I decided to start a thread that discusses the economics of hobbying. In particular, I wanted to discuss the economic forces that support this business.
The way I see it, the law of supply and demand still dictates the rates that agencies and indies charge. But what we do not understand is how these forces interact to change the rates throughout time.
From the looks of things, we are heading into a mild to moderate recession in the U.S. and subsequently Canada. Interest rates have risen a lot from historically low levels and it's starting to impact the housing and condo market. It will also impact home equity withdrawals and consumption, which will be negative for the whole economy.
Now, what would you expect in this type of environment? You would expect the supply of SPs to increase and the demand for SPs to decrease. That's what the economics textbooks tell you.
But it isn't that simple. Some hobbyists are richer than others and they'll continue paying HDH rates no matter what. But if LDL ladies offer similar or even better service at lower rates, then why bother with HDH?
I only bring this up because the McMansion market (houses over $1 million) in the U.S. is dying quickly but lower priced houses are still selling well. I also think that HDH agencies are charging outrageous sums for what they're actually offering.
For me, I get very weary of paying more than $400 for a 2 hour encounter, especially when it's an indy that takes it all. Think about it for a second: does a neurosurgeon make $200 an hour clear in Quebec? Maybe but I doubt it.
As much as I love being with someone, my threshold is $500 for a 2 hour encounter and I have even asked myself if that is worth it too.
The winds of fortune are shifting and I believe we are going to get a lot more supply and a lot less demand for SPs. In this type of environment, it's hard to see rates going up and the high end agencies and indies will need to rely on their regular clients to survive.