Psychological pricing vs Float Pricing

What is Psychological Pricing?

Psychological pricing or price ending or charm pricing is a marketing practice based on the theory that certain prices have a psychological impact. The retail prices are often expressed as "odd prices": a little less than a round number, e.g. $19.99 or £2.98. Consumers tend to perceive “odd prices” as being significantly lower than they actually are, tending to round to the next lowest monetary unit. Thus, prices such as $1.99 is associated with spending $1 rather than $2. The theory that drives this is that lower pricing such as this institutes greater demand than if consumers were perfectly rational. Psychological pricing is one cause of price points. (Source)

This Pricing does not only gives the false idea that something is cheaper than normal but also means your will be undercutting competition that are selling a Magic Online card for the "same" (0.01 more) price. This also means that your bot will be listed first on wikiprice when sorting by price and so on.

(Example of Psycological pricing on a well known bot chain, Buy on left, Sell on right.)

This sounds like a straight foward better option when it comes to pricing cards, but there are many situations where "float pricing" can be used in your advantage; Specially on Magic Online.

Float Pricing

Float pricing is a pricing method that takes advantage of the credit system in Magic the Gathering:Online. Pricing a card at 15.01 will benefit a regular customer with saved credit (against a newcomer) as they are likely to be able to take the card for just 15 Event Tickets (plus 1 cent credit). The main advantage of this are the extra sales you will make with this technique with new customers and the reduced amount of "raiding" trades. The same can be done to buying prices (ending on .99).

The way this method helps against raiding is quite simple. If a card is worth between $11.75 and 12.25 and you have it priced at 11, the chances are that you will sell it very quickly to a non regular customer for 11 that will never come back. Having that card at 11.01 means that you will either sell it to a regular customer for 11 Event tickets (while a raider with no saved credits wouldn't take it); or, with a bit of luck, will result in a trade like the one I had bellow last month. 

(on this example you can see one of the big advantages of the float pricing method)

While the trade above was happening I was lucky enough to watch the whole process. The Customer started by picking up the Polukranos, World Eater card, which I had manually priced at 11.01 Event Tickets.

on this specific day that card value spiked up to over 13 Event Tickets

 The Customer had no credits so the bot quoted 45 tix (saving 0.96 credit). If the card was priced at 11.00 the trade would be over within seconds and this person would probably never use my bots again unless he found another great deal in the future.

What happened was completely the opposite to the typical "raiding trade", the customer after a minute or two, started picking other cards trying to round things up to 45.0 so he wouldn't leave 0.96 credit. All the other cards he needed were worth between $2 and $5, meaning that the end result would never be near the 45.0 mark.

On the end this Customer ended up picking up all his needs from my bot resulting in a overall small profit (even though the Polukranos, World Eater were sold quite under the fair price). 

Needless to say that all the other bots that sold the card via "psychological pricing" at 10.99 and even at 11.99 on that day, made a worse deal than me selling this whole package.

This person is now a regular happy Customer... :D

Please comment or share your success stories!

Bad Bots - Final

As we wrap up this series on bad bot behavior, the nit-pickers have complained mightily.  After all, they state, Albert writes Library and he does not program the bot to cheat, short-change or otherwise rip off the players, or his customers, us bot owners.  One could counter that we have access to a configuration menu and otherwise have full control over bot operations and thus, we could program the bot to behave badly.

But all this misses the point.  All this represents is a symptom of something larger, greed.

What is greed?  The movie Wall Street proclaims that Greed is good.  Yet the Bible tells us that greed is one of the seven deadly sins.  So which is it?  To paraphrase a certain former President, it all depends on what the definition of the word is.

Some people have equated the term profit for greed.  They’ll argue that desiring any more than you consume is greedy and thus selfish. 

But careful study of history and economic systems tell us that the pursuit of profits is what lead the advances of the past 200 years.   Pursuit of profits is what enabled Steve Jobs to create devices that many people would want even though few people even conceived of such devices when the Apple Founder dreamed of them.

One can pursue profits ethically or unethically.  Unethical pursuits of profits have abounded throughout history.  Whether it is misrepresenting the amount of cards in your bot inventory or altering the credits your customer has, being unethical is one trait few people can legitimately justify.  Don’t do it.

Shady Dealings

In today’s article I’d like to point out a few things you should never do with your online card trading business. It seems to have become common practice these days to use the classified in many shady ways to deceive and cheat potential customers. While it might get you a few extra trades in the short run you will end up alienating the community and gain a reputation as a bad dealer.

