Is Second Life impacted by inflation?

[Bree Giffen]

Has anyone noticed prices rising in SL or has it stayed about the same? I'm not constantly buying things in SL so I can't really tell if in-world prices are rising. As far as my purchasing, I've found that it's cheaper to buy things in SL now compared to buying things in real life. I think my SL purchasing has increased as I pull back from buying in real life. 

[Scylla Rhiadra]

Just now, Bree Giffen said:

Has anyone noticed prices rising in SL or has it stayed about the same? I'm not constantly buying things in SL so I can't really tell if in-world prices are rising. As far as my purchasing, I've found that it's cheaper to buy things in SL now compared to buying things in real life. I think my SL purchasing has increased as I pull back from buying in real life. 

I don't think there is any question that prices have risen generally in SL over the past couple of years. I used to think of L$250 as a standard price, give or take, for a single colour of a garment or hair style. Now, I expect to see L$300 or even L$350 for new items.

Counterbalancing that, of course, is the fact that older items almost never get marked up.

I'm assuming that's a reflection of RL inflation, but I don't really know.

[Love Zhaoying]

The world of Second Life gets bigger as they add islands, mainland..

Edited August 31, 2022 by Love Zhaoying
Is still 2D so not "inflated"

[diamond Marchant]

I really have not noticed inworld prices increases as the prices have always varied between creators for the same type of item. And the sales remain in the 50/60/75 Linden range. What concerns me more is the possibility of an across the board price increase for paid memberships. AWS has tended to lower their prices consistently since inception as IT equipment cost has benefitted from Moore's law. But these are weirdo times and those days maybe over or temporarily suspended.

[Nalates Urriah]

Simply because of the way things are sold in SL we won't see price changes similar to RL. Designers don't go back and change all the vending machines and marketplace entries. It is the new items being released where we will see prices go up.

Those developers that hire people will likely have to raise prices as the cost of labor goes up.

There is also an offsetting factor. As prices in RL go up and funds available for discretionary spending decreases we will likely see spending in SL go down. That decrease in demand may pull prices down. However, Bree makes a good point. It is cheaper to play in SL than in RL. So, we may see factors offsetting what we might expect.

Energy cost in France and Germany is rising at alarming rates. I hear energy cost in France has increased 1,000%... Reasonable sources are making the same report... so did the equivalent of a US$300/month utility bill actually go up to $3,000/month? If that is true, they would be turning off my electricity. I hear 20% to 40% of small businesses in the US are behind on their rent. That suggests they will soon close their doors. That is lots of people out of work.

I expect these things to impact SL.

As to whether prices have gone up or not... I find it hard to say. I may see a 'new' Addams Fat Pack that costs more but it also has more stuff in it. I see other new items that have less stuff and cost less. I find it hard to decide.

Edited August 31, 2022 by Nalates Urriah

[Ceka Cianci]

More than I'm willing to pay out anymore..

[Chic Aeon]

There is at least one creator that I noted has greatly "inflated" their prices making similar to older items about double to what I would expect. When I see them half price it is a more reasonable price to me. I didn't check to see if they also raised prices on older items.   

Most of the places that I shop have about the same prices as before. Some seem "too high" now for me. LOL.  I am tending to sell things at LOWER prices than before but haven't marked any of my older items down lately (I did that maybe a year ago). So it is a broad range and I don't think you can consider it is because of inflation. The biggest change that I see is the sales all week and the store sales. These low prices -- sometimes on really nice things -- have in general given at least part of the populous the idea that they can buy items later for pennies on the dollar. And this has been proven to be true with many creators. 

My electric bill (NW US) has gone up some over the last few years but not doubling. Food however is noticiably higher and ranging in on the 50 percent more mark on some things. At the same time PACKAGING has made items smaller -- so less for you money AND higher prices.   That is the biggest factor for me.  My water bill charges and internet charges have remained the same. In general you often get less quality for what you pay. That too is kind of like inflation :D.  

I don't spend USDs in SL so the only inflation that impacts ME is what happens within the SL economy.  

