The Paragon SKIN market will fail (and how to fix it)

Communications Center General Discussion
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I’ve been giving the new SKINR tool a lot of thought, and in particular, the trade of player-created SKINs. It seems like CCP is betting heavily on the forthcoming Paragon Hub market to be a vibrant place to sell and distribute player-created SKINs. But my prediction is that the Paragon Hub (as it has been shown and described so far) will fail as a marketplace. I’ll explain why I think that, and offer a solution.

For starters, I think there will be a shortage of sellers on this new market. I’m guessing the vast majority of players will use the SKINR tool to create SKINs for their own use, and not to create SKINs to sell. Why? A number of reasons:

  1. SKINs are highly subjective. You may hate what I think looks cool and vice versa. This is really the SKINR system’s raison d’être. We all want something that’s just right for us.

  2. Cost to produce. SKINs are expensive to sequence, and particularly en masse. If you’re thinking about creating SKINs to sell, you’ll be risking a big investment of PLEX to create a marketable product.

  3. Hull demand. You sequence a SKIN for a specific hull. This means designers who want to sell the most SKINs will target the most popular hulls, to the neglect of others. And what’s popular is likely to be a moving target, which leads to speculation and risk.

  4. Thin margins. Every SKIN for sale on the Paragon Hub will have a floor and ceiling price, and profit (if any) will lie somewhere between those two boundaries.

    The floor is cost of the components and PLEX to sequence the SKIN + 30% (to cover CCP’s cut). Selling below this price would be unprofitable.

    The ceiling is cost of components plus the PLEX cost to expedite sequencing. If a SKIN is priced more than that, why wouldn’t the buyer simply buy the components and sequence it themselves? Obviously, there is some wiggle room here for the convenience factor and for the case of rare components*, but that’s only going to push the ceiling so high. And with the lack of any kind of copyright mechanic, sellers will always have pressure from copycat competition.

    * more on rare components below.

    So margins will amount to the sale price minus 30% commission minus cost of components and sequencing. And my guess is, those margins will be thin.

That means if I’m a SKIN producer, I have to:

  1. Create a design I hope many people will like.
  2. Front load the time and expense of sequencing my product.
  3. Pick the hull(s) that are going to sell well.
  4. Price my SKINs so they are profitable, but still marketable.

All for very little profit. And given that many SKIN enthusiasts like to have the same SKIN on different hulls, to meet that demand, I have to leverage potentially thousands of PLEX to create SKIN lines to put on the market—only to hope they sell and I recoup my investment plus a profit.

On the subject of rare, limited use SKIN components that could be used to create potentially high-priced SKINs, why would a designer gamble that component by making a SKIN and hoping they get items 1-4 above correct? Why not just put the component on the market and sell it directly to someone who is willing to pay a premium to use it in their own SKIN?

A Solution

Here’s my proposal to fix the above problems with a player-driven SKIN market, and I think it’s simple enough to work:

Don’t make designers sell SKINs. Let designers sell designs.

What I envision is a system where a designer sits down with a palette of all the available SKIN components, they design a beautiful SKIN (or a whole line of beautiful SKINs), and then they put that branded design on the Paragon market. The designer sets the fee for the use of their design, and they get paid for every unit sold. CCP sets the actual price of the SKIN based on the components used plus the designer’s fee plus the company’s own commission. Under this model, the designer has predictable per-unit revenue and zero upfront costs, which will encourage designers to spend their time creating more beautiful SKIN lines.

When other players go to the Paragon market, they choose the design they want, select among the available hulls for that line, and then pay CCP to generate the SKIN. The sequencing time is the same, and if the buyer wants to speed it up they have the option. But importantly, the production cost is shifted to the end user in an on-demand model.

Under this proposed system, CCP still gets their PLEX, but they also get many, many more player-created SKINs for sale on the market.

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Interesting take. For starters, the number of SKIN designs needs to be increased from 5. This should tie into one of the new skills. Otherwise it would defeat the purpose of buying “designs” on the Paragon Hub.

