A topic that has been floated around for quite sometime is now much closer to happening:  dynamic pricing within SimLeague Baseball.

We've been playing around with various models to achieve this the last few weeks.  We finalized a model and have it coded and working in the background so we can validate numbers before actually activating it.

We wanted to explain the approach here so we can gather feedback in advance.

How It Will Work
At a high-level, the concept is simple.  The more a player is drafted, the higher his salary will increase. The less frequently a player is drafted, the more his salary will decrease (while maintaining the $200,000 floor). This should rid the world of long-term cookies and, theoretically, should expand the distribution of players drafted and used across all leagues.

The process to generate new salaries will occur every two weeks.  During that period, the most a player's salary will ever increase or decrease is 10%.

During this two week period, we split players into two groups:  pitchers and position players.  We track how many times each player-season is drafted across all leagues that were scheduled during the period. This includes open leagues and theme leagues.

We assume each player in the universe is currently priced properly (but we know that's not 100% true). As a result, each player has an expected draft frequency of 1 / player pool count.

We then compare the player's draft frequency with the expected draft frequency. Those that are drafted above the expected draft frequency will have their price increase. Those that fall below will see their price fall.  The amount is percentage based, but with a cap of 10%.

One other key principle in play is that we always maintain the total salary pool across each group. For example, if the entire player pool has a combined salary of $100,000,000,000 then we make sure the total salary increase and decrease match each process so that this balance remains.  So, if we see an increase of $50,000,000 in salary across the board, we'll see the same decrease in salary across the board. 

Considerations
Some considerations we encountered while putting this together:

• Should we only use Open League drafts for the calculations? We opted to use the full spectrum of drafts because theme leagues make up a healthy percentage of all leagues and because little used players drafted in progressive leagues won't result in unexpected salary increases due to volume compared with open leagues.  The percentage of $255M leagues is also low enough to not be concerned by an unbalanced drafting of players without concern for salary.
• We've broken players up by pitchers and position players. Should we break position players up further by position? We decided this was not necessary due to the similarities between actual MLB team composition and SimLeague team composition. The number of catchers available, for example, is much smaller than the number of outfielders due to the fact most MLB teams carry 2 or 3 catchers at a time, similar to a SLB team.
• How should we treat teams in the Draft Center when salaries are updated? The answer is we will automatically update salaries for all players on any Draft Center team. So, if you have 22 players drafted for a $78M sum and the dynamic salary process update occurs, your sum could fall to $76.4M or rise to $80M. In either case, you'll need to account for the change before entering your team into the league.
• How should we treat an Open League that has not filled yet?  We could either send teams back to the Draft Center or accept the fact teams may compete with players at different salary levels. We are leaning towards the latter, but have not yet made a final decision.
• How should we handle Theme Leagues that have not yet filled?  We will not send any teams back to the Draft Center. Instead, we will leave it up to the commissioner.  We are also considering a theme league option that allows an owner to decide whether league should use the base salaries (current salaries) or the dynamic salaries (latest and greatest).
• Will historical salaries be tracked? Yes, and we will expose within the player profile so you can see fluctuations from each process cycle.

Feedback, Suggestions, Etc.
We're certain this topic will lead to much debate. We've created a thread to discuss the topic here.