Edited August 31, 2022 by Chic Aeon
spelling

[Da5id Weatherwax]

The exchange rate between RL and SL currencies goes a long way towards insulating SL from RL inflationary pressures. We see something with a price labelled in thousands and we think it's "expensive" when in fact it costs less than a good 12" pizza IRL. Put the price too "apparently high" and it won't sell, even if in RL terms it's pretty cheap.

The exception to this, of course, is the land market and tier. Downsizing ones holdings and reducing monthly tier has a visible impact on ones RL budget even if one is not an island-owner or larger - along the same order of magnitude as cutting out streaming subs and Amazon prime membership etc. All things that are amongst the first to go if one is feeling squeezed in ones RL monthly or annual budget. At the same time the cost of buying land remains a significant chunk of RL change in much of the grid and rises in RL prices of everything else will depress that market. If you want to offload your land to reduce your tier you may not get as much for it as you thought you would if there is significant RL inflation happening. Perhaps counterintuitively, therefore, inflation in RL is a deflationary pressure in the area of the SL economy most likely to impact ones RL pocket book - the land market.

Where the cost of RL living is rising "in a scary manner" folks will want to spend less on their SL. It doesn't even have to be a reduction in expenditure that makes much of a RL difference, it will still feel like one

 

ETA: to illustrate the difference between "how it feels" and "how it really is" consider my position as a musician performing in SL. On a regular day (not including festival season or Hogmanay - it's a lot more profitable then) I can busk the streets of Edinburgh and make around £25-£30 per hour of performance. Most individual tips during that hour are £1-£2. In a SL venue with average traffic over the same hour I will make about a fifth of that but it doesn't feel like that to the audience - a "good tipper" in SL will throw me 200 or 300 lindens - call it £1 (it's less after cashout fees etc but I minimize those costs by cashing out as infrequently as possible) but the number of folks who have the opportunity to tip in even the biggest and most populated SL venue is a fraction of the numbers of tourists that pass me on a good pitch on the Royal Mile or the number of students who wander past to their favorite sunbathing spot if I'm on the Meadows. But I'm putting in exactly the same amount of work and have the same expenses in both. This is not a criticism of the SL population - I'm NOT calling you folks "stingy" or anything. It's just how the virtual world works and that's fine by me and I dont ever see myself stopping performing in SL. But it feels - to both the punter and the artists - a lot more in SL than it actually is.

Edited August 31, 2022 by Da5id Weatherwax
additional info

[Coffee Pancake]

Prices in SL are going up and have been for a long while, but this is mostly for new products only and is often obfuscated with combos and fatpack offers.

inflation is going to affect the amount of L$ people buy, no doubt about that.

[Sid Nagy]

All I can say that the number of sales is significantly down for me for over a month now.
It can be the fact that it is vacation season in large parts of the world, it can be inflation related (money getting tight in RL).
I'm not sure about it.  Sales are always hard to predict in SL.

But when the heating season starts in the northern hemisphere, money will get tight for a lot of us in Western Europe that is a certainty.
I don't know about the situation in the USA, but here in NL inflation is over 10% this year so far and in a lot of European countries it is similar.
This will affect SL big time IMHO.

My sales cover my SL expenses at the moment. If that were not the case, I would have ditched my land by now.
10% inflation simply means one has to find ways to cut back 10% in expenses. A full blown recession is just around the corner IMHO.
Entertainment money is one of the easiest cuts. Pay TV providers like Netflix are already out of my house.

Edit to add:
And when people start to cut back on land, it affects our overlords business big time because they will see higher costs from their server provider (depending on the kind of contract they have) and lower land income (the main income source).
The sky really might be falling this winter/early spring.
 

 

Edited August 31, 2022 by Sid Nagy

[steeljane42]

Not the current inflation itself, but for the last few years I see more and more creators starting to separate their sets (mostly clothing as decor already was separated before) to more pieces than before. So what would be a one simple bikini set before is now 2-3 pieces sold separately, for example. And bigger/more complex sets sometimes have 4-5 pieces. As an obvious effect prices of those newer outfits have gone up.