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On the matter of saved designs, I think CCP has already said that number will increase. I don’t think it should be tied to skills, though. To sell designs on the market, they would probably need to develop an interface to create a SKIN line and save designs under that line (to some reasonable amount like 256 slots or something). Then the designer would list the line on the market, and the buyer would choose from among the hulls available in that line.

I didn’t mention this above, but I think the proposed system would also solve the problem of corporate SKINs. A corp could designate a SKIN designer, and that designer would create the corporate line and put it on the market. Corp members could then purchase the corp SKIN for whatever hulls they needed, and the member pays the PLEX cost rather than the corp.

CCP might even let designers put ACLs on their SKIN lines, restricting who could purchase them. Or set different designer fees based on corp membership (e.g., corp members pay zero for the design fee, anyone else pays 100 PLEX or 500M ISK in addition to what CCP charges for the components). If someone outside the corp really wants that SKIN, maybe they can get it, but the corp makes PLEX or ISK in exchange.

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CCP profits in both scenarios, they just profit more if you try to sell the SKIN after

True, but ingame groups also want things that set them apart, i imagine some of those groups will infact create skins that represent them, bombers bar has been asking for a skin for years, and now with SKINR they have the ability to make that a reality themselves

Yeah see its not always going to be about marketable, and it doesn’t need to be, imagine big streamers making a skin that their viewers can login to the game and buy etc

Not everything is just about the ingame market

Yup, you’re not going to be making massive margins, but to be fair most industrialists in the game are used to not making massive margins on things they produce

This is true, but you get to choose if you want to release it fast and take a margin hit or wait and earn more profit, for some people waiting will be fine, especially given that we still have a week until the hub opens anyway

Which is basically the same as people who buy individual skins off of the NES to resell, this “problem” isn’t a new one, only with NES skins the PLEX cost is the same for everyone so the profit margin can actually be a lot lower as someone could just buy the PLEX on the market and buy the skin if you’re charging too much

So what you basically want is zero risk and 100% reward?

Yeah i’m not sure thats ever really going to work, and you would still just have people undercutting each other as all design elements would be available to everyone so you wouldn’t be able to “brand” them as such as anyone could replicate whatever skin you create and just be willing to accept lower margins on it, so your income problem isn’t really solved

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One thing about the design time - it lends itself to selling/buying SKINs to skip the rendering delay without having to pay the associated PLEX cost.

So if you get rid of that (instantaneous render), there’s not really incentive to buy them off the Paragon Hub for the 30%+ premium.

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Eye roll. No, the question is, what is the intended purpose of the Paragon Hub? If it’s to create a thriving market for player-created SKINs, then you need a model that works for both buyers and creators. If you require that SKIN designers not only invest their time designing a SKIN line, but also leverage hundreds if not thousands of PLEX to create individual, hull-specific SKINs and put them on the market, you’ll be limited in the number of creators willing to take that position.

Likewise, if an individual creator is forced to restrict their production to a tiny selection of well-selling hulls, and ship only in small-batch quantities, that’s going to reduce the number of potential buyers due to high prices and limited availability. What will happen is that potential customers will visit the Paragon Hub, find a scattering of over-priced SKINs (in relation to those on the NES) and decide they will either make the SKIN themselves for less, or just buy something from the NES.

As I said before, if the prices are not competitive then the value-add is convenience. And convenience only lets you push the price ceiling just so much, especially when sellers will always be competing with the super-convenient NES.

Basically, as described, the Paragon Hub sounds like an artisanal marketplace full of $20 jars of organic honey that you try once, until you realize the fancy stuff isn’t any better than the $5 grocery store brand. If that’s what CCP wants, then fine.

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Wait… there’s spaceships in this game?

I thought it was just various shaped icons.

