College of Gaming: Entrepreneur (part 3)

The Fantasy Business Sim.

Welcome to the third part of this College of Gaming series. If you haven't yet read the first and second parts, I recommend you go and check those out first.

Contribution Margin

In business, there are certain products or certain market segments that give you a better profit than others. This can be done by computing the contribution margin of each product. Contribution margin is calculated by the revenues of a product (or market segment) less the variable costs of that product (like the cost of manufacturing & marketing for that product). To further illustrate, lets hop back in to Majesty.

Certain buildings will give off more gold than others. The level 1 market place provides 250 gold per day. Couple that with a trading post then you get roughly 750 per day (depending on the distance of the trading post). That sheer amount of gold should roughly be 70% of your revenues for the day. So what does that mean? It means that the marketplace is your most important building so you have to protect it at all costs. In business, certain customers or a certain product will be more profitable than others. These products should be the ones you focus on as they will provide the greatest benefit.

Lets get into deeper cost analysis. Certain enemies in Majesty are far deadlier than most. Facing a lone bear man or vampires is certainly more scary than a few rats attacking your base. These should be your priority enemy targets as they have the largest potential to cause problems. However, a horde of zombies are more threatening than a single vampire however, one must realize the number of enemies in Majesty increase if they aren't dealt with immediately. Again, this is merely prioritizing key threats and maximizing profits. In other games, picking the most threatening enemy is an important skill. Knowing when to fight or flight can result in victory. The same goes with business. A small to medium enterprise can't please everybody. Sometimes it's better to drop a customer who isn't profitable so that you can focus more on your more profitable segments.

Inflation

Inflation - in life, is when prices increase progressively. The result is then is that money becomes less valuable. When you build more of the same buildings in Majesty, the prices increase a certain amount. You can't go around the map placing guard towers as each successive tower costs more than the last. Monsters in the game increase as the game progresses since the lairs spawn more monsters and if the current ones aren't dealt with, there will come a time when the sheer number of enemies overwhelms the kingdom.

In business, prices generally will increase over time. The costs of your own products will increase thus decrease your own profits. Businesses should target to grow above inflation. This is where we go back to the concept of time value of money. Things now are worth more since inflation will make spending power decrease. In Majesty, wizard towers are very powerful defensive structures. Proper placement of these structures are key as the cost of these things increase. Heroes are another example. Your heroes must gain levels as in the later game, the enemies get stronger. If a vampire attacks and only low level (1- 6) heroes try and take it on, it will result only to death. Thus, it is key to have a core set of heroes reach a decent level 10 and up before building a similar guild. Certainly, a large group of low level heroes will be able to defeat a vampire over time however the cost efficiency of having one strong hero to take on the vampire is key.

In the final part of this series, I will go into the strategy concepts and walkthrough of the survival mission in the demo.