The term microtransaction was originally coined in the gaming industry to describe the money a person would pay to help them win a “free” game. These transactions could range in price anywhere from $1 – $30. In fact, the microtransaction games are becoming more profitable than games that charge a one-time fee. What seems to be a relatively small amount of money per transactions quickly adds up to a lot of money. The term microtransaction is starting to be used to describe any transaction that is of nominal value. And yes, the vendors want you to think of it as nominal so you are more willing to make an impulse buy.
When thinking about personal budgets, these small transactions are ones that we usually do not think to include in our spending plan. While small transactions can make big profits for business, they can make a big impact on a budget, especially when we do not realize how quickly they add up. As always, this post is more about mindful spending than it is about saying a person should or should not buy a specific thing.
I would like to look at a few examples of microtransactions from my budget and a couple of my friends (who do know I am writing about them). So, the first thing that comes to mind when I think of microtransactions is my tea. I used to get a tea every work day, either in the morning or at lunch; sometimes both.
Depending on where I go to buy my tea it can cost between $1 -$2.50. Taking the average that is at least $37 a month and $451 a year if I buy only one and only on work days. Let’s face it, the truth is I was buying tea more than once a day. In my mind it was only a couple of dollars and I did not think much about it. Here I am the budget lady and I am mindlessly spending at least $500.00 a year on tea. Don’t get me wrong I still buy tea, but now I make tea at home and bring it in my travel cup more often than I used to.
Coffee and smoothie drinks are another example of daily transactions that quickly add up. I have two coworkers who get either Starbucks coffee or a smoothie every work day. We all know premium coffee can add up but what surprised me was the green smoothie was costing my coworker $6 every day. I am told the cost of each drink is about the same so doing the math we are talking $129 a month and $1,548 a year.
Smoking is the last example of microtransaction spending that many people do not include in their budgets. Based on a quick internet search a pack of cigarettes cost anywhere from $5.25 – $12.85. I am going to go with a middle number and assume 2 packs per week. This assumption is for illustration and based off the people I know who claim to be casual smokers. Even a casual smoker is spending about $60 a month and $720 a year. The number only goes up from there when you are someone like my coworker who admits to smoking a pack a day for an average of $2,555 a year. Again, no judgement, but when asked where does my money go…it goes to coffee and smoking.
The reason I find microtransactions so interesting is because we all have spending habits that we are not really conscious of but make a huge impact on our budget. This makes it harder to reach our financial goals.
The examples I gave are simple ones but can include so much more. Just think about every time you just add that one little thing to your shopping cart and think it is only an extra few dollars for X or Y. Next thing you know it is the end of the year and a few dollars here and there add up to big money. To tie this back to the original term, I read that microtransactions in games generated 22 billion dollars of revenue in 2015 and is expected to reach 32 billion by the end of 2020. Small spending adds up to big money on both sides of the equation.