Comment on Open thread, Jan. 26 - Feb. 1, 2015

Mon, 26 Jan 2015 21:18:40 GMT

One could note that natural markets are going to this direction. For example steam has pretty reliably games appear on sale year or two after their release. Savvy consumers already know to wait if they can. This can get so bad taht early access games hit sales before they are released!

I tired to bring this topic up at a LessWrong meeting I have been calling my thoughts on this direction as "contributionism".

There is some additional even more radical suggestions. Instead of treating at each new sell as lesser amount, retroactively lower the price for already happened purchases (I am pretty sure they dont' mind). Otherwise there is this contention that if two customers are about to buy the product they try to make the other guy buy first so they get the cheaper price (which leads to a mexican standoff that chills selling).

Also normally when a seller and a customer are negotiating for a price seller wants to make it high and the buyer wants it to go low. However if the seller fixes the total amount of money he wants form all of his products then the price negotiation is only about whether the buyers wants to opt in now that it is higher or later when it is lower. However if the price retroactively changes you are "ultimately" going to be spending the same amount of money. If you attach your money early you get earlier access and run the risk that the product never hits high sales numbers (ie that you do not get any returns on it).

However the more people attach money the more the instant price lowers and more money is prone to flow in. This can also be leveraged to overcome a coordination problem. Even if the current instant price too much for you the seller can ask you how much you would honestly be willing to pay for it. (Answering this question too high will not cost you (too much) money). Then when the next customer that doesn't quite have enough buying willingness he might still promise the same level of sum of it. At some point that enough promisers have visited the sum of the promises actually covers for whaqt the seller wants to get for all of his products combined. At this point we can inform the promisers of each others existence - ie that a working sale configuration has been found. This might be a lot of people for a small sum of money each indivudally totalling up to a considereable sum.

Howeer this runs contary to a lot of curretn economical "ethos". Essentially every seller is expected ot try make as much money with the products as possible, there is no sum that is "good enough" that he would settle for. There is also talk of profit motive and letting the pricing game go on is said to make the wheels of the economy run smoothly. However in practise sellers will settle at some price as they think the proabbility of getting more diminishes faster than the gain.

However instead of maximising profits we could set profits to be constant and minimise cost per user. Ie instead of trying to maximse the wealth transfer we try to make the sale happen with as little fuss as possible.

One of the current economys problems is also that advertising and such creates otherwise frivoulous needs that prodeucts can be marketed for. The customer is taken into the decision procees only in what product they choose from the super market self. The decision to build the factory and logistic chain is a money lord with a profit motive trying to be greedy.

However we start from the needs of the customer for example that "I want our village to be educated and I am willing to do 10 hours of work for that end". When you got 100 of these kind of people someone might come suggest aplan to build a school that would take about 150 hours + 50 hours of someone teaching. It turns out that for contrucetion 1.5 hours of work on average is required per villager. Howevver the teacher is doing 50 hours of work when his "fair share" would have only be 1.5 hours. Probably the teacher has other desires beside wanting the village to be educated, the other promise to work on those projects for 48.5 hours. Divided evenly amongs the rest of the 99 willing villagers this amounts to 0.5 hours on those other projects.

That is in this village scenario the customer/investors put in 2 hours of effort 1.5 which most do themself and part is focused on one teacher.

I am interested if anyone wants to talk start-up or similar thingies, or just plainly would be okay purchasing some kind of services in this manner. The most challenge I have faced that people don't like it when a product doesn't cost a fixed amount of money even if they could argue that it's a fixed cost + free money afterwards however it comes back. Also it reminds of a ponzi scheme. However you can never go into a negative price ie you can't profit by buying a product. At most you get the product for (practically) free.

I would like to point out that kick starter uses clever methods in making sure taht the donation amount doesn't degenerate into nothingness. Ie it has perks where you get something when you enough. I am not sure whether being the "not profit making version" of kickstarter is a big enough difference to go compete with such recognised thing. But it has other alluring properties. However it is hard to pitch as a venture capital idea because it is "anti-profit" the most close is that sellign in this way would slightly outcompete with a profit maker because the profit makes has to guess beforehand the price point right to exact digits in order to have similar performance. In practise sales deviate somewhat from projected sales, contributionistic sale is sure to make econimcal sense at whatever scale but a beforehand fixed pricepoint will always live in a slightly uncompatible scale.

Discuss