Wednesday, September 30, 2015

Price Gouging

Lets talk a moment about "price gouging" and this angry manchild. Price gouging is a loaded term used to describe nefarious economic activities related to essentials for life. If after an earthquake, I charged huge amounts of money for food, clothing and shelter, you may assume I am price gouging.

Price gouging also assumes a level of unfairness. Unfairness means I am charging over the market rate because there is no competition or there is a temporary shortfall in supply.

So are retailers price gouging Battle for Zendikar Fat Packs? Well, unless your very existence requires full art lands, the answer is no. You may wear them as clothing, eat them until you're sick or build a wolf susceptible card house out of them, but they still won't be essential for life.

Are we being unfair? There is no temporary shortage of Battle for Zendikar Fat Packs. The shortage is quite permanent. Competition is also fierce, as opposed to some sort of limitation on competition. The market has determined a fair price for this product. That price is $58, according to Ebay. I don't care much for Ebay, but it's a wonderful example of supply and demand working at its best.

To the best of my knowledge, there will be no more Battle for Zendikar Fat Packs. They are sold out, and thus, by looking at Ebay and that $58 price, highly collectible on release.

So should stores sell them at the $39.99 MSRP? There are a few ways to handle this:

  1. Sell them at MSRP and watch the Magic speculators, friends of this guy, buy them up from you, call you an idiot and sell them on Ebay for $58, making a tidy $18 profit.
  2. Presell them to your loyal customers at MSRP and sell the rest at the market rate ($58).
  3. Sell a small amount at MSRP and hide the rest to go on Ebay at $58. Who will know?
  4. Sell them all at the market rate of $58, because eff you, market conditions.
We went with number two, but there is really no wrong answer.

What I can tell you is the basic economics of this particular situation is a very simple case of supply and demand. If you don't like it, take it up with Supply. That would be Wizards of the Coast. Ask them to print more. Don't you think I would like to sell more?

Or take it up with Demand. That's what this guy is doing. Hey you, Magic player! Don't pay the market price! You're being gouged! Good luck with effecting demand by telling people not to buy a highly desirable product. Better yet, grow up.

Nobody is getting rich here. Magic is not a high margin cash cow, it's actually a low margin endeavor with a lot of risk. Retailers in the game trade could do just about anything else and make more money at it. Yet, they deal with childish behavior like this because they love games. Cut them some slack.

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