Official New Tier Proposal

[Trebor Warcliffe]

After two in-world meetings and numerous postings, 32 at the current time, in the Land Committee Meeting forum posting, I'd like to officially submit my proposal for the restructring of tier for the orignal 5 C.D.S. sims. In as simple as terms possible the new proposal is US$ 3.25 per 512sqm for NFS and CN, US$ 6.50 per 512sqm for AM and LA and US$ 10.12 per 512sqm for MON. This results in an overall savings in tier for our citizens of 21%. It also places our occupancy rate's breakeven point at 81%. The link to the file CDS Master Parcel List New Tier is provided below. This parcel list is current to the best of my knowledge. I have eliminated the purchase price of all the parcels due to our new method of pricing being handled by the Chancellor. Upon approval I feel it would be a good idea to post this CDS Master Parcel List on the web portal in replacement of the current one. I feel this proposal will be one of the major steps in improving the C.D.S. and attracting new, active, and in-world citizens. Due to real life work requirements I am unable to attend Sunday meetings so I leave it to the RA to make the official proposal in thier next RA meeting. If anyone has any questions they can be posted in this forum thread or I can answer questions personally at [email protected]. If anyone would like to see the hard work that went into this proposal I will be more than happy to send all of my original Excel worksheets. Many of you already have this information available to them from past discussions.

https://spreadsheets.google.com/spreads ... E&hl=en_US

Trebor Warcliffe

[Beathan]

While I have voiced support for tier reduction in the past, I want to mention a point of concern. Since my return to Secondlife, I have resumed by occupation as a land dealer. I offered land for sale for L$2.00 per meter (which I set to provide a L$1.25 profit); my turnover was so low as to not cover costs. Then I reduced the price to L$1.75 per meter (which then, because of a change in my purchase protocol, would generate a L$1.15 per meter profit). I saw so significant uptick in purchase rate. I have since raised my price to between L$2.5 and L$2.75 on the theory that sims purchase land they want regardless of price and don't purchase land they don't regardless of price. I don't know if this will freeze my sales entirely, but I do know that a reduction in price to below market rate didn't improve the rate of sale.

Thus, I think that the critical point is to make more sims interested in the CDS rather than to make the CDS competitive with other communities. I still think that competitive pricing may be part of that, but I no longer think that it will be the most important part, and if may not even be an important part.

[Rosie Gray]

Due to real life work requirements I am unable to attend Sunday meetings so I leave it to the RA to make the official proposal in thier next RA meeting.

Trebor, thanks once again for all your work on this. I will propose at the next RA meeting that we hold a special meeting at a time that you can attend, so that you may make your proposal and answer any questions. I trust that everyone on the RA has the best for our sims in mind, and will want to accommodate you if possible so that we can discuss this important issue.

Rosie.

[Moonrise Azalee]

I would be interested in attending as well.
I would like to venture and say that I have rented/owned MANY parcels in the past few years. I find CDS about average. Less than some, more than others, even with the prims/size ratio.
I find your tiers great, but personally it was the purchase price that really threw me off.
There are a few different reasons for that, mainly to do with the fact that there are a few things that detract from it having the same benefits as regular owning. Although you are protected from unsightly messes like on much of Mainland, things like not being able to have more freedom in decorating (many parcels have a seemingly mandatory build) , not being able to have a roomate/partner unless they are paying as well, make it almost more Strata like.
To me, unless I'm actually 'buying' through LL, I would expect only to pay two weeks tiers as a purchase price, or even a month (seeing as how our tiers are monthly).
I was reluctant to buy here because of that. At the time, Monastery, the 512 parcel, was almost 10,000L! And in order to find out the actual tier, I had to go to sites, read documents etc... I assumed the tier would be huge, to match the selling price, but was SUPER happy to discover that the tiers were quite fair.
(and now I'm a super happy resident in NFS and Monastery)

[Sudane Erato]

I find CDS about average. Less than some, more than others, even with the prims/size ratio.

Thus, I think that the critical point is to make more sims interested in the CDS rather than to make the CDS competitive with other communities. I still think that competitive pricing may be part of that, but I no longer think that it will be the most important part, and if may not even be an important part.

At the VERY least, I would suggest that responsible administration of our community would insert circuit breakers into this, what I feel is ill-advised, tier reduction policy. As Trebor points out, the new policy will require 81% occupancy in order to break even. Break-even, that is, break-even on tier. NO additional money for our expenses or program or for making the CDS competitive with other communities, as Beathan suggests.

