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Finding The Sweet Spot: Pricing For Independent Games

January 12, 2010 Article Start Previous Page 3 of 3

Out of Your Hands

But while PSN is fairly flexible, giving developers a lot of freedom with deciding at what price point they want to sell their game, Microsoft's Xbox Live Arcade is much more rigid. Though, according to Michael Wilford, CEO of Twisted Pixel Games, this isn't necessarily a bad thing.

"Xbox Live Arcade games are priced by Microsoft," Wilford explained. "We get to make a suggestion, but ultimately it's their call. When making our suggestions, we mainly consider the amount of content on offer relative to other comparable games. We try very hard to offer more content than is expected for a given price point, and so far we feel like we've done a pretty good job, especially considering the free gamerpics, premium themes, and avatar awards we give to our players."

According to Wilford, putting the pricing decision in the hands of Microsoft can be "a good thing given their knowledge of the unreleased portfolio."

Both of Twisted Pixel's games, The Maw and Splosion Man, were priced at 800 Microsoft Points, the equivalent of $10. However, Wilford doesn't believe that this has put the developer in a box, forced to release only $10 games in the future.

"I don't think the majority of our audience knows or cares what we priced our previous games at," he explained. "And the ones that do have a positive attitude towards us and know that our goal is to one-up ourselves with every game we make.

"I think, and hope, that we've earned their trust enough that if we released a $15 game, or even a $20 game, there would be a high expectation of quality, and a high degree of faith that we would continue to over-deliver."

And in the digital space, where potential customers are often much more fickle, finding the right balance between paying the bills and not being over-priced can be tough to find.

"As your price goes up, you start losing potential buyers, so you can't just assume a higher price will yield more revenue -- you need to figure out if that buyer drop-off is proportional to the price increase or not," Wilford says. "And sometimes, even if you think a higher price point will be more profitable, it may be best to go lower anyway in order to get a bigger group of people playing your games, recognizing your brand, and remembering your name."

Vella agrees, saying "For us, it's a combination of what we feel the game is worth, and what we feel is fair to gamers. For example, pricing Critter Crunch at $15 just wouldn't feel right to us, and I don't think it would be fair to gamers. I think some games, many of them retail, are overvalued and overpriced.

"And on the flip side, I think there's a push on the iPhone side to undervalue and under-price. Pricing isn't easy, it isn't really fun, and there are so many repercussions that it sort of makes your brain bleed. In the end, we just try to make decisions that best serve our studio and try to be as fair as possible for gamers."

Critter Crunch

One of the most important things is to understand what you're getting into in the early stages of production, so that you can get an idea of how much to charge for a title even before it's finished.

"We started prototyping knowing that, while everything else may change, we are not aiming for a really big game," Vella said of Capybara's upcoming WiiWare title Heartbeat. "That knowledge helps us get an approximate price, so we can figure out, internally, how best to budget the development -- where we break even, those sort of business-related calculations that you have to do for every game."

In Conclusion

While there seems to be little consensus on how to price a game, speaking to Vella, Downie, and Wilford has revealed a few universal truths when it comes to putting a price tag on an independent, digitally released game.

1. Know what you're getting into. Though you may not settle on a price until the very end, it's important to think about a range early on in the development process. Factors like platform choice and the scope of the project are important things to consider and allow you to budget accordingly, and should have a strong affect on the final pricing decision.

2. Be Fair. Whether it's a free-to-play iPhone game or a $10 XBLA title, keeping your price in line with what consumers expect is vital. Not only will it ensure more buyers of that particular game, but it creates goodwill and a consumer who knows they won't get ripped off with your next title.

3. Stay Flexible. One of the benefits of a digital release is that it allows for flexibility in terms of pricing, discounting certain platforms. If you have the ability to experiment with price, do so, and pay attention, as it will teach you a great deal about how consumers react to different price points.

Settling on a profitable price is neither easy nor fun, but for independent developers it's crucial. Being prepared, doing your research, and listening to consumers can alleviate the frustration that is generally associated with the experience and make pricing less painful.

Article Start Previous Page 3 of 3

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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.