The Human Bot

The first and most frequent thing I notice in terms of bot owners abusing the classifieds is setting up a classified message that includes the word “Human” in an attempt to deceive players who prefer to deal with other players.  When building a classified message it’s important to include certain key words that individuals search frequently so that you’ll get noticed, but lying to a potential customer and doing so blatantly is going to do a considerable amount of damage to your reputation as a dealer. Nothing sets me on fire as a buyer quite like searching for a card and seeing a score of bots who even include bot in their username advertising that they are humans buying or selling a card.

Spamming Classifieds

Another popular shady tactic that many people have turned to is polluting search classified search results with dozens of bots all buying chase rares with the same classified message. For example you search for Sphinx’s Revelation and seeing GenericBot1, GenericBot2 all the way up to GenericBot41 all with the same classified message saying they will pay a modest price. 

This clouds searches with dozens of results and make sorting through the classifieds for someone actually selling a card a difficult task to achieve. Being the most obnoxious person in the room isn't the best approach to making a sale.

Deceitful Advertisement

I’ve encountered frequently bots that advertise they are selling a card in a classified ad but do not actually have the card to sell. This can be very frustrating because it wastes their time as well as wastes valuable trade time your bot may have with someone who wants what you have instead of what you claimed to have had. On top of that your reputation can be tarnished as easily as a single bad experience and having a customer open a trade expecting to make a purchase to find out you are out of stock (or were lying entirely) will make a very sour affair.

Likewise, Advertising at a price that you aren’t selling at is a great way to turn people away from your service. On several occasions I have seen a bot advertising a sale price of 1 ticket when in reality the card when selected costs a ticket and change. It may seem like a great idea to get people in the door but $1.00 at the door can incite a lot of confusion and aggression from customers who feel cheated when it suddenly costs $1.99 at the register.

In For The Long Haul

If you are playing the short game you may scrape up a few bucks with dirty tricks and a disregard for your reputation. For those of us in it for the long haul dodgy methods of making sales can ultimately cost you more than they are worth. Weigh your decisions heavily and remember that repeat customers are the heart of your business.

Future-Proofing: Surviving the Apocalypse

If you are reading this today, then we have survived the 12/12/12 apocalypse that was scheduled for today.  (Did anyone have any doubts about it?)  But in our continuing series of future-proofing, let me talk about an apocalypse of a different kind…  instead of a catastrophic event affecting the world, how about an event which affects just you?

Let’s look at how traditional business owners generally operate: The owner spends the first three (3) to five (5) years doing virtually every aspect of their budding business.  Oh, they may hire some help to ease the load but the owner does everything of consequence.  They rarely take a day off, much less do anything like take a real vacation.  All this work ensues a greater possibility of survival for a fledgling business.

After five years or so, the owner is burned out by all the sleepless nights, the stress of growing a business and all the unexpected that occurs, the owner is convinced to hire someone to assist in managing the business.  This gives the owner a chance to take a much needed mental break and a vacation is taken.  Another added benefit is that the owner starts to take a day off here and there. 

When the business owner hires a manager who can run the business in the owner’s absence, this gives a level of stability to the business.  No longer can the business be disputed by an unexpected event because the owner is nowhere to be found.  The manager can handle minor situations.  This is a good thing.

We bot owners need to look at what we do as running a business.  Most of us have contingency plans on how to run our bots should a hard drive crash or a motherboard burns out.  If we use virtual machines, we have backups of their configuration so we can get a bot back up and running quickly.  Some of us even have backup computers just in case.

But what about YOU?  What if you were unable to manage your bots for an extended period of time?  What would happen?  The bots are designed to run 24/7 with minimal interaction so the bots can run fine for the short term.  But once you get past a week, little quirks start to appear.  As much as Windows was designed to be a stable operating system, in my experience, Windows likes to be restarted once a week.

What about changing the settings?  The bot is not able to select cards from a new set automatically.  (Nor should it as we all run our bots differently)  What about changing advertising messages?  (Would you do business with a bot where the classified message reads “Now selling Zendikar!”?)

So what do I do?  My wife checks on the bots status and can restart the bots when Windows has a hiccup.  She knows how to start and stop the VM’s that the bots are on.  But doing this post made me realize that she should know how to change the messages, how to have the bots select cards based the business model I use so when a new set comes out, she can do it if I am unable to.

In the business world, this kind of planning is called long term contingency or a survival plan.  My wife is part of my survival plan.  What is yours?

Future-Proofing: Intellectual Property (Part 4 of 3)

From the comment section:

Milagre:  Hi. I follow your blog and i was wondering could the legal action against WOTC be connected to the ebay ban on MTGO card sales?