We are guaranteed to lose money with this proposal. People feel, fine, we can afford to lose money because we have accumulated a large reserve, so, hey... let's just spend that down. As some have claimed, this large reserve is "sinful", "unconscionable", "obscene". So great, let's get rid of it. What happens when the "free money" runs out? As in RL, are we really going to "raise taxes"?

At the very least I would think that the responsible legislator would insist on circuit breakers, where if indeed we do find ourselves losing money, say, over a 3 month period, that the reductions be rolled back. Needless to say, I strongly agree with Moonrise and Beathan that our tier is not excessively high, and that lower tier will not lead to higher occupancy. But, we might be wrong. Can we not factor in provisions to account for unpredictable outcomes?

Sudane....................

[Rosie Gray]

Sudane Erato wrote:
At the very least I would think that the responsible legislator would insist on circuit breakers, where if indeed we do find ourselves losing money, say, over a 3 month period, that the reductions be rolled back. Needless to say, I strongly agree with Moonrise and Beathan that our tier is not excessively high, and that lower tier will not lead to higher occupancy. But, we might be wrong. Can we not factor in provisions to account for unpredictable outcomes?

I think giving it a try for a period of one year to see if some of the proposed changes would assist in bringing the occupancy rate up to supportive levels would make sense. In my mind, it has to be a long enough time to give it a real chance for success. We could write into any change that the rates go back up to where they are now if the experiment doesn't succeed. As noted by Sudane, the reserve is huge and I think we can afford to give this idea a real try. I wouldn't want to see these reserves drained substantially, but I do question why there is such a huge reserve.

[Moonrise Azalee]

81% occupancy is a rather high requirement in order to make ends meet.
I think that if the parcels themselves are less expensive to purchase, that in itself will be a bonus.

1)As it stands right now, the majority of parcels don't have a tier amount even on them, so this is not as likely to draw in new occupants. In order to even know what the tier is, one needs to go here, and go there, and click this, and click that, and in fact, as someone who runs quite a few websites, I would look at that round-the-bush access to info and worry that perhaps the community was not very up to date, and prefer to put my money elsewhere. As I mentioned, with the high purchase price, one would assume the tier is also high and possibly not even look further.

2)If we try it for a year, and then realize it ISNT working, then what happens? Tier gets raised and suddenly people find that their budget needs to be readjusted. Perhaps a resident buys two properties... but then once tiers go up, they realize it will be too costly to afford their properties, so they sell one. Then we have empty parcels because people who bought with a particular tier at the time, are no longer able to afford it. (raising tiers like that is also the sort of instability that goes along with non-Linden owned land. We don't want to be tossed into a negative light.)

Once again, I must say that a) the purchase prices are the most important to consider lowering to a more competitive market, and b)listing tier fee's is very important to the person traveling about looking for land. Not many places insist on a whole month's tier up front. Combine that with a high sale price and well..... it's just not an attractive purchase. It was the friendliness of Pip that got me to look past these complaints of mine. Made me realize that maybe this place would be different from the other places I have lived/do live. (and I think it is Some fantastic people in the CDS!)

Purchase price of one month's Tier would be fair enough, and still almost pushing the limit, when one has to purchase their whole month also. It takes alot of faith for someone to spend 16-20.00 US on a new place all in one shot. (and after that, I found out that my roomate could not even live their with me unless he paid $250L/month. He didn't like the way that that information was not offered up front and decided against it. He said it wasn't the amount, it was the point. Which is too bad because he was a big help with my fees)

[Beathan]

Since my earlier post, I have new data from my land sales on the ML. My price increase to the high end of the market does not appear to have appreciably changed (slowed) my rate of sale. That means that the price increase has the sole effect of increasing gross profit to help me cover the carrying cost of holding vacant property in a slow market (although probably not enough to realize a net profit). Based on this, it appears to me that price has very little effect on market demand for SL land (except at the extremes of very high or very low pricing). Rather, price seems to float on top of a market where demand is driven by other variables.

Based on that, I have changed my opinion about changing our pricing or tier structures and now agree with Sudane that we should not do so. If we are to adjust pricing or tier, I would favor raising, rather than lowering, them and using the funds realized as a result in a community building or sim beautification project or a publicity campaign.

[Rosie Gray]

Beathan, I would really not be in favour of raising tiers at all, and to me that would be entirely unnecessary given our huge fund, and in fact would be going in the opposite direction that we are all looking. If we don't lower them a bit, we really must not raise them.

Moonrise's point about accessibility is so true. I had a very similar experience when I first arrived, and I was fairly dedicated in searching out all of the information. Many, many people in SL will not spend time hunting up information on tier fees, covenants etc., so they must be presented to them in as easy a manner as possible. This is critical. I think the Hippo system would take care of that, but it needs to be installed and activated to do that. What are we waiting for?