I would say those creators are aiming at the usual weekend sales from the start, because very often those outfits are, while "okay", still nothing special, so absolutely not worth 4-5 x 250L$ for a single color, but somewhat passable for 300-375L$ if someone doesn't have something similar already. I know I did pass on a plenty of those myself, though. Sadly quantity over quality to be preset on every single weekend sale is also a thing.

[Love Zhaoying]

I did see one post recently where someone complained that their electric cost is now exorbitantly high due to Second Life, but it seems to be they probably exaggerated. 

[colleen Criss]

Sometimes we forget that SL creators depend on SL money to take to RL to help pay RL bills. They will charge in accordance with what they need to bring to RL.  I ask myself as someone raising a family do I want that SL item, that bad or do I want to save that money for , oh I don't know , milk, bread, school lunches/activities. This current economy will affect SL and RL. 

[Claireschen Hesten]

in RL inflation is going through the roof people are wanting higher pay to cover the cost of living which in turn fuels inflation. There are people that use SL to fund part or all of their RL income if SL prices are going up it's to help cover the increased cost of RL. I have noticed plenty of places not price matching their sales item where they could do or selling what appears to be a set by it's individual pieces. The amount of money i have to spend is finite if i see something i like and it turns out to be individual pieces i'm unlikely to splash out on it

[EliseAnne85]

9 hours ago, Bree Giffen said:

Has anyone noticed prices rising in SL or has it stayed about the same? I'm not constantly buying things in SL so I can't really tell if in-world prices are rising. As far as my purchasing, I've found that it's cheaper to buy things in SL now compared to buying things in real life. I think my SL purchasing has increased as I pull back from buying in real life. 

It's affected some items greatly.  A texture artist I really like had texture packs on average about 250.  Now some of her textures pack are 900 linden each.  I can't afford that.  I may buy one or two but will look elsewhere for textures now.  

But yeah, inflation is crazy right now.  It's called runaway inflation during war time and COVID has created a large part of it too.  But, this is beginning to look like train wreck inflation.  

Personally, I would never charge 900 linden for a pack of textures because I'd know most people would pass and not buy.  I don't know what she is thinking.  She could kill her business.  IMO, she's panicking.  

Edited September 1, 2022 by EliseAnne85

[Lindal Kidd]

28 minutes ago, EliseAnne85 said:

A texture artist I really like had texture packs on average about 250.  Now some of her textures pack are 900 linden each.

I doubt that's due to inflation. More likely, she's noticed how hard it is to make money on textures in SL. It's too easy for the first few buyers to just give them away to their friends, and them to THEIR friends, and pretty soon...no more sales for the creator.

[Finite]

Unless creative suite and/or maya go up in price or something I see no reason for in world prices to go up due to inflation. As for the exchange it hasn’t really budged. In fact I find myself getting more L nowadays. I’ve been buying at 251 pretty consistently lately where as just a few months ago I was buying at 248.

If someone is claiming inflation for raising their prices I’d find that to be very disingenuous and probably chuckle and not bother with that vendor again.

Edited September 1, 2022 by Finite

[Coffee Pancake]

1 hour ago, Finite said:

If someone is claiming inflation for raising their prices I’d find that to be very disingenuous and probably chuckle and not bother with that vendor again.

People gotta eat.

Winter is coming, this one is going to be expensive, especially in europe.

[Finite]

3 hours ago, Coffee Pancake said:

People gotta eat.

Winter is coming, this one is going to be expensive, especially in europe.

More of a reason not to spend money in a video game. Especially if vendors are reaching for an excuse to raise their prices. SL > Me > Dragonflight (winter hibernation) 😝

[Rowan Amore]

9 hours ago, Finite said:

I see no reason for in world prices to go up due to inflation

It would be the ONLY reason I'd see for prices to go up.  Many people supplement the RL income from SL just to pay the bills.  Bills go up (food, gas, utilities, etc) they'd need more  income.  Many may be on a fixed income in RL so their only option would be increase revenue in SL.