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Right. That’s the convenience premium, and why I said the price ceiling includes the cost to skip the wait time and get immediate delivery. You can charge somewhat more than component costs plus immediate delivery plus CCP commission, but only so much as the average buyer values their time. Otherwise, they’ll do the math and decide the PLEX they save is worth gathering up the components and making the SKIN themselves.

I didn’t propose that the end user would get instantaneous render for free. I said it would be the same as it currently is (they can wait, or they can pay to skip the wait). The difference between the status quo and my proposal is that the production costs (and the decision whether or not to pay the convenience premium) are placed on the buyer, not the designer.

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In case this idea is too abstract, I put together some numbers to illustrate the problem I see with the current model for a Paragon Hub SKIN market. I also include numbers below to show how my proposed system would work, and how it might benefit all parties involved (SKIN creator, SKIN buyer, and CCP). Theoretically, anyway. There are other problems (as the math will show).

Let’s say I want to create a Hawk SKIN to sell on the market.

If I create the SKIN without paying for expedited processing, here is how the numbers break down:

Hawk hull
4x limited-use components
Delayed delivery

Item Amount
Cost of components 15 PLEX
Cost of sequencing 60 PLEX
========
Creator investment 75 PLEX
20% profit margin 15 PLEX
========
Required return 90 PLEX
— —
List price 129 PLEX
CCP 30% -39 PLEX
========
Creator return 90 PLEX

So in order to make a 20% return on my time and PLEX investment to create the SKIN, I’ll need to sell my SKIN on the Paragon Hub for 129 PLEX. Looking at the NES, there are currently two individual Hawk SKINs available for purchase. One is 77 PLEX and the other is 50 PLEX. Both are far below the price of my custom SKIN. But… let’s assume my SKIN is so awesome players will be willing to pay the incredible premium (yeah, kinda doubtful).

However, to create this SKIN I’ve had to wait several days in order to avoid the expedited processing charge. How do the numbers change if I pay that fee and create the SKIN for immediate sale?

Hawk hull
4x limited-use components
Immediate delivery

Item Amount
Cost of components 15 PLEX
Cost of sequencing 60 PLEX
Cost of expedition 30 PLEX
========
Creator investment 105 PLEX
20% profit margin 21 PLEX
========
Required return 126 PLEX
— —
List price 180 PLEX
CCP 30% -54 PLEX
========
Creator return 126 PLEX

In the first case, the buyer payed 129 PLEX. I made a profit of 15 PLEX, and CCP made a profit of 114 PLEX (39 PLEX commission on top of the 75 PLEX I paid to create the SKIN). In the second case, the buyer payed a whopping 180 PLEX. I made a profit of 21 PLEX, and CCP made a massive profit of 159 PLEX. (Note: if you think that profit disparity is a bit too wide, I agree).

Now, I was happy making 15 PLEX on the sale of my Hawk SKIN. I was not happy at all with risking 75 PLEX to make the SKIN. Particularly because if the SKIN doesn’t sell, I’m stuck with it and I’m out the 75 PLEX. Unlike manufacturing say, a battleship that doesn’t sell on the market, I can’t reprocess the end product, re-manufacture something else, and take less of a loss. The SKIN is non-fungible once it’s created.

But if I’m happy with making 15 PLEX, how would the numbers look if we shifted the production costs to the buyer instead of the creator?

Hawk hull
4x limited-use components
On-demand production

Item Amount
Cost of components 15 PLEX
Cost of sequencing 60 PLEX
Creator commission 15 PLEX
CCP commission 39 PLEX
========
List price 129 PLEX
Immediate delivery 30 PLEX (optional)
========
Cost to buyer 129 or 159 PLEX

Under this model, the list price is the same (129 PLEX), and the buyer can choose whether they want to wait for sequencing or pay the immediate delivery fee. In either case, my profit as the creator is the same at 15 PLEX. However, my investment as a creator is only my time. If my SKIN doesn’t sell, I’m not out some huge investment in PLEX.

