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Finding The Sweet Spot: Pricing For Independent Games

January 12, 2010 Article Start Page 1 of 3 Next

The surge in popularity of independently developed games has opened up new creative possibilities. The advent of new digital distribution venues provides plenty of new outlets for these developers to get their games out to a wide market. However, this has also had the side effect of leaving a lot of these individuals and studios unable to make a profit.

While people are beginning to realize marketing is relevant, price is a vital part of the equation, too. The right price point will attract buyers, but still allow the creators to make money. It's a tricky balancing act that can be a daunting task. And when you factor in the variables inherent to each different platform indie games pop up on these days, the balancing act gets even more difficult.

Planet of the Apps

The iPhone has become one of the most popular outlets for independent developers in recent years. With a low barrier to entry and great flexibility, it seems like a perfect fit for small, up-and-coming studios.

But the nature of consumers on the app store means that it can often be difficult to make a profit or even break even when releasing a game on Apple's mobile device.

"The push to 99 cents is the single most frustrating and terrible thing about App Store pricing," says Nathan Vella, co-founder of Toronto-based Capybara Games (Critter Crunch).

"Since it became 'expected' by consumers, it forces a lot of developers, specifically indies, to devalue their game and significantly increase the number of sales needed for developers to get back their investment."

Capybara's Critter Crunch, which was released on the iPhone in June of last year, currently sells for $1.99. And Vella says that if more developers stay away from the 99 cent model, the App Store will become a better environment for indie developers because it could potentially change the way consumers view the value of games.

"I always use Canabalt as my example -- that game is 100 percent worth $2.99," he says. "Adam Saltsman bucked the trend and priced his game at a level he thought was fair. We're on board with what Adam is doing -- not letting the 99 cent pressure define how you price your game. Rather, just price it fairly. Having control of your pricing is great -- being able to define, at a fine level, what your game is worth is something you often don't get control over."


It's also important to realize the platform you're developing for and to budget accordingly.

"You need to be smart on the production side to not spend a fortune making a game," Vella says. "That way you break even at a good number of sales, and maybe even start profiting. Huge teams and giant-sized epics are super risky (on the iPhone), since it's so tough to tell if a game's going to hit and make back its costs.

"The other key thing is making a quality game," says Vella. "While quality doesn't assure you financial success by any means, making a garbage game pretty much ensures you won't have financial success. So, the best thing you can do aside from being smart in your production is make sure the game you put out hits a certain quality bar."

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Joe Cooper
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Why do we think consumers actually expect 99 cent games?

A lot of people actually do see low pricing as a sign of the producer's lack of confidence.

I've actually got a book here, from 1984, called "How to start, finance and manage your own small business" (by Joseph Mancuso). A particular chapter on releasing new products struck me. It said that a large number of collapsing small businesses are failing because they underprice themselves to death in a scramble to sell more units.

(It then went on about pricing methodologies.)

I suspect a lot of smaller, independent games won't sell more units simply by pricing themselves lower.

If 1000 people have heard of you (say through your website or word of mouth or reviews or something), and 800 will buy your game at 99 cents, how many do you think will buy it at $2?

I'm gonna go out on a limb and say most if not all of them.

I'm also gonna say it won't help sell to people just browsing. Pricing at $1 drops you in a sea with TENS OF THOUSANDS of other things also priced at one dollar, most of them garbage that isn't even worth that.

Pricing at $1, basically, means nothing except to say "I belong with the $1 crowd."

E Zachary Knight
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This reminds me of a commercial I saw last night for Office Depot. The commercial started with a camera view of a small town barber shop. The shop was empty except for a single barber looking out the window. The view changed to across the street where a large chain barber shop was having its grand opening with huge signs advertising their $6 haircuts. The Chain owners smiled devilishly at the small town barber. The Small town barber then got his own devilish smile. The next scene was the small town barber entering the Office Depot and describing something to the custom printing department. This was followed by the small town barber hanging a banner above his store. This banner read "We Fix $6 Haircuts." Next scene was the chain store closed with for sale signs in its windows.

I like that philosophy when it comes to price wars. Don't try to compete on price alone. Focus on quality. Then price according to quality.

Robert Gauss
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I can give a consumer's point of view on iPhone pricing. There are two main reasons that I expect a diminished game experience: terrible controls and the small screen. Also diminishing my experience is how incredibly hard buying games from iTunes is--you have to dig two levels into the menu system on the Store and the Search isn't very good. Browsing and buying from the iPhone itself is even more difficult as it seems to limit your results to 100 items.

Then add the thousands of crappy games that are 99 cents. It devalues the quality games that cost $2.99 because of the expectation of crap. And for that reason, anything higher than 2.99 is a really tough sell. As stated in the article, the goal should be to eliminate the 99 cent level. I believe some sort of consortium is needed, even if it is part of ESA or Apple.

It would be much better if the consortium was supported by the various companies much like the ESRB is. I know this sounds very un-consumer of me, but you would need to attempt and standardize pricing levels. And if Apple would help, have standards in place that if not met, would send an app to the FREE department.

Once your pricing structure is agreed on, assuming development costs are the primary criteria, you can then budget for whichever tier you choose.

Robert C.
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Here's the simple truth about iPhone games - they don't have to be good. All most people want from an iPhone game is a way to kill 5 minutes. Maybe you can get a much more polished, deeply engrossing experience for a game that costs $5 insteand of $1, but why bother when I just need something to keep me occupied while I wait for the BART train?

Stephen Northcott
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@Robert C., It's a scary thought, and quite possibly true.

But I think that the general perception of iPhone games as being simple time fillers is also driven by the volume of crap and the pricing levels. If "iPhone" games were just for personal / business phones I would agree 100% with you, but they are not, they are also for iPods and for everyman / woman and child. We certainly see many many more iPod downloads than iPhone downloads of our products.

