Improving Web3 Monetization: Pricing Through Supply Control

Free to Play games have mastered the art of item pricing to boost revenue. But Web3 games need a new playbook, based on optimizing item SUPPLY. Yet many teams are failing to do this, or choosing designs that hurt their ability to control future monetization. Let's change that ??

First a look at how F2P can capture more revenue than a 1-time Premium game purchase.

F2P has the advantage of being able to sell items or other benefits at a wide variety of price points at the same time.

Players with different budgets all have something appropriate to spend on.

Now let’s take a common web3 model: the limited NFT drop.

Supply is fixed and decided by the studio, driving the secondary market price Item tradability increases player willingness to pay initially (due to resale residual) & secondary market fees can add additional revenue.

Supply decision is much more important than price, which may be decided by auction.

Even if the team picks the sale price, the supply decision is crucial for monetization.

It impacts future primary sales (hard to sell a new item for more than what a similar one is trading for).

So teams should:

• tightly control the supply of items
• issue different items at different supplies to create a distribution of secondary market prices that hits different budgets.

Teams often miss out when they:

1. sell only one or a few NFT collections
2. sell many types of NFTs, but with similar supplies
3. not control supply tightly at all (even if you want a cheap item, supply controls help you decide how cheap)
4. go too far with “substitutive inflation” and introduce too many item substitutes that devalue existing assets, even though each individual item has a fixed supply (e.g. NBA Topshot)

Another factor to consider is if teams want an asset to be more of a status symbol/collectable or an accessible item.

• Status items are lower supply, driving higher prices
• Accessible items are higher supply (potentially infinite), keeping prices in range of their target buyer.

Check out the full guide that dives deeper and also covers a variety of specific supply control strategies:

https://economicsdesign.com/improving-web3-monetization/