It’s very common for people online to state (on the subject of games pricing) that
“If you dropped the price, you would sell way more and make tons more money”
It is not that simple. I’ve done a lot of tests, and found that the twenty – twenty four dollars price is right for my games. Lowering the price makes me less money.
But why oh why do the steam holiday sales work then? here is my best guess:

The sales == attention == increased visitors.

Getting tons of eyeballs on your game will mean more sales. This is just basic business. There were whole websites dedicated to promoting the steam sale, no wonder games in the sale sell tons more

Also, this is not the whole story. When you hear people say “I dropped the price of game X, and made twice the money”. That is NOT the whole story. For the whole story you need to know what happened to the sales a month after the price reverted to normal. You really need an A/B test in different universes looking at the lifetime sales of the game in both scenarios.
You basically can’t tell whether the 100 extra sales are the 100 people who would pay $5 for the game but never pay $20, or whether they are the people who hadn’t heard of the game and would have paid $20, or the people who keep meaning to one day get your game, and will eventually buy it for $20, but bought it in the sale to save money.
It’s the last last group I find interesting. I suspect the vast vast majority of Democracy 2 buyers are in that group. I sold 4 copies of that game this morning (it’s an oldish game now, so that’s good!), and it’s $19.95. People who have been waiting since I released it in December 2007 for me to offer it below $19 are still waiting, and I see no urgent reason to cut the price now. If you really like the idea of a complex and serious government-sim, Democracy 2 is your best choice. It’s a love it or hate it game, and not something people buy for $2 on a whim. The price reflects that, and likely always will.

Theres some interesting analysis by a fellow indie of his ‘pay what you want’ sale here. Notice that if he basically just told everyone paying under £1 to get stuffed, he would only have lost out £2.40. If just two percent of those cheap-buyers had raised their price to £1, he would be in profit. In other words, you can ignore the cheapest-paying 85% of your potential market, and hardly lose a penny.

In more fun-related news I’ve been getting decent nebula renders arranged for the next expansion, and working on improvements to the graphics in GSB. Better engine glow effects (you will hardly notice, but subtly, subconsciously you might), and optimising for maybe some better particle effects. Come monday morning I’ll be doing real work on new ship stuff.

15 Responses to “If you lowered the price you would make more money”

  1. Cap'n Lee says:

    the downside to putting a floor on the ‘pay what ever you want’ sale is that it looks like a recommended price, i’d be interested to see the sales stats of a similar sale with that floor in place.

    I myself was a fence-sitter as far as GSB is concerned. I read about your game first on the Wolfire blog and planned to pick it up but never did, the Steam sale was just the little push I needed. I can’t say whether I would have ever bought the game otherwise.

    I’ve discussed with my housemate how it has become a lot more difficult to talk people into buying the game now that the steam sale is over. Having both played the game a lot, we can easily say we have gotten £16 worth of fun out of it after-the-fact, but it’s a lot harder for people to take that leap of faith.

    Are your games sales any higher after the sale? how much of an effect on word-of-mouth has the sale had, if any? I’m interested to know whether the main barrier has been obscurity, rather than the price point.

  2. cliffski says:

    game sales are definitely much lower post-sale, but that could be just that people are back at school/work, it could also be that people bought (or got given) a ton of games to play through at Christmas, so all these factors tie in.
    If a game has strong competition and mass appeal, then price is more of a factor, I guess, than a more niche game with selected appeal.

  3. Gnoupi says:

    True that nowadays, with digital distributions, prices are falling so fast it is quite alarming. I see quite big games, produces of several years from huge dev teams, which are dropping to -50% after 2 months.

    So yes, of course it’s for a weekend deal, something limited in time. But If I see such a thing, in my mind the game lost 50% of its value, and I will not buy it for the original price anymore, since I know it was twice less expensive once, it will probably be again. (And publishers like THQ are perfectly illustrating this concept, they are easily the ones proposing the most often deals on their games, even recent ones.)

    It can be understood for blockbusters (though less fast than that, in my opinion), as in a way. Unless it’s something destined to be a multiplayer reference (like the COD, CS, TF2, etc.), you will most likely have a lot of first day/week/month buyers, and then it will pass easily. So you can understand this way of milking the cow.

    However, this counts only for games which target the basic gamer audience. Games like you do are specific, targeted for a kind of people who have to be passionate in what they will buy. These are not games someone would buy just because it’s cheap, you actually need to be involved in them.