The short answer is no.  But I suspect you’d like a detailed explanation.

[1] Wildcat’s lawsuit is based on a patent for online card games.  The Ebay ban is on digital objects.  The Ebay ban is not just limited to tickets or online cards.  If you look on Ebay, you will not find items for World of Warcraft, Diablo 3, Guild Wars 2, or any other online game.  (You’ll find the games themselves, but not any of the items found inside the game.)

[2] I did a series on Ebay auctions a couple of months ago, http://mtgolibrary.blogspot.com/2012/10/ebay-auctions-part-3-of-3.html where I postulated that Ebay was taking down these auctions as protection against copyright and patent lawsuits.
[3] I suspect there is more to Ebay banning digital items than simply copyright violation protection.  What could that be?  Sales tax.  Let me explain.

Here in the United States, there is talk of the fiscal cliff and how the US will fall into it if some deal is not made.  As we all know, there are two (2) ways to balance a budget: reduce spending (Not likely with the re-election of President Obama) or increase revenue.  This means raising taxes, seeking out revenue enhancements, increased fees, or whatever politicians wish to call them.  It means more money into the Treasury.

One of the ways that has been proposed is an Internet sales tax.  This has cropped up every now and then so the idea isn’t new.  It is just that there is so much opposition that it is politically unpopular and no politician who wishes to be re-elected will vote for this. 

But there are other ways such a tax could be levied.  One of the proposals was on the sale of digital items.  As you can imagine, this has far-reaching implications, even for us.  Diablo 3 was to have a real money auction house; where you could purchase digital items for real world cash.  As controversial as this is, Blizzard had plans to do this.  But even the mighty Blizzard buckled at the legal quagmire that would ensue.  For instance, is a digital item new or used?  I don’t mean just in the pedestrian way, but in the legal sense of when the tax was imposed on the item.
These and many more questions need to be answered and will eventually be addressed by the US Supreme Court.  But this is many years away and will not affect us bot owners for the foreseeable future.

Future-Proofing: Intellectual Property (Part 3 of 3)

I began this series with an introduction to patent law and last time I discussed the nuisance of patent trolls, companies which exist solely to get patents and sue anyone else who makes a work which violates their monopolistic idea that they are just squatting on.

MtgoSoS did a post about Wildcat’s suit against WotC and makes the claim that nothing major is going to come from it.  Let’s analyze that claim.

Wildcat has a patent for online electronic card games.  So this would mean that WotC could easily have MTG in paper form, but could not have it in online form.

But doesn’t having a patent imply you actually have to do something with it?  Wildcat has had this patent for over a decade now and has no products or services to show for it.  Shouldn’t a court take that into consideration and toss out this lawsuit over revoke the applicable patent?

Sadly though, Wildcat will simply make the claim that they are “still in development” of their Ultimate Electronic Card Game.  They’ll say, look at Diablo 3.  That took over eight years to make that.  How long was Starcraft 2 in development?  This is not just limited to Blizzard either.  Duke Nuk’em Forever was in development for fifteen years. 

Now, to many of us, we can see the flaws in that logic.  But to a judge who is not well versed in technology or the subtleties and nuances of game development, those arguments will not hold much weight.

So what normally does happen in these cases?  It depends on the target.  Smaller companies or those with inexperienced legal representation tend to be forced to pay, which usually means bankruptcy.  Since it typically costs at least $1,500,000 to defend such a suit, some companies will negotiate a settlement.  Larger companies with some backbone in management will fight these suits.  They figure that you can always negotiate a settlement based on how the trial goes.  Plus, larger companies can hire better legal representation which helps their cause in court.

So what is the long term prognosis?  WotC may win in a trial.  Wildcat may win in a trial.  Other card game makers may join this suit as this patent is the only reason why they have not made such a game.  (Did you ever wonder why there are no other card games online?)  But typically a settlement is reached.  Terms of such agreements are confidential.  If WotC has to pay a substantial amount to Wildcat, players may have to pay extra for their booster packs. 

But the bottom line, it is unlikely that MTGO is going to be shut down because of this lawsuit; and that is good news for us bot owners.  Knowing that MTGO is going to be around and alive and kicking makes it easier to do what we do.

http://www.cardboardconnection.com/news/law-of-cards-wildcat-files-lawsuit-against-wizards-of-the-coast
http://www.google.com/patents?id=tEIfAAAAEBAJ&printsec=abstract&zoom=4#v=onepage&q&f=true
http://www.patentarcade.com/

Future-Proofing: Intellectual Property (Part 2 of 3)

Last time I gave an introduction to copyrights and patents.  It is through this mechanism that many advances in technology and culture are made because through this encourages people to take risks and profit from ideas which prove beneficial to mankind.

