bring your memberships down

One wish would be to have the option of non-auto renew subscriptions.  I wouldn't mind paying for a couple months here and there but in our houshold things come up and budgets need re-working so things must get dropped to meet a current obligation.  All dollars on board!

I can't stand things that cost $99. I'd honestly rather pay a flat 100. Bring it up a dollar.

Exactly you just proved my point. if there is unlimited supply then supply is then ruled out of the equation meaning that supply and demand have no relation to eachother and a change one will not affect the other.

It is not true that chess.com can hand out an unlimited number of memberships. There is an incremental cost to serving each additional member. I assume your hypothetical is not meant to be realistic because there is no way that this site can be maintained for $2,000 per year. I assume that they have full-time staff (employees). Annual salary plus benefits for a software developer or other similar professional is probably about $100,000 or more per year. Conservatively, assuming that they have only 20 employees, that's at least $2 million in salary expense alone, not counting rent, utilities, depreciation, etc.

cjt33 wrote:

Savage wrote:

It's called supply and demand. Chess.com is not a charity and nobody owes you a free lunch.

Actually in this case there is no supply and demand because chess.com can hand out as many memberships as it wants without having to worry about running out.

Hypothetically if it costs two thousand dollars (nice even number) to run this site and there is no money comming in from advertisment, then at $50 per membership there might be 500 costemers then chess.com will make $25,000- $2000= 23,000bucks. however if chess.com increses its prices to $100 then there might be 300 costomers (it could be any number of costomers, but my guess is most the people looking to buy this product can afford to pay a little more for a yearly membership.) so $30,000 - $2000=27,000 dollars. clearly chess.com would be smartest to go with the second option. however if chess.com gets the briliant Idea of pricing the memberships at $200 there will only be 100 costmers left. so $20,000-$2000(remember the cost of running the site!)=$18,000!

in this example chess.com would have to be stupid not to price there membership at $100 each as it brings in the most profit

This is how the prices are chosen to the best of my understanding.

hope it helped

It is a membership for the whole family and maybe some friends. If you have a family of 4, you can have one account for the whole family. Because you can play unlimited online and blitz. The problem here is time management within the family.

I am not asking for the price to go down. It would nice if it could. But it would be a fantastic achievement if chess.com is kept the way it is with some more improvement. Like 2 free lesson videos per month. Well, that maybe too much to ask.

This is formally true, but the demand side rules the equation by a large margin. If your fixed costs is huge and the marginal (incremental) costs are small, then for all practical purposes there is an unlimited number of memberships.

Ok, a bit of calculation to show this. Summary : staff is the only thing that really costs, and it does not cost enough to warrant equilibrium between supply and demand.

Assuming as you do 20 employees (I think that's even exaggerated, but never mind) ; assuming that all data storage is made by a third company, ie renting some servers outside (which is certainly not the case), you can get away with around $10 per terabytes per month. (Some websites offer $40 / month or less for unlimited storage, but I suspect it is only unlimited... up to a certain point).

If there is one single memberaccount : still needs around 5 employees to make the site work, to moderate the forums (ok, let's say two member accounts ), etc. And you need to store the templates of user pages, the forum arborescence, etc., let's say this is a conservative 1 GB of data.

Now for the marginal :

Assuming 100 MB of needed storage per member, which is a lot (some post video and stuff, but that's a minority, and you delete threads when the OP closes his account, etc.), the storage space wil scale linearly with the number of members, with a fixed cost of around 100 members for space. So indeed, that cost is significantly different from "unlimited memberships".

But the staff is the big part of the equation. One staff member costs as much as around 8000 TB of storage, or storage for eighty million members. This means that the server costs are ridiculous.

Now, how do the staff scale with the members ? Nowadays there are 7M accounts ; but out of these, let's say one in 35 is active (to have a round number), that makes one staff member for 10,000 accounts.

If we assume the staff scaled linearly with the number of members after the first member joins, it means that there are (15 additional staff)/(200k active accounts) = 0.000075 or one staff for 14k members. If out of these one in a hundred pay for $100 a year, it means that a staff member is more than paid for (14k members*(1% of paying) * $100 = $140k a year > $100k).

As you can check, I made very conservatory assumptions (I don't believe the real scaling of staff is 20 now, 5 at the beginning ; more like 15-10 I think) and yet, it is very clear that the fixed costs dominate, as marginally one staff member offers an investment return of 40% provided customers come (the whole point is precisely that the demand side rules). The only thing I am not sure about is the 1/100 premium subscriptor, but keep in mind that non-premium are more likely to not use the forums and/or close their accounts very soon, hence their marginal costs are smaller that the premium members'.

If you want to add the ones that write articles and stuff, fine, but it goes into the fixed costs (the same article will be written no matter how many members will read it, and if you want to pay for more writers as more subscribers come, it is your choice - there is no natural law saying the number of articles must scale with the number of readers).

Bullshit.  Anybody denying corporate greed hasn't much idea how economics of business operates.

It all comes back to investor returns.  Almost any investor faced with a choice between putting their money in one of two business will choose the one with the greatest prospects of returns.

If you run a business and are not pushing to maximize growth and/or returns then you are mismanaging your investors' capital and should not be surprised when it dries up.

Corporate greed is paramount to staying solvent as a company.

ok, but people do stuff to get rich. this is like the first and only consept you need to understand to understand capitilism.

you can call it greed if you want, but whenever componies try to maximise there profit it seems like the smartest choice to me...

Ha!  I wish.

That is what the soviet union was about... As you can see it didnt work out to well. That is what Gorge Orwell wrote about in his books 1984 and Animal Farm.

To investors it is.

Yep, just like with the Apple factory suicide nets; they respect mankind so much they would hate to see anyone lose their life!

Did they really do that?  I knew suicides were a problem -- man, talk about treating the symptom.... (and ineffectively at that).

http://www.bloomberg.com/slideshow/2012-03-30/inside-apple-s-foxconn-factory.html#slide9

Worker dormitories, yuck.  The idea of living like this...

we installed suicide nets outside the chess.com headquarters last year. 

oh wait, everyone works from home....

www.chess.com/about

Makes it worse !

Suicide bouncy castles are a much better idea.  Or suicide ball pens; anything to inject a little fun into the day.  Ooh, a suicide waterslide!

(alright I should probably stop talking about death so much)