Elder Game has a great post up proclaiming that the subscription model should not be dead yet. He points out that it's comparatively easier for players to decide to do without optional microtransactions, and that your core business challenge is keeping both payers and non-payers happy.
From my perspective, the latter is the big problem. For example, I used to love to play collectable card games (CCG's), but I just can't justify the amount of money it takes to play a game where your ability to do things depends on how many booster packs you paid for. (The best part is how that $4 booster pack contains only one random "rare" card, which probably is not one that you wanted, AND also is not valuable enough to trade to another player for a card you DID want.) There is an amount of money that I'm willing to pay for a game, and, if the game is not fun for me at that level of spending, I won't play it.
All of which got me thinking - how much do these new-fangled, so-called "Free to Play" games cost anyway? Turns out that this question is a lot harder to answer than you'd think.
Official Site: https://www.wizard101.com/
Wizard 101 is a Harry Potter-esque MMORPG that uses CCG mechanics for combat. It is technically more what I would call "free to try" than "free to play". You get actually free access to 10 areas - I'm not clear on which of these are adventuring zones and which are basic towns etc - and then have the choice of either paying a monthly fee ($10/month, discounts for longer subscriptions, and a unique $7 per person per month "family plan") or going with an a la carte access pass.
The monthly fee gets you access to the entire game, and presumably that access (or maybe even your whole account, once you've opted to go the subscription route?) goes away if you stop paying. The access plan, on the other hand, allows you to permanently unlock specific areas for your no-monthly fee account. Prices appear to scale per level of the content you're unlocking, and range from 715 crowns to 1200 crowns.
Wait, back up, crowns? What's a crown?
Crowns are W101's "microtransaction" currency. At this point, I invite you to go to the site I linked above and try to figure what a crown is actually worth in real world dollars. I spent a pretty long time digging and I wasn't able to figure this out. Actually going to the store to see the prices appears to require that you create an account - apparently they don't WANT you to know what it costs to play the game until after you've tried it.
Fortunately, I have a blogroll. Tipa at West Karana has been playing W101, and comes to the rescue with a post on the game's launch. Apparently the lowest demonination of crowns is 2500 crowns for $5 (that's 5 crowns for 1 cent), while you can get a substantial bulk discount, up to 60,000 crowns for a whopping $80 (that's 7.5 crowns for one cent, and so far beyond the realm of what I'd call a "microtransaction" that I don't know what to say about it). That new area for 1200 crowns costs $2.40 at the worst exchange rate. There are 30 areas at that rate, some smaller number of areas at lower rates (again, the first few levels are free, the second few are cheap, and then they hit you with the large price tags), and they deliberately reserve the right to raise the prices on future content.
I guess the bottom line is that you could get a perpetual subscription to most of the content currently in the game for about what they want for a one year subscription to all of the content (including new stuff that they roll out over time). As tempting as it is to go no-fee, this probably would not be worth your while unless you're literally only playing for a few hours a month (and spending less than $10 monthly on crowns, including zone unlocks, during that time). Note that the discounted $80 for 1 year is significantly less that what you'd pay for a traditional subscription game box plus monthly fee (e.g. $40 for the box and first month and 11x$15 for the rest of the year, for a total of $205). Then again, you may or may not be getting less total game for that smaller price tag.
Anyway, the fun with crowns doesn't stop there. There's an ingame store for gear - experienced players point out that the gear starts at level 5, and paying for it at that level is a terrible deal because you will outlevel it so quickly - and those prices also don't appear to be viewable from out of game. Tipa to the rescue again, with a look at the high end crown items - the most expensive is just shy of 15,000 crowns, which is $20-30 depending on your crown exchange rate. That's IN ADDITION TO either the subscription or the access plan you paid for to get into the zone in the first place, and Tipa describes the high end item as "so amazingly powerful that it would be hard NOT to buy it".
On top of this, the game also apparently includes booster packs. Good luck finding out how much those cost, or what the odds are of getting a spell card that you want out of them - I haven't seen much mention of them amongst the blogs so I'm presuming that these are optional.
Incidentally, W101 is actually a game aimed at children, with pre-generated names, strict parental controls, and a generally kid-friendly atmosphere. The decisons to price these items in an arbitrary currency, rather than at their true dollar value, and to make it very very hard to determine what those prices are before you've agreed to let your kid start an account, is quite clearly deliberate.
Runes of Magic
Official Site: http://www.runesofmagic.com/
Runes of magic is a more WoW-like game (and has been mocked for having an area that looks a lot like WoW's human starting area, Elwynn Forest), with a slight Guild Wars-like twist where characters have two classes and can switch between the two, or mix and max class abilities. The good news is that it appears to ACTUALLY be free to play. However, they have to pay the bills somehow, and the answer is through an item store where your purchases are paid for in "diamonds".
