token packs went up but the basic incentive structure stayed the same, I'm not sure the impact would be that great. For instance, maybe for $1K you'd get 90 packs instead of 120 packs, but you'd still get the 4 PYPs, Tooth, modules, etc.

If we do see a price increase I'd rather it be something like this. I don't know about anyone else, but I've become use to budgeting the same amount every year and would probably go down a pack level if they raised the level costs.

Brokkr wrote:

Mike Steele wrote: I think it might matter on how the price increase was handled. If the price of token packs went up but the basic incentive structure stayed the same, I'm not sure the impact would be that great. For instance, maybe for $1K you'd get 90 packs instead of 120 packs, but you'd still get the 4 PYPs, Tooth, modules, etc.

If we do see a price increase I'd rather it be something like this. I don't know about anyone else, but I've become use to budgeting the same amount every year and would probably go down a pack level if they raised the level costs.

Everyone is focusing on the PYPs. Slashing the number of packs in an order by 25% would mean 25% fewer random URs. And I recoup a lot of the cost of an 8k through selling trade goods and UC/Rs on eBay. Most people might not care, and I’d have to math when details are announced, but it might be the straw that causes me to retire. Margins are negative as it is.

And the idea that any changes to the 8k would not roll down to the $250 deal or the price of a ten-pack is naive. I know it’s fashionable to try to stick it to the “big guys” and assume everyone else will escape any consequences, but that’s just not how economics works.

Re tariffs: I don’t think that’s a factor. Even a 20% tariff on the cost (not price) of a ten-pack is no doubt negligible. Assuming Matthew’s $1/ten-pack is accurate, and from my independent research it seems reasonable, we’re talking maybe 2.5% of the price of an 8k, and it’s probably less than that (or could be). Packs can be cobbled together for zero material cost, “just” labor, from tokens sent in for transmute.

For condensed packs, it would be under 1% because trade tokens can be reused many many times, year after year.


TL;DR - the tariffs are irrelevant, assuming they even happen.

This is all conjecture. I have no insider knowledge about any of this. And none of this means TD can/will/should raise token prices (or the opposite)

EDIT - Clarification: the point of this whole diatribe is that a 20% tariff on imported tokens, in and of itself, would not justify a price jump of $2k on an 8k order as some are suggesting. More like $200, if that, because of the prevalence of condensed orders. The next postage increase will likely have a bigger impact.

kurtreznor wrote:

Endgame wrote:

edwin wrote: For my next auction I would be happy to sell folks the random URs for $100 each sight unseen to help close the cost gap. Any takers?

If auctions are coming out at around 7500 to 7600, and there are 9.6 random URs, I would bid 48 for a random ur, sight unseen.

I will bid 55 each on 2 of them.

That is significantly below what would be a breakeven point on my last auction. After postage losses, I netted $7,140 and this was after all GT were gone for $8K orders. So to breakeven I would need as I stated before $100 for each random UR.