Posts Tagged ‘Life-Cycle’

Competitive Forces: Virtual Product Pricing & Life-Cycle

Business owners interested in understanding the profitability of a market or industry, prior to releasing a product, should be very aware of the forces affecting competition. These forces, are generally accepted as indicators to predicting profitability. Understanding these forces also exposes which forces in an industry may be advantageous to being profitable, and which are challenging the opportunity. Since I sell a line of pre-fabricated retail stores in Second Life, I've had to consider things such as pricing, feature sets, texturing, and correctly sizing the buildings for my target market, compared to existing substitutes or alternatives. Using the XStreetSL web site to sell my virtual goods, I have experienced a phenomenon in doing virtual business manufacturing that is completely different from the real world: my competitor's products never go away, they only get cheaper and cheaper until they are offered for free! What I am suggesting in this post, is that the lack of entry and exit costs (not to mention direct costs) associated with selling virtual products, negatively affects both pricing and product life-cycles in the virtual product industry. Combine this supposition with the exchange ratios of virtual currencies to real world currencies, and being a product manufacturer is a very difficult industry in which to find sustainable profitability.

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