I also think Moonrise's point about a whole month's tier up front after just purchasing a property is also a high expectation to a person new to CDS. Most places rent on a per week basis, so given this, maybe if we are only taking tier's on a monthly basis we might consider giving the first month's tier free? Either that, or switch to the option of weekly payments. With the Hippo system, you can do both at the renter's own discretion.

[Sudane Erato]

What are we waiting for?

I would strongly urge anyone asking this question to ask those affected by the current "test" in LA to come forward with their opinions. It has surely not met with the unqualified approval of all those using it. Some have found it OK, and some have not. I think the current test process is valuable.

Sudane..............................

[Rosie Gray]

Good idea Sudane, I will ask!

[Trebor Warcliffe]

To all interested parties,

As many of you know I have many, many hours dedicated to researching and coming up with my tier proposal. I haven't kept track of every hour but I'd guestimate I've put in over 60 hours of time, 40 hours with my original work and easily another 20 hours plus of fine tuning. I've just now figured out how to upload Excel documents to the Google Docs area and not having to convert it to a Google Docs style document. So I have uploaded a Office 2000 version of my CDS Tier Analysis Report and a macro enabled version of the same report. My personal recommendation is to actually download the report so you can view it properly in your version of Excel on your computer. I encourage everyone to please download and read the report. Even if you already have an older version of this report please download the newest version. I have deleted the worksheets I felt weren't necessary and kept the most important ones. Please take an hour or two to review all the information I've provided. In my opinion, according to the financial statements reported in the web portal since mid 2008, the CDS has had a rather robust revenue stream which would account for our rather large reserves. And no I am not implying that we "drain" the reserves by lowering tier. As has been pointed out in many postings, not just my own, the restructuring of the tier is but "one" factor in returning the C.D.S. back to its prominence it has enjoyed in years past. My personal vision is restructuring of the tier, remodeling where needed, some strong marketing to increase the population in our current sims, and laying the foundation for adding a few more sims to the Confederation of Democratic Simulators. It would seem to me that the more citizens the C.D.S. has the truer a representation of a democracy we will have.

https://docs.google.com/leaf?id=0B8zbEv ... ist&num=50

https://docs.google.com/leaf?id=0B8zbEv ... ist&num=50

Trebor Warcliffe

[Moonrise Azalee]

I had a very similar experience when I first arrived, and I was fairly dedicated in searching out all of the information. Many, many people in SL will not spend time hunting up information on tier fees, covenants etc., so they must be presented to them in as easy a manner as possible.

Glad I wasn't the only one! lol
First thing I do is look for the hippo/rent box and check the weekly tier (in this case it would be monthly) I found it to be really tough finding the tier fee, and that in itself made me feel that the Sim was outdated. Meeting Pip helped to clear that up for me. He found the fees etc and told me what the cost was.

I also think Moonrise's point about a whole month's tier up front after just purchasing a property is also a high expectation to a person new to CDS. Most places rent on a per week basis, so given this, maybe if we are only taking tier's on a monthly basis we might consider giving the first month's tier free? Either that, or switch to the option of weekly payments. With the Hippo system, you can do both at the renter's own discretion.

That's actually a very good suggestion. Seeing as how we can't control how much someone wants to sell their property for (I think there is a 1024 parcel going for 30,000L in AM right now? I could be mistaken, but I think that is what I read) Then at least allowing the first month's tier to be free could equal out the balance of the purchase cost and act as a 'move-in bonus' which is something many landlords do when trying to get a building filled up.
As an example, when I got my 1024 sqm, 470-ish prim property in Lionheart, it cost 900L, and that included the first week's tier. They call it a 'set-up' fee. Weekly my tier is 850. So, if I were to be there one full month, it would cost me 3450 for the first month total. The land is constantly monitored for lag, and although there isn't the same community aspect as CDS, there is a good community nontheless. Added to it the absolute simplicity of paying the fees (can be direct through their site, or at your property) the very up-to-the-moment parcel availability and info, and it's no wonder LionHeart is constantly filling up.

I invite you to look at their site, Lionheart has a great reputation and is growing fast:
http://www.lionheartsl.com/

Top notch site, up to date easy to access information, move-in bonuses, and constant monitoring of lag-causing items. That's what kind of stuff we have to compete with these days in Second Life.
Oh, haha, and some good stuff? Well, one of the neighbouring shops, owned by a woman who also works for Lionheart, came over to NFS on an invite from me and LOVED, LOVED, LOVED it!

