Anyone here who used to own a Spectrum? Anyone remember the average price of a game? Yep, around �2-3 or $3-4. Ridiculously cheap.
Now, anyone know the average price of a modern game in Europe? �20-30 in the UK, 45-55 Euros in Europe. That's $60-80. That's PC games - console games are even more!
Okay, the comparison is a little silly: Spectrum games could be created in a matter of days while modern games take years to make. But, on the other hand: the market is a lot bigger so there's more potential profits to make. Yet what do companies do? They increase prices. Activision recently admitted their plan to increase the price of their games with €5 (Modern Warfare 2 was the first to have this increase).
What I'm really getting at, is this: why? I seriously don't get it. Companies constantly complain about piracy and how it affects their sales yet they charge an arm and a leg for their games. On top of that, many modern games can be completed in an afternoon!! €50 for a 8 hour game? Are you kidding me? That's over €6 an hour! Why do they believe people are willing to pay so much money for so little? Fancy graphics are all good and well but if this means you have a game that can be completed between lunch and dinner, something is really going the wrong way. Modern Warfare 2's single player campaign was merely 5 hours long for example and for a game that is so expensive, you'd expect a little more.
I mean, a movie is two hours long and costs $10 to buy, $3 to rent yet costs about 10 times more to make than a game. Why is this possible? Because the price is low enough to see a lot more return from sales and viewings..
So why don't they give games slightly lower price? I think if they priced them at €25 (or �17 in the UK - $30 in US) they'd sell a hell of a lot more. A lot of students have to get by with a small allowance and dropping the prices in half may well see them cross the threshold from piracy to actually buying games. I know that, as a teenager, I could never afford full priced games either so I had to rely on budget games and copying them from friends.
A more recent example is Solium Infernum. It's a nice little indie strategy game. I saw screenshots, thought "Great! Looks great fun and will probably only cost $20" yet when I checked the price, $30. Now, that's not a lot of money for a good game but ... it's a multi player game. Every friend I showed it to, to get him interested, replied "Are you crazy? $30 for an indie game?". When you consider this $30 has no overheads (100% goes to the developer), it seems excessive for a multi player that lives or dies by its community. At $15, this game would be flying off the virtual shelves since it would be worth the risk but $30, in these economic hard times, is too much for many gamers.
So really, when will companies learn that sometimes less is more? GOG is a good example of how it should be done: great games with low prices.

Yeah but every game on GOG has already had its high priced shelf time, this is a secondary revenue stream for publishers so it doesn't really compare

This is the response from the developer:
The economic calculus is pretty straight forward and rational. My games are complex and require a serious commitment to learn the rule set and intricacies of play. I don’t expect to get any business from casual players and my price probably drives away some of those who fall in the middle. But there are reasons you don’t see a lot of turn based strategy games rolling out on the PC every month. One of them is that there just isn’t the demand for them anymore at least compared to the demand for other genres. I do think that if you compare my price of $29.99 to what my competitors offer for similar experiences you will find that it is a pretty good deal.
The irrational side of the equation is that I value my work and have a huge emotional investment in it. I’ve spent years making these games and they are not just a commodity for me. I would honestly rather go out of business then see them in the digital bargain bin for $4.99. If you run a real company with employees then you can’t have that attitude.
http://www.rockpapershotgun.com/2010/01/26/pitchforked-tongue-davis-on-sol-infernum/#more-24395
So basically, he don't think that lowering the price would result in enough extra sales for it to be viable. Remember he needs to sell a lot more games to make the same profit if they're priced lower. And if those extra sales don't happen, he's screwed.

I knew you'd say that :p Note how I never said that GOG is a viable example for modern games because it's not - I said it was a good example of great games at low prices.
But it's already been proven that a lower price creates far greater profits in the digital market. Right now, it's pure greed that a digital game costs as much as a retail copy. If a retail game costs 50 euros, the publisher will only receive 10 euros of that amount yet digital games don't reflect that.
Valve admitted that the weekend sales on Steam brought in 100+ times more profit for a game than for that same game spread over a full month. For many gamers, there's a certain price threshold and the moment a game falls under that treshold, it becomes worth buying. The sad truth is that too many games are above this virtual line for many gamers.
Old games or not, it's all about the price. "Pay what you want" was a big success for creator's of World of Goo for example. The average paid for their game was $2 which is not that much until you consider that they sold hundreds of thousands of copies during that week. They made more profit during that single week than for all other weeks combined including launch weekend.
So really, the facts are there. Cheaper games = more profits if the right balance is found. So why are they going the other way?
I've read his reply and think it's nonsense, to be honest. For a single player game, he'd have a point but this is not a single player game. He already admits there's not such a huge demand but if you keep the price that high, you'll get even less players in an already niche market which is suicide for a multi player game.
Other players (indie developers) who've been around for longer have already understood how the market works. Games such as Multiwinia took a lot more effort to create and were originally sold for $30 as well but then they quickly dropped the price to get more players playing the game online because it was heading towards a disaster due to a lack of a strong community.
I already suggested to the creator to create a bundle pack like Steam is doing: buy 4 copies for $75 and let you give 3 to friends. This would mean you can immediately play online with friends at a more affordable price and you'd drag 3 friends into playing with you. Win win.