What's a diamond cost, you might ask the official website? Again, good luck with that. Via google and forum fu, it appears that a diamond will run you somewhere between 4-5 cents. Why would you want to spend them? Perhaps you'd like extra bags? Not only do they charge for bagspace, but you can't even BUY bags - you have to RENT the right to have bags at approximately $11 per 30-slot bag per year. A mount (which you actually do get to keep) will run you $20. You can't actually buy weapons and armor directly, but you can buy items that create sockets in your gear, which you then spend more money to fill. One forum estimate says that it would cost $225 for a single set of best-in slot item enhancements, all of which would be permanently lost when you replace the gear you put them in.
Somehow, $15 a month is sounding like the best deal in gaming.
Charging for convenience or necessity?
Obviously, both games ultimately need to bring in money, both to pay for their initial development, and to recoup current operating costs (including servers, salaries of developers), not to mention actual profit for their investors. Though these two games share the obnoxious business practice of doing their best not to reveal their prices to prospective customers, they differ a bit in approach to that problem.
W101's approach is two-fold. With their subscription model, they're basically requiring a certain amount of money. Perhaps some players will bum around the newbie areas indefinitely on principle, but the vast majority will need to pay for one of the two means of access to additional content in order to continue enjoying the game. (And, realistically, only small children, or disinterested parents who don't want to take the time to do the math on what the access pass costs in the long run, are likely to benefit from skipping the monthly fee. Then again, perhaps a smart parent might use the access plan as a way to teach their kids the rudiments of how to manage a budget.) On top of that baseline level of income per user, they're hoping to collect extra via sales of optional, but convenient (and, in some cases, overpowered) gear and other perks.
The good news for players is that it sounds like many of these optional things are relatively optional, though the question of power inflation may become a huge balance issue for the game. Are the next set of items going to be even more overpowered, and going to cost even more than $20? The devs are going to have to walk a fine line in providing incentives to buy the optional stuff without making it so powerful that the subscribers who aren't willing to pay significant amounts on top of their monthly fee decide to punt. (Also, one would imagine that even the staunchest RMT proponents will balk at the prices someday if they keep going up every few levels.)
The Runes of Magic approach, on the other hand, sets no floor for what they can expect to make from their players, but also appears to have no ceiling. Their model really rests on having supposedly low prices for things that they think players will want, without having them technically be mandatory. The expensive things like that mount aside, they're focused on smaller ticket items like charging players for consumable teleport items, exp potions, and, yes, those absurd bag rental fees. The issue here is a bit more difficult than mere inflation.
The developer of the game is now ultimately in the business of trying to sell players perks. This means that their incentive is now to actually make it hard to play and enjoy the game without perks. For example, maybe monsters should now drop items that have to be vendored instead of carrying coin on their person, so that players have more need for extra bags and teleports back to the nearest vendor.
Does "optional" convenience mean optional fun?
I'm living another odd example of this over in EQ2. At the moment, EQ2's forums are full of complaints from players who are getting to maximum level without anywhere near the number of alternate advancement points (earned via quests, exploration, etc) they need for endgame content. This issue results from the fact that the devs chose to increase the speed of leveling - to a pace that is arguably too quick - while holding the rate of AA gain constant (and even increasing the number of AA's available, after players who have been around for previous expansions used up content that would have awarded them AA exp while stuck at the old cap). Now, perhaps SOE's motives here are honestly for honoring the time players have previously spent on gaining these achievements in the past. Then again, it is awful coincidental that they just so happen to have rolled out RMT AAXP potions.
(Unlike W101 and ROM, Sony is at least willing to admit that 1 station cash is 1 cent, and they've even passed on the opportunity to use a multiplier that forces you to pull out a calculator to figure out what things ACTUALLY cost. However, I can't find a list of prices of actual items on their official site, so half of that story is still missing.)
At the end of the day, there definitely are situations in which it makes sense to pay for convenience. If I could have paid Blizzard the $20 in real money ROM wants for a ground mount (presuming that said mount was faster than non-paid alternatives in WoW) back in 2004, I absolutely would have saved enough travel time between then and now to make it well worth my while. Perhaps paid exp potions would have made those painful grinding levels in the mid-40's in LOTRO (back before the Angmar revamp) actually fun. My ultimate caveat is, in some ways simply a different way of looking at the issue.
If I'm paying extra, I want it to be for something that makes the game more fun. If, instead, your microtransactions are deliberately shrouded in secrecy to conceal the fact that you have taken industry standard features (such as bagspace and hearthstone teleports) and slapped a real world price tag on them? Well, if you make me feel like you don't want me playing your game without paying for all the extras, the danger is that I might take you up on your offer. Perhaps that's still worth your while if there's a big spender who will pay you $30 for every $15 subscriber who leaves. Then again, as Elder Game points out, that means dealing with a smaller, and increasingly influential, minority of your playerbase that will begin to have a larger and larger impact on your bottom line.