What is expensive?

Aug 2, 2017 | 8 minutes read

A reflection on pricing games.

This article was originally posted on my Medium

You’re an indie game developer. You spent the last 14 months making a living mostly of freelance work since you decided to go forth with that game idea. What you were able to earn in these past months was the bare minimum to pay off rent and some bills. Sometimes not even the bare minimum. When circumstances required, you relied on Twitter to offer your services and find some work just to be able to feed yourself. Thanks to that the last few months have been of sleep deprivation, trying to balance the work that pays you and your own game. And now it is finally ready. It’s time to put a price tag to it.

You’re a game developer. You work on a renowned games company, one of the big fishes. For the past three years and a half, your work life — and the work life of some 300 other people — has been summarized by one game, a new entry in an already successful franchise. Paycheck is not bad, but in the past few months, you’ve had probably as many crunch hours as you have worked on the first year in this project altogether. Your back is sore, your sleep is shattered, you barely see your kids. And it’s summer. You like your co-workers but can’t wait for this to be over. And now it finally is. The company is about to present their sales plan for the game.

There’s something in philosophy we call value judgment. It’s a fancy name for the impression one has of the value of something based on personal experiences and comparison by similarity. Putting it in a familiar perspective, think of something that is very precious to you but has no material value to other people — like an expired ticket of a museum you once went to or an old doll your grandmother gave you when you were a kid. Your value judgment of that object puts it in a high emotional spot. It is far more precious to you than the tickets to the last crappy superhero movie you’ve seen, or the business card of a guy you dislike. Getting rid of this object, whatever it is, requires an emotional quest to detach and let it go.

Same would happen with a rare demo tape of your very favorite song by your very favorite band. You’d be willing to pay a lot for it, and some people who don’t know the band or the song wouldn’t pay a dime. When we’re talking material or cash value, emotional attachment is one of the many reasons the market is able to regulate your value judgment. We’d like to say things are valued as they’re worth, but they’re not. When mobile gaming became a big deal, circa July 2008 with the kick-off of App Store, nobody knew what to expect. Games for mobile were a bit of a marginal market until then; games were sold via carrier networks or pre-installed to show off what the phone hardware could do. App Store started with 500 applications. As of today, its numbers go as far as 2.2 million and counting.

By the time it started, however, it was all new and mysterious and developing games for iOS was laborious. Accessible engines weren’t widespread in mid-2000’s and applications were built from scratch in native languages as Objective C/C/C++. Although things became much simpler then, thanks to close contact with Apple. You just needed a rather cheap developer account instead of a devkit and voilà, make and publish with much less friction. At large, apps in the dawn of App Store were experimenting, exploring what the brand new hardware of iPhone 3G could do using things such as accelerometers (remember the candle app? And the beer one?) and games were just scratching the surface. If you’re publishing something close to a prototype, just trying out a cool feature, how much would you price it?

Before the dollar standard changed the market, App Store games were what we’d today call “expensive”. On average games were priced in a range of U$5 to U$10 (which honestly was already cheap, but we’ll get to that soon). Then some games — taking mobile games in general as now more complex and complete experiences — launched with a dollar price tag, and they boomed. That’s what happened to Angry Birds, a supreme App Store hit in the pre-freemium era. And other casual games surfaced, this time making an even bolder move: giving entertainment for free. So you state a new base value for your players to judge on.

At this point, players’ value judgment shifted dramatically. On one hand you had $10 games; on the other, $1 games providing equally enjoyable experiences. It seemed like a logical decision; pay less, get the same, or almost the same. Suddenly games priced higher than $1 were old news and not worthy. That lead to the development of free-to-play and freemium games that dominate the mobile market to this day. Game developers had to come up with solutions to make their games profitable — if you are not a game maker, be aware that making games is rather complicated. It takes time and money. Most of these practices (as showing ads in-game or creating pay walls) weren’t well received by players, and soon the value associated with mobile games dropped exponentially.

When Mario Run came out, people freaked out. It’s free to download and U$10 to get all levels. Based on value judgment and market behavior, players judged it expensive. But Mario games on consoles cost U$40 or more. So what? It’s not the same, you may argue. Mobile games are casual, simple, archaic. See, that’s the value judgement’s devil whispering in your ear. Mobile games are seen as lesser because the market made us look at them like that. Indie games for various platforms came to face a similar situation. When Xbox came out, console games’ prices were fixated in $60 at launch. Years went by and games became more and more complex, realistic, absurd open-worlds with ultra high graphics. Games take more time and more money to be made now than they did before, and yet are still sold by the same price. What does that do to our judgement? When you see a new indie game (that does not feature open-world environment or 4K graphics) priced at $20, you may consider it expensive (consciously or not). How can a game made by one guy — and not 300 — in a year — and not three years — cost so much?

But hear me out, fellow game dev: your game is not too expensive. I’m not bringing you an answer, or a magic formula. I’m bringing in this thought: as a matter of fact, you’re probably pricing your game well below what it is worth. For market reasons we have to adapt and change our break-even calculations. It’s not like we can change everyone’s experiences and try to imprint a new judgement forcefully in their heads… or maybe can we?

My suggestion (as a game developer who knows not much about pricing except this bit on why it works how it does) is: study sale strategies. Learn more about the people you’re targeting, the ones you want playing your game and, ideally, buying it. Study your competition, the other thousands of games in market probably targeting the very same players. Study their prices, what they offer, their values. Study psychology and value judgement. Stop pricing a game from your heart, or from what you’d wish to get with it, or because that other game got double of this price and you think your game can be beaten in maybe half of the time.

We, as developers, cannot ignore that we’re on a sales business. We’re selling ourselves, and you have to understand the market to sell. Most game devs are not very fond of doing business, alas we will have to deal with it at some point anyway. And it won’t hurt to get there a bit more prepared.

Keep in mind this is a starting point for indie devs with no clue at the moment. If you want more, dig for more. So:

• Take a deep breath. We’re doing business.

• Be aware of your surroundings and your limitations. Know your competition. What are they doing in their game different than yours? What are you doing different than they are? Is there anything that stands out? Would it make you price your game higher or lower?

• Understand the base value of your game’s niche. Explore the market. Calculate the price of your work. No, really. How much would you pay yourself for the work you’ve put in your game? That helps making break even calculations.

• Do your math, draw a worst and an optimal sales scenarios. How long would it take to brake even if it sold fairly well? And if it sold poorly? And if it didn’t sell at all, what would you do? This part can be very trick, so use SteamSpy, App Annie and search around for intel on similar games and genres.

• Gather your info and choose a fair price. Fairness may be a different concept for different people; you’ll want to make it fair for your players but also to yourself. Unless you make it your sales strategy to set the price real low or real high to get attention to the game or to assure some income, don’t forget that you should feel comfortable with your decision. And, as we are being honest here, those previous research steps are there precisely to make you comfortable.

Happy pricing!