But patents are not as objective as other laws, like theft and murder, which are much more objective.  There exists a lot of “wiggle room” when it comes to defining what is a violation of a patent and what is not.  Here is where the lawyers and law-makers work their magic.

In the United States, patent law and intellectual property laws in general, are considered too strict.  What I mean by this is that it is considered too easy to sue a company for violations.  This has created a cottage industry where companies exist, which never make a product or offer a service.  But these companies will rent out a small office space, put a name plate on the door, but are “never open for business”.  They hire no employees.  But they are extremely willing to sue someone else for alleged patent violations.  As one of their slogans puts it, “Look at many ideas.  Pick an outstanding one.  Patent it.  Commercialize it.  Reap the rewards.”  They are known as Patent Trolls.

Note that making a product or making significant improvements to an existing product is never mentioned.  Just patent an idea, and wait until someone else independently does something with this idea , the patent troll will sue.

This has led to some pretty silly lawsuits over the years, but because patent law is this way, these suits have merit.  Namco has a patent which prevents playing mini-games during a loading screen.  Simpson’s Road Rage had to change an arrow which points where you should go in a driving game to a finger because the arrow violated a patent. 

http://www.gamasutra.com/view/feature/130122/the_trouble_with_patents.php?print=1

Clearly, this kind of patent abuse is not what Thomas Jefferson and others had in mind when they founded the patent laws.  Next time, I’ll wrap up by going into the Wildcat lawsuit against WotC in detail.

Future-Proofing: Intellectual Property (Part 1 of 3)

As we continue our series on Future-proofing, I thought I would take this opportunity to look into the recent blog post by mtgoSoS about WotC being sued by Wildcat Intellectual Property Holdings and do a little research and throw in what little I know about such topics.

First off, the name of company is a little weird. “Intellectual Property Holdings”.  A quick internet search revealed a plethora of lawsuits that this company has filed against other companies, not just WotC.

But first, we need a little background.  When normal people think of copyrights and patents, we think of artists and inventors who make something and want protection from vultures who simply want to copy their work.  For example, MGM/United Artists holds the rights for the James Bond series.  What copyright law is intended to do is to prevent me from making a Single-O 9, who works for Special Branch in Scotland Yard or Interpol.  This makes sense to most people.

The same thing applies for products.  If I make a device that turns sludge into potable water, I should be allowed to profit from it.  This is an important point.  The reason that patents were permitted was to give incentive for people to create new products that over time will improve all of mankind.  This is one of the main reasons why the United States went from a fledgling nation to a Superpower in a century and a half.  Contrary to what many people and world leaders believe, profits are not evil.

Generally speaking, countries respect patents from other countries.  So that smartphone I create and patent in the United States will be respected in Europe.  However, not all countries respect patents and copyrights.  When Mitt Romney stated that he would get tough on China, he was referring to the well-known fact that China routinely ignores other countries’ patents.  Basically whenever a new product is introduced, you can find a clone of that same product, made by a Chinese company, on the streets of China for pennies on the dollar within weeks of the product’s release.  Even sooner if that product was made in China.

So how does this affect us?  I’ll get into those details next time.

Greed (Part 1 of 3)

President Obama has stated that corporate greed is the root of the economic collapse of 2008. 

The US Banking Regulatory agency has accused banks of causing the housing crisis by charging unfair interest rates and using insidious tactics of putting people into homes that they could never hope to pay back, all for reasons of greed.

Big Pharma has been accused of  using advertising to exploit illness for greedy profits.

Superstar athletes are accused of being greedy when holding out for a larger contract when the offered contract is tens of millions of dollars.

Big Tobacco is accused of addicting children to nicotine, all for greed.

Population control advocates accuse parents of being selfishly greedy if the parents have three (3) or more children.

US Taxpayers accuse those who are protesting the expiration of 99 weeks of unemployment benefits of being greedy.

Bot owners are considered a scourge on MTGO, all because they are greedy.

If one scours the news headlines on a regular basis, you’ll find stories in which one person or group will accuse another person or group of greed.

This is no trifle charge either.  Greed is listed in the Bible as one of the seven (7) deadly sins.  Most people will say that greed is bad.  But what is greed anyway?

According to Merriam-Webster:
Greed: a selfish and excessive desire for more of something (as money) than is needed
http://www.merriam-webster.com/dictionary/greed

So how does this affect us bot owners?  I’ll discuss that next time.