[Sid Nagy]

When money gets tight in RL  (and that is surely the case) money spending in a virtual world gets even tighter.
In RL one has to spend for necessaries. That means cutting back on luxuries and non essentials if needed.
In the end SL is a luxury for every non merchant. So there will be cut backs in spending.

The main question/concern in relation to SL should not be about inflation affecting sales, but about how many cut backs from SL spending caused by inflation can Linden Lab take? Will they have to hang a lock on the main gate because of it in the near future?
 

Edited September 1, 2022 by Sid Nagy

[Da5id Weatherwax]

10 hours ago, Claireschen Hesten said:

in RL inflation is going through the roof people are wanting higher pay to cover the cost of living which in turn fuels inflation.

If it were that simple it would be a much easier economic problem for governments to address.

Right now, we're coming out of an extended period of both low inflation and low interest rates. During this time wages for almost everyone except the very top earners have stagnated, not really rising at all. While low, inflation hasn't been zero so the cost of living has still been rising but it's the classic "boiling a frog" scenario. The pan hadn't got hotter quickly enough for folks to notice the change. Pressure on wages has been building but very slowly. The "real terms" value of most folks pay packet has been slowly but surely declining and it was almost at the breaking point where people were going to be demanding pay rises as they started to feel the pain. Now the energy crisis in particular is pushing inflation up and there's no slack left in anyone's pay to absorb the - more severe and very noticeable - cost of living increases, particularly since the "biggest lever" a central bank has to control inflation in a free market is via raising interest rates - making money more expensive. Unhecked, we are looking at a perfect economic storm where the richest countries might be seeing 40-60% of their population pushed into a poverty situation unless they DO demand - and get - a significant upwards correction in their wages.

In a (relatively) sane world, one would expect this to cut into corporate profits, but in many cases it isn't doing. Businesses have been operating on a ratchet - they pass increased costs onto their customers in their entirety, maintaining their profit margins. When costs go down, they don't reduce their prices, they just make a greater profit margin. This is particularly true of something like the energy sector where you can't really refuse to buy their product because it's too expensive!

Both of these things push an inflationary cycle into overdrive. and the situation will not reach any sort of equilibrium without intervention by governments. Either with government expenditures to damp out the cycle or by the governments regulating the market - making it a little less "free".

[Finite]

5 hours ago, Rowan Amore said:

It would be the ONLY reason I'd see for prices to go up.  Many people supplement the RL income from SL just to pay the bills.  Bills go up (food, gas, utilities, etc) they'd need more  income.  Many may be on a fixed income in RL so their only option would be increase revenue in SL.

Raising prices wouldn’t increase revenue. It would actually decrease it for non-essentials. Since people are less likely to spend money on non-essential goods. Generally speaking non-essential products tend to go down in price during economic times like these not up. 

Edited September 1, 2022 by Finite

[Storyof Oh]

The exchange rate has an impact too. Once $1.60 to the £ it is now down to $1.15.  What on a monthly basis wasnt much in fees for the entertainment now is over a year quite an investment.  It is only the major artistic and vanity project that keeps me paying as to lose it all or consign to inventory would be sad and exchanging land ownership to rental would be too restrictive.  Once I could cover monthly fees with sales but not now plus simply have not kept up with the time required for new technology.  Instead of raising prices I am considering reducing on the basis of quantity being more profitable especially if players are more hard up.

I still love SL and admit during covid to playing more of a time wasting game for which there can be no actual financial reward just spend for in-world currency. What amazes me is how animated some players can be in their progress within that game that has zero rl reward. 

[Henri Beauchamp]

On 8/31/2022 at 7:32 PM, Nalates Urriah said:

I hear energy cost in France has increased 1,000%

You are totally mistaken... In France, we barely saw a 4% increase or so for electricity, so far, and the gas price remained stable; as for the gasoline, there are ups and downs, but we are currently around the same level of price as last year. The government simply froze the energy prices and is kind of ”discounting” taxes on gasoline.

Today, I pay less than 20 cents a kW.h for electricity...

Of course, things might change in 2023, when the current governmental measures will be progressively ”extinguished”...