[Beathan]

Trebor,

I have reviewed your proposal several times. At the start, I thought that it was great as proposed. I have recently changed my trhoughts on the tier reduction portion.

I would like to propose something which is the converse of Sudane's circuit-breaker proposal on the tier reduction. I would propose setting occupancy goals which, if met, would then trigger a tier reduction (so, if the occupancy rate does not increase, tier does not decrease; however, I do not have a recommendation on whether we should have triggered tier increases if occupancy decreases -- either before or after an initial goal is met).

This would have three potentially good effects: 1. it would provide a communal incentive to bring in new citizens (we would all benefit from a tier reduction as occupancy rates improve); 2. it would not have any initially negative impact on revenue, and we would not be gambling on success as a budgetary assumption; and 3. it would allow immediate action on the part of your proposal that has widespread (perhaps universal) support while holding the controversial portion in abeyance until the system is shown to work.

Beathan

[Trebor Warcliffe]

I am truly amazed, befuddled, flabbergasted, god smacked, baffled, and any other words I can come up with to describe the resistance the new tier proposal is being subjected to. Allow me to expand on what has brought us to the point that some of us feel the tier does need to be restructured. The information I’m presenting here and in all of my postings past and present is information available to anyone who wants to spend the time digging it up and dissecting it. I have not been provided with any information from private sources or any individuals. I’m hoping this posting won’t be a long tirade of words but knowing my writing style it probably will be.

Let’s start at the beginning. The CDS was formed in late 2004. http://secondlife.wikia.com/wiki/Confed ... Simulators
It remained a one (1) sim estate until October 2006 when Colonia Nova was brought online. The sales of parcels were set-up to cover the initial cost of each sim and the tier was set-up on a sim-by-sim basis to cover the tier to Linden Labs. It is my understanding that the current Master Parcel List reflects the original sale prices of each parcel and the original and current tier and that neither of these have been changed since except for the recent change in sale prices enacted by the Chancellor. I don’t know what the original cost of NFS was, currently a full prim sim is US$ 1,000. Based on the information provided in the MPL the base price in US$ for all parcels available for sale was $1,217.50. I feel that is a reasonable overall base price, it covers the cost of the sim to LL and probably expenses involved in the public buildings and such. The tier in NFS is also very reasonable when you look at the big picture. The cost to LL is US$195.00 and the total tier at 100% occupancy is US$259.70. It’s when Colonia Nova, Alpine Meadows, and Locus Amoenus were brought online that I feel things went out of whack.

Colonia Nova was brought online in October 2006. I’m assuming for arguments sake that the cost of the sim from LL was US$1,000 yet the base price US$ according to the MPL is $1,858.36, an 85% increase above and beyond the cost. I understand there were other costs involved such as builds and such but I find it hard to believe these expenses totaled US$858.36. My next point is the tier. It’s been explained to the citizens that the tier for each individual sim was set up to cover the tier to LL and a little above that to pay expenses such as salaries, events, promotions, etc. etc. So you’re telling me the CN with a tier cost to LL of only $195.00 costs the citizens of CN $371.68 a month to maintain? An increase of 91%, translated to a 91% monthly profit margin?

Here’s the quick breakdown for AM and LA. Based on current prices from LL both these sims cost US$1,000 each. Alpine Meadows was brought online on November 22, 2007.

http://secondlife.wikia.com/wiki/Alpine_Meadow

Our base price for AM is US$2,320.33 that’s a 132% profit margin. Why? Tier cost to LL is US$295.00 and our current tier is set at US$510.90, a 73% profit margin. Whether or not we maintain 100% occupancy in AM each owner of a parcel is paying a 73% premium on his or her parcel. Locus Amoenus was brought online on August 2, 2008. Our base price for LA is $1,554.22, a 55% profit margin. Tier to LL is $295.00 with current tier set at $416.67, a 41% premium. A few things I’d like to point out before I go any further. Until recently whenever a parcel ended up back in the hands of the C.D.S. estate this land was put back on the market and resold for the same price as it was originally sold for. This added even more to the profit margin of each sim. The other point I’d like to bring up is the fact that August 2008 is the first month that the financial statements of the C.D.S. were made available for public viewing. I don’t know how it was done before August 2008, but that’s not my point, here is my point. As of August 2008 the C.D.S. had cash reserves of US$ 6,255.74. So we have one sim online since late 2004, a second sim online since October 2006, a third online since November 2007, and the fourth sim online the same month the financial statements are posted. So in four years with the first two years being a one sim estate and the other three being brought online 22 months, 9 months, and 1 month respectively, the C.D.S. managed to amass over $6,000 in excess of tier, expenses, events, promotions, etc. etc. That’s six months worth of reserves in tier. In my opinion August of 2008 would have been a good time to look at restructuring tier instead of almost 3 years later.

