A. Aside from a fancy name, it is actually about cleaning up IMVU's code and providing creators with a better method for pricing products. At IMVU we have several old methods for calculating prices which can at times be at odds with one another. Because of this we run into issues such as products no-longer being purchasable or breaking outright because a price changes in the derivation tree.

For Creators, Profit Based Pricing really means two things: 1) Being able to price a product much like you would any other product; 2) Being able to freely adjust prices to reflect the marketplace. Currently our existing product pricing is very confusing and not very transparent. Profit Based Pricing makes the underlying details that go into calculating a price much easier to follow. Being able to freely change price is extremely important for maintaining a healthy economy. Price changes is a key component of a market based economy. Up until now this has been very difficult for Creators to do, and often resulted in lots of challenges.

A. Under the old process Creators were asked to assign a price to their product, told that there would be a markup, and given some information about the cost. Unfortunately this method required Creators to do some math in order to figure out what their ideal profit should be for selling a product. And because IMVU used several pieces of old code to calculate a price, the price might not always be the same between different products of the same kind.

The new process makes calculating price very straight-forward and uses a single piece of code. Creators will now be presented with their total costs, assign a profit, and then see a breakout of the markup and the final price calculated for them. Now a creator can just focus on picking a profit and the system will calculate the price and show them the final price result.

A. In any market based economy (which IMVU is) one of the key pillars is the ability for creators to sell for a price that the market (users) will bear. Allowing creators to more freely set and change price, while targeting a profit they would like to earn, allows creators to better meet the market need for a particular product. Let's use an example to illustrate:

Let's say we have 100 Creators who all make chairs. Ninety-nine of those creators price their chairs at a premium, say 2,000 credits. Let's also say that it only costs 300 credits to sell the chair, so the ninety-nine who are selling at 2,000 are making 1,700 credits in profit for each chair sold. There may be real valid reasons for while they are priced at such a high price (quality of the textures, animations, brands, etc). But let's also say that there is a market for discount chairs (plain brown, no animation, just a simply chair). Now along comes Creator Bob who sees this market opportunity and chooses to sell his chair at 500 credits, thus he own turns a 200 credit profit. Creator Bob is now able to price his product to what the market demands. Perhaps not all ninty-nine competitors really need to be at 2,000 either. Now because they can freely change their price they can price everything from the 500 credit discount to the 2,000 premium all because of their ability to differentiate price. (Please note for this example markup is assumed in the cost)

This pricing difference allows creators to help further differentiate their product on price, and make adjustments based on their costs, and the market demand.

A. Not really. Sure someone who makes only one product in a particular category might gouge their buyers, but that gouging presents an opportunity for others to come in and compete against them and lower the price for the entire market. Perhaps for the first few months the prices go up and down as people settle on the right price point and what the market will buy, but in the end depending upon the product, its quality, features, brand, etc. the prices will stabilize at a common rate the market would pay.

A. Yes and no. At this time IMVU will NOT be allowing Creators to change the derivation price of a good if it has been derived from. Any good that has a derivation will be locked at this time.

However this may change in the future since changes to the cost of a good are a common occurrence in any market for any product.

A. We will keep an eye on the prices of products (we already do in order to prevent fraud), and in addition we encourage creators to reach out to us at creatorsupport@imvu.com and let us know if someone is abusing the pricing system. We can't rule out abuse, it happens in any market economy, but will work diligently to ensure it is kept to a minimum.

A. Let's use an example to illustrate: We have a product called A, and its derivation costs is 250 credits. Creator Bob wants to derive from A, and use that for his new Thingamabob product. After altering A in Create Mode he uploads Thingamabob to the submission process and is presented with a simple breakout of his product price. He's told the product's cost is 250 credits. Next he is presented with a box to enter his profit, so he enters 100 credits. IMVU lists that the markup fee is 10%, and so his markup will be 35 credits. And finally he is given a total price of 385 credits. This breakouts to:

(250 derived cost + 100 profit)+35 credits (350*10%)=385 Credits as the final price.

A. No. IMVU will not allow for predatory pricing. We do not support people being able to set their price for less than the cost of their product.

A. Unfortunately IMVU isn't perfect. We make mistakes, just like anyone else. For whatever reason several IMVU base products have the wrong derivation cost assigned to them. Under the old pricing system any changes to their core products could break the derivation chain. Profit Based Pricing system fixes this problem and eliminates this problem. This in turn lets IMVU fix these exploits. So, for people using their exploits they'll see their prices changed. However this is a good thing, because it means that all creators will be on even footing when it comes to IMVU base costs. No advantages to one party simply because of a mistake on our part.

A. The pricing equation for catalog products has always been thus:

(Derivation cost + Your profit) + 10% = Final list price.

If, for example, you derive from a product that is priced at 100 credits, and tack another 100 credits of your own on, the equation looks like this:

(100cr + 100cr) + 10% = (200cr) + 10% = 220cr

This has not changed. The focus of the change we made was in how we handle parts of credits. For example, if you chose a 5 credit profit instead, the equation looks like this:

(100cr + 5cr) + 10% = (105) + 10% = 115.5 credits

This is great, but we don't do partial credits, so it has to round one way or the other. In the past, IMVU was inconsistent about this, so in some instances, the price could come to 115 credits, and in others 116. Now, we always use the same rounding algorithm.

In this case, it should always come to 116 credits.

A. No, this process works behind the scenes and will not trigger a product being placed into Peer Review if your product price should change.

A: For now yes, though if we do it, it will be an extremely rare event.