    Popcap has the same approach, you can notice. Their games are targeting a particular audience (rather casual players), they are successful, and they keep their price, after years. They drop in price only when they do something like a second edition (bejeweled 1, 2, for example). And truth is, it is selling.

    The main public on platforms like Steam is now buying mainly in two cases, in my opinion: blockbusters on release day/preorder, and the rest on “weekend deals” and other promotions.

  4. nine says:

    The most interesting thing about your 85% figure is that game piracy is generally quoted at ~90% of PC gamers. Maybe game prices are right after all?

  5. Fargo says:

    The interesting part of sales is that low prices don’t garner much. I was listening to a story about sales in general, and this guy was talking about selling jewelry in the mall. Simply pricing lower did nothing, but doubling his prices then offering half off spiked sales up immensely. It’s all about how people, in general, act like complete idiots.

  6. Zhatt says:

    I more or less agree with Fargo. There’s not going to be a direct correlation in the sense that ‘if I lower the price by X I’ll see a Y percentage increase in sales.’. It’ll about perception. There’s a TED talk that goes over this quite well:

    http://www.ted.com/talks/lang/eng/dan_gilbert_researches_happiness.html

    Somewhere near the middle he starts talking about perceptions about saving money.

  7. Keith LaMothe says:

    A limited time sale also provokes a quick decision, “I may not get another chance (at least soon) to get this game at 50-90% off, so if I intend to get it any time soon I should get it now” is a mental process I’ve gone through many times myself. I even have the audacity to consider it rational ;)

  8. Mike Caprio says:

    However, a question remains: do any of the 240 copies of the game sold for 1p create sales greater than 1p? If one of those copies of the game inspired just one of the people who paid £5.00 or more to make the buy, the underpayers have paid for themselves. If you look at the bottom end of the spectrum as pure marketing, and ignore them as you say, it’s actually possible to perceive them as having contributed to overall sales if you can imagine that just one of their friends saw the game and bought it for more – and that’s one more sale than you would have gotten if the bottom hadn’t paid the minimum for it.

    So, what if people were able to get it for £0.00? How many more copies would have spread, and would any of those copies have inspired more sales on the higher end? The straight average made from all sales is just under £0.83 per unit – it would be interesting to see if that goes higher when cost goes to zero.

    Is customer satisfaction higher overall? There are always people who regret getting a game no matter how great it is – are fewer of them dissatisfied if they don’t have any buyer’s remorse?

  9. Kris says:

    I lowered the price of my game on Xbox Live Indie Games from $5 to $1 and my sales are 30 times greater than they were before (which more than makes up for the price decrease).

    I think it all really depends on your market and pricing your game right for that market. On PC, gamers seem to be more willing to pay a higher price. On XBLIGs (and placed like the App Store), gamers expect much lower pricing. You need to find that sweetspot of value vs what a gamer is willing to pay.

    And you can always sell cheaper too if you want to get your game in the hands of the most gamers. That’s why i ultimately lowered my pricing, the massive sales uptick was just a nice bonus.

  10. Gnoupi says:

    @Mike Caprio – Actually, when 2DBoy made their “Pay what you want” week, it actually increased also their sales on steam, on full price: http://2dboy.com/2009/10/19/birthday-sale-results/

  11. […] abbreviates it “gratbat”. Cliffski will, with 100% certainty, make more money by dropping the price here, I don’t know why he doesn’t just drop the price all the time forever, since he […]

  12. […] Remember the Qwak pay-what-you-want sale? Jamie Woodhouse presents the data on his hits, his sales and the prices they paid. Everyone has picked over it this week, and you should too. Here’s Cliffski doing it. […]

  13. xrdrt says:

    This sounds interesting, you should make a game about being a game developer and using different marketing/sales/pricing strategies…

  14. xrdrt says:

    Oh and I think your thinking of it a bit wrong, I don’t think you should worry about customers buying your game at the 10$ sale that would eventually buy it for 20$ later, I bet this is insignificant in the long run.

    It’s more of, if you have a marketing/interest spike going on you might have a lot of potential buyers but with a lower price treshold then your usual standard customers, so at that moment a lower price is more optimal in the profits = #sold * price equation.

  15. […] truth of it, it makes no difference to our bottom line whatever price we charge. My esteemed peer Cliff Harris aka Cliffski has rather a lot of knowledge of economics and has a few things to say on the subject which you […]