Since August 2008, through thick and very little thin, the C.D.S. has continued to amass an impressive amount of funds which currently totals as of the April 2011 financial statement, US$14,069.40, that’s 13 months of reserves for all 5 sims at 0% occupancy. For an estate that touts itself as not being a for profit entity it sure has a considerable amount of profit.

August 2008 to December 2008 tier revenue US$6,293.69, land sales $342.92, other income $2.06, total revenue $6,638.67. Tier costs for the same time period $4,903.44, events, professional fees, and web hosting fees $240.30. Currency conversion charges $129.38, which I point out when and if we convert over to Hippo the 3.5% transaction fee can be absorbed by the residents automatically when they pay their tier. So even though it will show as an expense in the financial statements it will be a covered expense. Currently that “expense” is covered by a 10% fee per the Accounting Act I’ve mentioned in my presentation. Total expenses for the 5 months of 2008 $5273.13, net income $1,365.54, profit margin 20.57% that’s an average profit of $273.10 each month.

Now let’s take a look at 2009. July 22, 2009 saw the merger between C.D.S. and AA come to existence. This increased our land mass to 11 sims. The AA sims, if I understand this correctly, were listed with LL as a non-profit entity and as such had to pay their tier to LL 6 months at a time in advance. The financial statements presented on the web portal do an excellent job of separating the tier collected for the original 5 sims and the tier collected for the AA sims. In my presentation I didn’t separate the two but I will provide that information briefly here. For the months of July, August, and September the total tier revenue collected for all 11 sims was US$4,588.33 and out of that amount AA contributed $504.85. The big influx of AA tier didn’t occur until October 2009 which I point out in my presentation was countered with an over double the amount in tier expense paid to LL that same month. I point out the reserves as of September 30, 2009 was US$ 10,131.14. So at the end of 2008 the C.D.S. reserves grew to a little over US$ 7,300. From that point until the end of September, with AA only contributing $504 to the till the original 5 sims contributed an additional US$ 2,700+ to the reserves after all tier costs to LL events, professional fees, etc. etc. etc.

October 2009 tier revenue from AA is US$ 2025.07 which I remind you is tier collected for a minimum of 1 month up to 6 months depending on how the AA citizen paid their tier. C.D.S. tier revenue for the same month, 1 month tier revenue only for 5 sims was $1,679.48. Our total expenses for that month were $7,567.17, that’s a difference of $3,590.56 and we finished the month of October with US$6,600+ in reserves.

January 2010 until the end of July 2010 was the remaining time the C.D.S. and AA merger was in place as reflected by the financial statements. Tier revenue for these months was $14,922.32; land sales $744.68 plus other income of $4.09 total income Jan 1, 2010 to July 31, 2010 $15671.09. Tier cost for all 11 sims 1/1/2010 to 7/31/2010 $10,187.75 all other expenses during this same time period $1,302.07. Net profit from 1/1/2010 to 7/31/2010 US$ 4,181.27 for seven months averages out to almost $600 a month.

How did we finish out 2010? Well even with our worse month on the books in December 2010 with only $843.25 in tier revenue, we closed out the year with a net profit of $4,676.66, profit margin of 20.24% and reserves of US$ 13,116.11 So does anyone see a pattern here?

Now we’re in 2011 and as of the end of April we’ve already made a net profit of $751.06, a profit margin of 13.48% and more vacancies in the history of the C.D.S. Yet I bring to the table a sensible, well thought out, well planned proposal, in the first step to bringing the C.D.S. back to its prominence it once enjoyed and I get nothing but opposition and naysayers. With our current tier we only need 63% of our parcels occupied. That’s a 37% vacancy rate people, an utterly ridiculous amount. Yes I agree, tier reduction isn’t the only step we need to take, anyone reading my previous posts will see that I completely understand that. I understand that the current tier rate isn’t the only reason we have so many vacant parcels and why our 5 little sims in map view look like every other sim out there with so much yellow splotches covering the beautiful landscape but I don’t feel we’re going to solve anything by sitting on our asses and doing nothing or wasting so much time bickering back and forth, hell it’s been 3 months that I’ve begun discussions on this issue and still nothing has been done. As it is now we have approximately 55 citizens with maybe a dozen or so being active and in-world a decent amount of time.

Amazingly I have nothing left to say, I am truly at a loss of words, a quite a rare event for me.

Trebor Warcliffe