Well, did it work? My guess is that it didn't. Multiwinia was a huge flop, and while lowering the price might have gotten them some more sales, I'm sure the game still ended up losing them money.
Anyway, the thing with a game like SI is that it has a smaller audience than a game like World of Goo. Much, much smaller. So there's a limit to how much it'll sell, no matter what the price is. If it had been priced at $15, it would have needed to sell twice as much (a bit more, probably, considering transaction costs) to earn the same amount of money.
Would it have sold twice as many copies at that price? I don't know. But I know that someone who isn't interested in hardcore turn-based strategy games would have been just as uninterested if it was $15. Or even $5.

I can't remember the last full price game I bought. I have so many good old games lying around I may never ever have to buy another game. Civilization IV and Capitalism Plus alone make any other game superfluous. Yet there is always another weekend deal or bargain price for a great game, so I am never running out of cheap good games.
As much as I would like to pay less for new big games like MW2, complaining about high prices is futile. They will charge that much as long as people are willing to pay that much. Just look at the sales figures for MW2 and there you have the explanation for the current pricing policy (that's the short version, for a more detailed discussion have a look at http://en.wikipedia.org/wiki/Monopolistic_competition). No one is forced to buy it, yet many people choose freely to do so.
Edit: link should work now

Ok, first of all multiwinia was never $30. If you're going to give examples, at least check your facts. Also, how do you know if took more effort to make Multiwinia than Solium Infernum? It seems kind of presumptuous to say something like that.
Second of all, you really can't compare the games market with movies. The audience that watches movies is significantly larger than those who play games. This isn't because of the price, its just the nature of the medium. Also, movies continue to make money even after they've been released (theater tickets, dvd sales and rentals, etc), whereas generally games do not (except for mmorpgs, but thats a whole different revenue system).
Thirdly, people will buy new games for $60. Other people wait until the price drops a bit. If the devs release the game for an already reduced price, just as many people will buy it. They just won't get that extra revenue that they had with the higher price.
Also, Solium Infernum is kind of a niche indie game. If the price was lower, they probably wouldn't sell enough more copies to justify it. Its not a game meant for mass market appeal, so the (relatively) few people that would buy the game for $20 will probably also pony up the extra $10.

Ever heard of inflation?

Didn't most SNES games cost $70-80 back then?

If you're going to criticise, check your facts. It retailed at £20 = a little less than $30 (and the pound was stronger back then and the dollar weaker).
I agree - that was my partially my point: the public is expanded because the exposure is increased. The high price for games and the strong effort to keep games out of the rental market only make games more exclusive and less reachable with those who can't shell out $60-70. The point was really that movies do so well because they're a lot more affordable. The entry-price for a movie is low enough for people to take a gamble, for example.
Oh, I don't argue that people will pay that much - but then don't complain about piracy when you have a price that high. It's not a question of "does it sell" - it's a question of "will you make more profits if you lower the price enough to draw in more buyers". You say people wait for the reduced price but you're only partially right there: enough people may not be willing to wait that long and will pirate it and why would they still pay for it later? This is pure lost money.
Releasing bundles would be a solution as well yet he doesn't do that either. Again, this is a MULTI PLAYER game that relies on a strong community. No players = no games = no value. If this game had thousands of active players, I'd immediately get it but from what I read, it only has a few hundred gamers who tend to play in the same groups. I think it's naive to say that lowering the price would not convince more gamers - considering I've read the same sentiments on every site I've been to that mentions the game, I think you'd be very surprised. I already personally know at least 10 people who would have bought the game otherwise - that's $200!

What I can't bare now is the price of digital stuff (not talking about GOG of course).
Can be games, movies, music, the average price is just a little below of physical stuff's price, while publishers don't have to pay for physical support, covers, booklets/manuals, nor the sellers have to pay for transport, storage, shelves, etc...
We're in a time where publishers/sellers use price habits of customers to make them pay stuff that absolutely doesn't worth the price.
That's mainly because of that I rarely buy digital stuff. When I can have the physical version, I buy it, even if the price is slightly higher.

This was because SNES games were cartridge based. I remember reading in Retro Gamer than manufacturing a game cost $30 or so. That's why there were no "budget" releases like on home computers. After all, a floppy disk costs like 20p for companies to produce so even at £5-10 they still make a lot of profit. But when even just the cartridge costs $30 .... Now, they can very cheaply manufacture games - if the overheads used to be 50% of the game's total price, they're now maybe 5% yet the price of a game has not dropped. Even for digital games, they stick to that price tag even though you don't get a manual or box or DVD.

That, and the fact that Nintendo had the monopole on cartridges, making the price they want, and taxing other console makers. That's one of the reasons why Sony chose CD for their first Playstation instead of the cartridge, as originally intended.

I remember games always being expensive at release, with the exception of deliberate budget titles. Even then, they weren't that cheap back then.