The devices themselves are more than capable of running games akin to the level of complexity we have seen on the PS2, which is only a one generation old home console, and is still a market leader today. To some degree it is up to us as publishers (as this article says) to set realistic price points, market effectively, and create quality titles. I fervently hope that in coming months we start to see more developers squeezing more out of all the various flavours of iPhones and iPods - much in the same way we saw some of the best titles for the PS2 come out at the end of it's life span. This is unlikely to happen these days from large publishers on this kind of platform, and consequently more likely to come from Indie developers who hone their products rather than rely on an in house engine and production line.

Other thoughts..

Our current project arc is certainly on the path that hopes that more people will get into more complex and more rewarding games in the coming months / years on these devices. And we are actively working on background marketing now, and involving a community which will enable the word to spread virally with Betas and the like that this is not just a 5 minute "snack" game.

One of our previous titles was a simple but unique puzzle game from which we have only had good feedback from customers, and those sites that bothered to review it. Unfortunately it simply did not gain significant traction in the market before it was buried. The only thing we did wrong with that in our opinion was not get the marketing right. It still sells on a daily basis and we covered our costs, but it is a little depressing that something we thought was really unique, people who play definitely enjoyed, and we tried to nurture, was largely sunk by apathy from sites that we contacted simply asking for a review. Am I bitter. No not at all. It was fun, and we were happy with the end product. We move forward....

At the end of the day the one hugely depressing thing is that unless you get the word out on any product quick smart, you very easily get buried under crap and whats more you now also have to compete against the large publishers on a tilted scale, who get favourable treatment by pretty much all of the so called Indie Game Review sites. Most of these publishers are pushing out what are basically mini-game adverts for their AAA titles which also allows them to use the iPhone as a revenue stream whilst doing so.

Something that this article does not touch on is branding. Branding will sell a steaming pile of s**t in a brown bag these days. If people really want to crack the nut of marketing then sell yourself out for a product and a branding / sponsorship deal. This is effectively what the large companies are able to do. And good for them because if they have built a good AAA title then they should be able to cash in on it. It's just that some of the iPhone games linked to an AAA title, or a movie / product deal are not really worthy of the publisher putting them out, or the IP they are associated with.

It would be nice though to see some of the Indie Review sites out there reporting more fringe stuff and not charging for "reviews" by way of compulsory advertising, rather than regurgitating Top Ten listings which serve only to show the rare breakthrough title and the volumes that large publishers with huge budgets are selling. Just my 2c.

Kyle Killian
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I personally find myself avoiding $.99 games simply because I don't expect much satisfaction from then. While they aren't all bad, and some of my favorite games on the iPhone I did purchase at a lower price of $1.99 or $.99, a lot of times the quality of the game is much higher when a more premium price is payed. N.O.V.A. for example is sitting at $6.99. It's a great price for a higher quality game. Other games at the same price point offer similar levels of satisfaction. $.99 games just don't seem to "fill me up", so to speak, as the higher priced games. After a certain amount of time, I only saw myself looking towards the more expensive games because, for the most part, I knew they would be worth the price.

One exception is when a game goes on a special sale where the price is dropped down to the $.99 mark, like Konami seems to do quite frequently. Those games I will pick up because they have proven themselves as being higher quality.

Shay Pierce
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Joel on Software had a great post years ago that sums a lot of this up:

The point is the same one made by the above commenters: Price sends a signal to people!!! The movies industry, the music industry, and many others have already realized that people believe - rightly or wrongly - that things are usually worth what they cost. A ticket for Gigli costs as much as a ticket to The Godfather... because if you charged less for Gigli, you are telling the consumers "Gigli sucks!"

In other words, pricing sends a signal. And guess what signal a $.99 price sends?

Some iPhone apps are absolutely worth $.99. Some are worth less. But many are worth more than that - and their creators do their own apps a disservice when they take a quality app and give it a price tag of $.99. You might as well be putting a little icon next to your app on the App Store view that says "THIS IS WORTHLESS."

Russell Carroll
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@ Shay (and I suppose others)

I don't think that it's true that pricing to .99 is equivalent to putting a 'worthless' sign next to your app., at least not everyone thinks that way. What is seeming to be equated in some of the comments is quality and depth, and not everyone sees things that way. The mention of 'snack vs. meal' games in the article is a decent analogy. Sometimes people don't want depth. Some people don't want depth in their games.

Use books as analogy for yourself. What kinds of books do you read. Are they deep? Do you read Plato in your spare time? Maybe not. Maybe reading is something you do for entertainment and so you'd pick Harry Potter over whatever won the Pulitzer Prize most recently. I know people who don't want to read a deep book, b/c reading time is mindless time. Other people I know are just the opposite. Others read based on their mood, sometimes deep stuff, sometimes fluff.

People have different perspectives on things. Being entertaining for 5 minutes may not just be 'ok' by some people, it may be exactly what they want. A $.99 second game that entertains every once in awhile for 5 minutes is someone's perfect entertainment. There is a lot of different takes on what is 'entertaining' and what is 'quality.' Determining where you can successfully fit into the market is something to figure out on your own. The market can be maddening to understand, but it's even more maddening to expect it to behave like you want it to.

Great article! Lots of good thoughts :).

Sean Francis-Lyon
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@Stephen Northcott

Keep in mind that covering your costs is the definition of a successful game. I completely agree with you that it is both true and sad that good advertising is almost as important as a good game.

On a side note, I assume you left out the name of this game because you figured it would violate the rules of etiquette to promote your own game in these comments. I for one would prefer that people include the name (and maybe a link) so long as the game is relevant to the discussion, which yours is. Others feel free to chime in if you disagree.