IW Introduces Setup Fees

On September 1^st The founders of Inworldz will start to charge a $75 USD setup fee on the purchase of a new simulator. The tier will remain the same for an island at $75 USD per month. So if you plan on purchasing a sim on the IW grid after September 1^st, it will cost you a total of $150 USD for that first month and then $75 USD each following month.

Many residents have known about this pending setup fee for months. I remember it being tossed about this past spring, so it is with no surprise that it is being implemented. The justifications for the setup fee are many, as are the arguments against its implementation at this time. While there is never a perfect time to introduce new charges, recent stability improvements makes the proposition of a setup fee much more palatable than it was this past spring. If the founders were to continue to hold off on implementing the setup fees, I believe their ability to support growth would be compromised. The inability to properly support growth wrecked havoc on that other grid and should be avoided at all costs.

Knowing setup fees are imminent, may residents have, or are thinking of, purchasing sims before the fees take effect. Many of these residents plan on offsetting the tier expense for these newly acquired sims by renting out parcels. In a normal market this strategy is not only valid but the norm. However, the post September 1^st land market will not be normal.

On September 1^st, the supply of rental properties will be abnormally increased compared to the time period before the setup fees were announced. This is a natural consequence of many new sim owners racing to purchase before the setup fees are enacted. These new owners will now attempt to offset their expenses by offering parcels for rent. Thus adding to an already saturated market, as evidenced by the number of rental advertisements currently in the forums. The status change of these new sim purchasers from renter to owner will only further increase the supply of rental units on the market. For a period after September 1^st there will be a glut of rental units on the market and demand for these units will be exceptionally low.

One can argue this is the natural state of things. Supply and demand will always balance out in the long run and you would be correct. But, the move to equilibrium, while inevitable, is none the less painful. Many of the people who planned on renting out parts of their new sim to help cover costs are going to be disillusioned when they realize the rental supply vastly out weighs the demand if only in the short run.

The question now raised is, when should you buy that new simulator? If you do not plan on using rental income to pay tier then the answer is now, before the setup fees take effect. However, if you will be depending on rental income to offset tier expense, you need to take a second look before purchasing.

Ask yourself a few questions: How confident am I in my ability to rent enough parcels to cover tier? Knowing the market, at least initially, will be saturated with properties for rent, what pricing can I reasonably expect to charge? If I cannot cover tier with the rental income, will I still be able to pay the tier on my own or will I lose the sim?

The answers will be different for everyone. If you are confident in the timing and your ability to pay tier then by all means make your purchase now. If you have doubts though, I urge you to think twice before plunging into this market. Waiting a few months, while the ever increasing number of new residents eats up that surplus in rental properties, could actually save you more money than acting prematurely to avoid the $75 USD setup fee.