The Effect of Short-Term Sales on Quantity Sold - A Case Study on Zeboyd's Deal of the Day
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There has been much discussion on the usefulness of short-term price discounts on improving sales and revenue for video games. To further this discussion, we'd like to share some data from a recent sale we participated in on Steam. (Note, I asked permission from our partners at Steam before publishing this article and they gave us their blessing.)
Our games, Cthulhu Saves the World and Breath of Death VII, were released on Steam in April of 2011 at the price of $3 USD. They have done well but as you might expect, sales have been dying down over time. On April 6th, the games were featured in Steam's Deal of the Day during which time they were 50% off ($1.50) for a period of 24 hours. The games had been in holiday sales before this and at one point had even briefly been in a larger discount (66% off) but this is the first time that they were featured in a sale specifically for them.
During our 24-hour sale on Steam, we sold approximately 125 times our daily average from the week prior to the sale (when articles about our new game started coming out and gave us a sales boost) and approximately 230 times our daily average from the week before that (when we had no such boost).
Not only that, but in the week immediately following the sale, our daily average was about 35% better than it was immediately before the sale. Now admittedly, we had the benefit of getting additional coverage for our studio due to the articles about our upcoming new game, Penny Arcade's On the Rain-Slick Precipice of Darkness 3, but since that coverage began before the sale and continued after the sale, I think the post-sale boost was primarily due to a lingering effect from the sale and not due to coverage of the new game.
From our experience, I think we can draw a few conclusions.
1 - The visibility of a sale is more important than the amount being discounted as long as the discount is noticeable. Our Deal of the Day did substantially better than our Holiday sale even though it was a smaller discount because we had much greater visibility for the Deal of the Day. In contrast, with the holiday sale, just about everything on the store was discounted and so our particular sale got little attention.
2 - Beyond the period of the actual sale, short-term discounts can offer long-term benefits as they get people talking about your game and may get you a position in the Top Selling charts, both of which can result in additional sales.
In short, periodic sales can be extremely beneficial but only if the sale has visibility. And though some people believe that short-term sales are just making potential future sales come sooner than they would have otherwise, in actuality, I believe this is a case where success breeds success - not only do sales not decrease your potentialfor future sales, they actually are more likely to increase your chances of future success.