How in-game economies work
“Economies (virtual or otherwise) are governed by the law of supply and demand. The availability of an item affects the demand for that same item. Generally speaking, the lower the availability, the higher the price. In the real world, items of value are finite. They require time and resources to create which influences their market value. Games attempt to simulate this. Developers set the attributes and rarity of an item in order to incentivize players to spend more time and money to acquire it.
There are three main economic models in games:
The first is a two (or multiple) currency system that features both in-game and real money. League of Legends and most other FTP MOBAs have this, where many items can be purchased with real money, but players also earn another currency by playing and progressing.
The second model is a one-currency system. A number of mobile games use this system, whereby the user pays money to install the app and then gradually earns in-game currency to pay for in-game rewards. There are also massively multiplayer RPGs like World of Warcraft, which has a purchase price and a subscription fee, but also an in-game economy and auction house based entirely on earned gold and crafted items.
And finally, there are games that employ no in-game currency at all, and instead opt to implement real money transactions for upgrades and cosmetics. Dota 2 use this as its main form of monetization, differently from its peers.”