CCP still makes their commission of 39 PLEX, their production fee of 75 PLEX, and possibly an additional 30 PLEX if the buyer wants immediate delivery. This nets them potentially 144 PLEX, which is less than the 159 PLEX they would have gotten if I had payed for immediate delivery and factored that into my costs. But with no upfront costs, more creators will create more SKINs, and the overall volume of sales will be higher, netting greater profits to CCP.

With expedited delivery, the buyer pays 159 PLEX instead of the 180 PLEX they would have paid if I used that option when I created the SKIN. Granted, they would have gotten expedited delivery for free (essentially) under the current system, assuming I chose to queue the sequencing to keep my costs down and didn’t pad my margins to reflect that time cost. That’s probably not a realistic expectation, though.

All that said, I think the stickier point remains that the buyer could always choose to pay for the components and make the SKIN themselves at a cost of either 75 PLEX (42% less) or 105 PLEX (34% less). So you have to wonder if the Paragon Hub markup falls within the range of “convenience premium” or not. Personally, I kind of doubt it.

After running these numbers, I think the problem with the Paragon Hub SKIN market is three-fold. First, sellers are going to be averse to leveraging large amounts of PLEX on speculative sales. Second, buyers are going to be averse to paying huge premiums for SKINs they could create themselves with a little grunt work. And third, CCP’s 30% commission is just too damn high. This is not an app store, where there is no direct cost per unit sold. This is more like a flea market where the proprietor is charging vendors a 30% tax on the list price of every physical product they sell (products, by the way, that the vendors themselves buy from the proprietor—who is also selling direct to the flea market customers at much lower prices!).

(Hint for the clueless: such a flea market would fail hard and fast).

Aside from a couple of bugs with it, I like the SKINR tool. And I’ve already made several custom SKINs for my personal use. But I just don’t see how the Paragon SKIN market (as presently described) is ever going to work. I guess time will tell if I’m correct.

EDIT: I mathed wrong on one point, and had to make some corrections.

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I think CCP needs to cut their commission to 10%. Or have standings/skills reduce it.

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Looks like a clear case of CCP being way too greedy for their own good. A 30% commission on sales of something they (presumably) want to get up and running and for lots of players to use seems excessive to me. I know I sure as hell won’t waste my time with this new “feature”. It’s just way too expensive.

I understand that CCP wants to monetize these cosmetic items so they don’t have to resort to selling items in game that give advantage to players, e.g. so-called gold ammo, but how about making less on each sale and making up for it in volume?

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CCP would probably have to get our benign South Korean overlords to agree to that.

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Agreed the 30% is way to high. CCP is presumably already making money on increased PLEX purchases and some components cost PLEX so CCP cut is baked in already.

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I feel like the ultimate issue can be explained with a single screenshot:

image
image1920×1057 109 KB

Using stock elements, and with Industrial Sequencing at my current skills, I can make up to 880 skins at a time. That’s GREAT as a manufacturer. But then, look at the PLEX cost…

Yeah, that’s not a typo. 96,800 PLEX! That’s 486 TRILLION ISK, not counting sequencers!

What’s the point of having skills to boost the number of skins you can make in a single run, when you could buy the entirety of a sovnull alliance’s assets?!

The ONLY use I can see with this is to use this to make skins for myself, not for sale. The PLEX cost is stupidly expensive. There is no way that - except for the richest of the rich - no one will want to buy other people’s skins, and because of the limited number of save slots, it’s highly unfeasible for someone to create a ‘line’ of skins that follow a theme.

This is utterly broken and unusable. I may play with it for fun, but it’s not something I’ll be investing in. I could use my PLEX and/or ISK in far more useful ways, such as a bunch of subs and Genius boosters.

Potential Fixes

Since I don’t like leaving a rant without constructive feedback and/or suggestions, here’s what I would recommend to CCP to fix this:

  • Remove the save limit; allow as many SKIN designs as the player wants.

