Posted January 22, 2021
How are game prices determined?
This is not really a question, so much as a discussion about pricing. So don't think I am hoping or wanting any of you to come up with the perfect answer ... it's impossible in any case, by my reckoning. So here's what I think, and I certainly welcome the comments of others, especially if I have overlooked something.
There are many factors and a lot of random involved.
Once of course a DEV/PUB have developed a game, the overall cost of making that game is mostly known. Of course there is also a cost to then provide it, and I doubt that is so easy to determine.
The first random element, comes before the game is complete, and as we know games can end up costing more than projected, and the desired outlay being more than was really desirable and that would of course have a flow on financial effect (interest etc). So recouping the loss due to outlay is the initial concern, and then of course they need profits to make the whole exercise worthwhile.
The next random element is the expected or projected number of sales. So with that as the basis, no doubt likely profits are determined at specific price points, and no doubt it can vary from country to country, and overall profit is likely the key thing.
So now comes the elephant in the room ... Regional Pricing.
Before we start, we need to acknowledge that games for the most part are a luxury item, though of course many have an educational aspect, and some are totally educational. This will likely have a tax impact, and different countries have different policies in place. So no doubt it isn't possible to avoid some aspects of regional pricing.
Generally and certainly in principle I am against regional pricing, tax considerations excepted. That said, a fair argument can be mounted, if not totally accepted for those living in poor or third world countries. I personally take some exception to that notion, because it is based on country and not people ... every country has poor people. Logic also needs to play a part, about all aspects of gaming cost.
So price is often tied to cost of living. It is also often tied I believe, to number of likely customers in an area, such as in bulk discount sales. The USA for instance has a large customer base, so often they get big discounts, and the rest of the world has to pay more. Once again, the focus is on overall profit and every dollar can count, as we are dealing with a non perishable digital product, that does not incur most of the costs or losses of a physical product.
Price is also tied to what most people in a given region would be prepared to pay, and of course to a desire for the product. So you can have scenarios where the cost in a poor country is low, and the wealthy there benefit greatly, and then have the opposite in a wealthy country, where the willingness of the wealthy to spend, sets the price, and the poor in that country are penalized.
We all likely know someone who bought something they couldn't really afford, because for a variety of reasons they felt they needed to. For instance, take the Harry Potter books ... each time one was released fans just had to have it immediately, even if it meant being broke or going into debt to do so ... due to fear of the story being spoiled by first readers comments or reveals etc etc.
Most of us are aware, that a game when first released can be very expensive, and then something like a year later be dirt cheap, though not always. A game's success is usually determined by its early sales, even though it may continue to gain good profits at much lower prices year after year.
Some have been known to buck the usual trend and reap the rewards for doing so. It is probably not a luxury many DEVs can afford, but surely based on faith in your product and due diligence with development and likely freedom from too much monetary restraint, perhaps because a longer view is taken.
As incomplete as the above is, I think I have said enough personally for now, so please add your bits etc ... discuss, argue, agree, add, illuminate, etc.
This is not really a question, so much as a discussion about pricing. So don't think I am hoping or wanting any of you to come up with the perfect answer ... it's impossible in any case, by my reckoning. So here's what I think, and I certainly welcome the comments of others, especially if I have overlooked something.
There are many factors and a lot of random involved.
Once of course a DEV/PUB have developed a game, the overall cost of making that game is mostly known. Of course there is also a cost to then provide it, and I doubt that is so easy to determine.
The first random element, comes before the game is complete, and as we know games can end up costing more than projected, and the desired outlay being more than was really desirable and that would of course have a flow on financial effect (interest etc). So recouping the loss due to outlay is the initial concern, and then of course they need profits to make the whole exercise worthwhile.
The next random element is the expected or projected number of sales. So with that as the basis, no doubt likely profits are determined at specific price points, and no doubt it can vary from country to country, and overall profit is likely the key thing.
So now comes the elephant in the room ... Regional Pricing.
Before we start, we need to acknowledge that games for the most part are a luxury item, though of course many have an educational aspect, and some are totally educational. This will likely have a tax impact, and different countries have different policies in place. So no doubt it isn't possible to avoid some aspects of regional pricing.
Generally and certainly in principle I am against regional pricing, tax considerations excepted. That said, a fair argument can be mounted, if not totally accepted for those living in poor or third world countries. I personally take some exception to that notion, because it is based on country and not people ... every country has poor people. Logic also needs to play a part, about all aspects of gaming cost.
So price is often tied to cost of living. It is also often tied I believe, to number of likely customers in an area, such as in bulk discount sales. The USA for instance has a large customer base, so often they get big discounts, and the rest of the world has to pay more. Once again, the focus is on overall profit and every dollar can count, as we are dealing with a non perishable digital product, that does not incur most of the costs or losses of a physical product.
Price is also tied to what most people in a given region would be prepared to pay, and of course to a desire for the product. So you can have scenarios where the cost in a poor country is low, and the wealthy there benefit greatly, and then have the opposite in a wealthy country, where the willingness of the wealthy to spend, sets the price, and the poor in that country are penalized.
We all likely know someone who bought something they couldn't really afford, because for a variety of reasons they felt they needed to. For instance, take the Harry Potter books ... each time one was released fans just had to have it immediately, even if it meant being broke or going into debt to do so ... due to fear of the story being spoiled by first readers comments or reveals etc etc.
Most of us are aware, that a game when first released can be very expensive, and then something like a year later be dirt cheap, though not always. A game's success is usually determined by its early sales, even though it may continue to gain good profits at much lower prices year after year.
Some have been known to buck the usual trend and reap the rewards for doing so. It is probably not a luxury many DEVs can afford, but surely based on faith in your product and due diligence with development and likely freedom from too much monetary restraint, perhaps because a longer view is taken.
As incomplete as the above is, I think I have said enough personally for now, so please add your bits etc ... discuss, argue, agree, add, illuminate, etc.
