If a company sells utility tokens to raise money and these tokens are the only thing that can be used for payment of their services. Say they are $1 each. Then they offer a service that will cost $10 or 10 tokens. How do utility tokens ever increase in value? If they accept 10 tokens for the payment of service and then sell these 10 tokens back to someone for $10, how can token value ever go up?
It would make more sense if a company defines its prices in USD. Generally the thought is that its ruled by supply and demand, if for example a company shows growth in use every quarter consistently than the tokens should rise with the demand aswell. But right now utility tokens are pure speculation and not really worth investing in imo with a few exceptions. If a product/service is widely adopted though and the tokens are the only means of payment then they should rise with that demand.
Lets say in your case indeed we have $1 dollar tokens, service costs 10 dollars so 10 tokens and the circulating supply is $50MM, that would mean a marketcap of $50M for these tokens (doesn't reflect company's worth). Then you'd expect that this company does a similar amount in transactions. If you have 5million customers anually and the service is has an anual fee then it doesn't really need to be worth more than $1 per token. Imo utility tokens are absolute bullshit, its very unconveinient transacting with them as every company will have their own shitcoin. Companies should adopt the GAS token of the platform they build on such as ETH with Ethereum. The tokens should be used for revenue-sharing/dividends but regulations don't allow for this.
Unless the company sees a huge influx of new customers that are all buying up the tokens cause they want to see use the service the price would increase, but it will always come down as the company now needs to dump these tokens. Its all very messy. I can be wrong but I think this is roughly how it works.
You can also view these utility tokens as ''credits'' like a lot of online platforms already use such as online dating sites. If you get that they are really nothing more than credits or stamps you get in a supermarket where you get discounts (such as carvertical does) you realise its not investable and incredibly risky as there is no reason for them to be worth anything. With platforms like ETH you have network value, same as BTC, for a company that uses utility tokens this isn't the case and honestly utility tokens should be banned cause its a big fraud.
here's an example of what I DO think is a good token. See my signature (yes I'm half-advertising it but I believe and understand it) they are a gaming blockchain/platform where developers can build games on the blockchain without getting into specifics on why this is a good idea, i'm going to briefly explain the token purpose. Virtual games have always seen their own economies such as Runescape WoW and Final Fantasy games, CSGO etc etc. The prices of for example Gold on Runescape and gold on WoW fluctuate same as the prices for goods on CSGO for example. Chimaera's token is the unified token on which you can pay for anything on the chimaera blockchain, items, gems, P2P transactions for goods and accounts etc. This is why imo this token makes sense because its no different from the fictional currencies already used in games like Runescape and WoW and other games. The more players this ''network'' sees the higher the token price is as everyone transacts in chimaera and converts that to USD or ingame items, goods and accounts. It isn't a utlity token, it can be viewed as a fictional ingame currency, I think the price at some point would stabilize though as there are many factors that would give the token its value. But ofcourse it all depends on adoption with every currency, the USD moves against other fiat currencies in terms of economic results and frequent use etc. Not sure if what I'm saying really makes sense, it makes sense in my head though