  • Make all elements unlimited; if we’re going to pay PLEX to use it, we should be able to use it an infinite amount of times. Otherwise, what’s the point of batch-sequencing a SKIN? At that rate we’re paying an absolutely absurd amount of ISK and/or PLEX to buy it.

  • Have the PLEX cost fixed, regardless of the number of batch runs; so if, for example, you have a SKIN that costs 110 PLEX to forge, to make copies of it should only cost Sequencers, and the PLEX cost should remain the same. This means that if a player wants to make a really fancy, expensive design, they can splurge on PLEX on the inital cost, and it won’t bankrupt the bank, in terms of PLEX.

  • Player buying player SKINs should be similar in PLEX cost to CCP-official skins; the player who made them should be given 50% of the PLEX value. This means that the designers who make a very popular design will get rich, and that will encourage players to put in a lot of awesome work into their designs. By being worth 50% of the PLEX value, it also pulls a lot of PLEX out of the market, which means CCP gets paid, and PLEX prices will go up (which is arguably good).

Doing this should solve the problem, but in its current iteration, I can’t and won’t use this system. It’s absolutely punishing to skin designers. It’s a real shame, too, because I was super excited to use this feature.

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I know, it’s ludicrous. There is something I’d like to know (and I haven’t been willing to spend the PLEX to find out). The production cost multiplies with each unit produced (linearly), but what about the cost for immediate delivery? Does that 30-50+ PLEX to skip the wait for a sequencing job also increase with the number of units produced? Or is it a flat per-job fee?

If you sequence one SKIN at 50 PLEX and pay 30 PLEX to expedite the job, your unit cost is 80 PLEX. If you run ten SKINs at 500 PLEX, but pay the same 30 PLEX to expedite the job, your unit cost drops to 53 PLEX. That’s the only mechanism I see to reduce costs via bulk processing—assuming the immediate delivery fee is, in fact, static.

Since I’m not planning to waste my time and PLEX with the Paragon Hub market, I have no personal need for two copies of a SKIN, and CCP only shows the expedite fee after the sequencing job is submitted—I’ve no interest in finding the answer to the above on my own. But if anyone else has found out, I’m curious to know.

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I have to agree with what others said. I was very excited to explore the skinr system.
After making some skins for myself, and looking over the now active market, the system is silly.
I will never buy a skin on the market as I can just make my own for less isk/plex. I also wont sell anything on the market, as if I risk the plex to create some, I have to sell it at such a high price, why would anybody pay that, they can look at what I did and easily recreate it themselves. I had wanted to make skins for my alliance and donate them, but I cant do that in the skinr’s current state.

The skinr is the coolest feature eve has added in a long time, but ccp, you channeled your inner Ferengi so bad that other than personal use, its making most pilots laugh. Nobody I have talked to has any interest in the skinr market due to the stupid high prices caused by your fees to make them, and 30% cut on top of that.

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“Inner Ferengi”, lol.

  1. What the Nagus wants, we acquire.
  2. Satisfaction is not guaranteed.
  3. Don’t tell customers more than they need to know.
  4. Enough… is never enough.
  5. Exploitation begins at home.
  6. Only fools pay retail.
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I’m not sure, but at those costs, I don’t even see what I’d bother, especially with sequencing times being pretty low already.

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At least with HyperNet you know you’re being scammed.

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After I’ve been working with the SKINr simply out of interest (skill training, design tool, etc.) I’ve finished some skins for sale. My assessment is:

Nobody will be interested in these skins because the cost of making them and the resulting selling price is extremely too high.

What should make a potential buyer buy such skins when even the bundle prices in the store are only half the price?

That’s why CCP urgently needs to lower the Plex prices significantly. The prices should be such that it is interesting for every potential buyer not only to search for skins in the store but also in the Paragon Hub. Of course, a possible profit for the designer should also be factored in.

To be honest, I’ve rarely seen a tool in an online game that was so obviously designed to take money out of gamers’ pockets.

If you know CCP’s annual balance sheet for 2023, you know why.

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