Slashdot Mirror
Letting Customers Decide Pricing On Game DLC
An anonymous reader writes "How much should game developers be charging for DLC? It seems that one indie dev has decided to carry out a unique experiment. The latest expansion pack for Gratuitous Space Battles is priced at $5.99 — or is it? It turns out there is both a standard ($5.99) version and a discount version ($2.99). And the difference between them is... nothing. The buyers have been left to make their own decisions on whether or not they should pay full price, and send more money to the developer, or treat themselves to a deserved discount. The buy page even lists comparisons of national incomes, average salaries and even the price of sausages to help buyers make up their minds. Will this catch on? Will Microsoft start asking us whether or not we should get a discount and trust us to answer honestly?"
There have been multiple cases of "pay what you want" in the last year alone.
Hell, even Slashdot ran an article about this back in march: http://games.slashdot.org/story/10/05/11/1932233/Indie-Pay-What-You-Want-Bundle-Reaches-1-Million
They concluded that after removing those that paid less than five cents, the average price was around $9.20. Hell, they even break it down by OS for you.
moox. for a new generation.
This experiment has been done before in some form, but it generally gives an option of paying nothing, and that's invariably the most popular option. I suspect this may give more interesting results - the main reason I'd often choose to pay nothing when given the option is because I can't be bothered to find my credit card for a tiny purchase. In this particular situation, users are forced to actually figure out a payment method, then make an objective decision about how much to pay. For a small indie developer with a loyal fanbase, I can see a fair proportion choosing the higher figure.
At least for me "DLC" reads as "Stuff we took out from the main release or would give out in a free update but now sell as extra to squeeze more money out of the customers", 'cause that's exactly what has been done by most publishers.
Call it "expansion pack" or "small expansion pack".
Next give some sort of no-monetary-value reward for people who pay the larger amount. Maybe easier access to the developer and the ability to suggest improvements for the next version.
That said, is the "expansion pack" even worth the small amount? For all we know the two amounts listed are "more money than it's worth" and "way much more money than it's worth" and this is all a poor-man's advertising gimmick. Certainly getting the game to Slashdot will bring more sales.
(Disclaimer: I have no idea if it's so or not. Maybe the use of the word "DLC" has put me in a overly-negative mind-set with regards to this and even the large amount is great value. Take my opinion with a pinch of salt).
Well, he's basically tesseracting the gap in time between when the DLC is released and the point where it goes on sale on Steam for half price (which is where it sells the most, according to him) by offering the DLC at the sale price, while also offering people who are willing to pay full price the option of paying what he feels his work on the content is actually worth.
The fact that he expects to make money on his work should be no surprise. He's experimenting with different ways of doing it instead of trying the tried-and-tested-to-be-shit method of throwing your loyal paying fans under the DRM bus.
Oh come on. No shit $2.99 covers the cost. It's digital. The incremental cost to the developer to ship another unit for a piece of software is tiny, tiny, tiny. Most of the $2.99 goes to profit, R&D and fixed costs.
Now, he still needs to pay those developers who made the software, buy computers, rent office space, etc. I'm sure he's done the math and knows he can achieve that by selling X at $6 or 2X at $3. Of course, he could go open source, set the price at 0 and make it up on volume [/stupid slashdot joke]. In Econ 101 he would have read about the price curve that suggests that fewer people will buy at $6 but maybe not so much fewer that it isn't the better price for his business. For a businessman, the ideal scenerio is to charge everyone the most their willing to pay - price stratification. This is why you have coupons at the grocery store. People with little money and lots of time can clip coupons and pay less. People who have more money will not and will pay a higher price.
The play here is not that he's trying to sell the 2X number with some paying $3 and some paying $6. He wants to first make sure he is able to break even by selling something like .5 X @ $6 and X @ $3. The $6 price helps him break even the same way the $3 price does. Plus, after Econ 101, you learn the price curve is somewhat BS in the first place. Part of what he's doing is stating "We think the product is worth $6, but are offering a 50% discount to poor people and assholes (distinct groups)." Now, regardless of why I look at the $3 price, I am much less likely to think, "Is $3 too much for this expansion?" because it's already a half off discount and be more likely to purchase. He may actually sell more units at $3 than he would have without the $6 option.
These guys are just remarkably (for better or worse) upfront about the price stratification. He's also a freak'n brilliant marketer. Free publicity on Slashdot is a win.
All software pricing is arbitrary. Always. It's up to a vendor to ask for what they think the product is worth, offer discounts / sales / etc to those who think it's worth less, and for the consumer to either purchase or not. The vendor needs to deliver a product that delivers a fair enough value that consumers will purchase their products again / not leave angry messages on forums or app stores.
I sell a bit of stuff online - skyboxes and tools for indie game developers. With one of my tools I made a similar "experiment". I offer the very same product at four different prices, from 10 to 50 bucks. I'm very upfront about it and basically say "you know what the time you save with these tools is worth to you, pay what you find fair".
Turns out that my most optimistic estimates were about spot on. About half of the buyers pick the lowest price, the rest pays more. And yes I've sold several for the highest price.
My lesson from that is that people will treat you fairly if you treat them fairly - be honest about what you offer, tell them up front what the deal is, give them your trust and let them do the right thing. You'll be surprised at how often they will.
Meanwhile, with computer games we're pretty much back where we were in the early 90s when we all traded floppy discs on the school yard and didn't think anything off it. Since you are continuously being treated like a criminal by the software companies, even if you are a perfectly honest customer, with all their limited activations, and DRM and invasive copy protection and key and so on, heck, if you treat me like a criminal anyways, give me one reason to not become one.
Assorted stuff I do sometimes: Lemuria.org
Yes, run Linux.
(Please don't mod me funny. I'm serious - I've seen lots of people pirating Windows and Windows apps, I've seen lots of people running Linux for all sorts of reasons but I have never yet seen anyone run Linux because they can't pirate software. Because they don't want to pirate software (and perhaps can't afford to purchase legitimately), sure.)