The 0.99 Problem

Discussion in 'Public Game Developers Forum' started by EssentialParadox, Dec 12, 2009.

  1. EssentialParadox

    EssentialParadox Well-Known Member

    Sep 21, 2009
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  2. The prez 12521

    The prez 12521 Well-Known Member

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  3. Quorlan

    Quorlan Well-Known Member

    Sep 5, 2009
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    Good article and it makes some solid sense. I've always maintained that pricing an App at $.99 means you must make the Top 10 in order to be successful financially.

    The one fault I see in the article is their bottom three pricing tiers example:

    The problem is that if you can sell 50k copies at $.99, you won't sell that many at $1.99. If you're lucky you can sell half as many and make the same amount of money:

    25,000 copies x $1.99 = $49,750 - 30% = $34,825.

    They did mention something about sales scaling down as price scales up in the text, but failed to demonstrate it in the example. Perhaps the example was only intended to demonstrate the various amounts of profit based on a fixed number of sales at each pricing tier, however, that isn't the real world.
     
  4. EssentialParadox

    EssentialParadox Well-Known Member

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    #4 EssentialParadox, Dec 12, 2009
    Last edited: Dec 12, 2009
    I think their point was probably to show the income difference when you're targeting a specific amount of sales with your marketing. I personally don't believe that pricing between $0.99 - $2.99 will make much difference to the customer if effective marketing has already brought them to the game and they're interested in it.

    Do you really think the difference in price between $0.99 and $1.99 will translate into halving the sales, and further halving it at $2.99? I'd personally be surprised if that's true.
     
  5. Quorlan

    Quorlan Well-Known Member

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    I don't think it would actually cut the sales in half necessarily. I do think that the $.99 app has a disproportionately higher chance of winding up in the Top 10 charts than a $1.99 or $2.99 app. And that in turn will affect final sales numbers and profits.

    Personally I believe apps should be priced higher or risk the continued pollution of the App store with garbage apps. Or the app store charts should be a function of volume of sales AND price, that way apps that are priced higher have a more level chance of showing up in the top charts.

    I guess that's what the top grossing chart is for, but when presented as Top Charts - Paid Apps vs. Top Charts - Top Grossing, I think the general user base sees the first as "the best games" and the latter as "the most expensive games". I could be wrong and I certainly don't have scientifically gathered evidence to back it up, it's just a gut feeling based on my own observations of people in the App store.

    Anyway, I think $.99 Apps are a problem that create a "race to the bottom" price war that leaves many developers in a position where they have to choose between depth and quality in the their games or profitability. In that scenario, depth and quality will almost always loose, after all, we all need to eat.
     
  6. EssentialParadox

    EssentialParadox Well-Known Member

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    I agree on the image the "Top Grossing" charts currently have. I don't think any of the charts are reliable for finding quality right now.

    I am starting to believe that customers are starting to begin becoming more sophisticated about their app purchases. The last year the App store has been treated as an all you can eat buffet, tasting everything because it was so cheap. But I am getting the impression that app buyers are looking for more substantial games, and they're willing to pay extra for that. Looking forward, I don't believe $0.99 will be a viable business model for developers. This should hopefully translate to the app store leveling out with a more substantial lower-end price-point. We'll always have the occasional $0.99 impulse buys that shoot to the top of the charts, though…
     
  7. Quorlan

    Quorlan Well-Known Member

    Sep 5, 2009
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    I think you're right about that. I know that I've talked to quite a few App store customers who all, like me, feel that the $.99 problem is holding the platform back and who are all searching for the better apps that may cost more but promise more depth, more gameplay, higher quality graphics, sound and programming, etc. I'd love to see the App store grow up this coming year and become a better source of quality titles.

    Q
     
  8. Frand

    Frand Well-Known Member

    Yes, unfortunately we've seen a linear relationship between the number of sales vs. the pricing of the app in our past experiences.
     
  9. TrueAxis

    TrueAxis Well-Known Member

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    The only way this will happen is if developers make a stance together and refuse to set the 99c price. There's no way on earth a quality game can be made for that price. Sure maybe 1 developer out of 100,000 developers may get lucky with a quality game at 99c but the rest will go bankrupt.
     
  10. NickFalk

    NickFalk Well-Known Member

    A practice that would be 100% illegal in a lot of countries…
     
  11. mobile1up

    mobile1up Well-Known Member

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    why would it be illegal? you are free to set whatever price you want.
     
  12. TrueAxis

    TrueAxis Well-Known Member

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    Probably yes :)

    But is it illegal for companies like EA or Gameloft to put all their games on sale on holidays (And this is a lot of games), selling because they know that's when people will buy games, and at the same time go up the charts and knock the competition down the charts. For an Indie to do this with one title is not good business. For someone like EA or Gameloft this is fine because they can soak up the loss.

    This is just designed so that the indies will be pushed out or give up... And when this happens they will put their prices higher up than now. In the end they will control the price. And if anyone wants to muscle in on the action, they will just drop the prices down to push them out. And then the App Store will become like the console business where original product will not get in.

    So the question is how many Need For Speeds will gamers pay for - Need For Speed - ripoff 20?

    It's similar to how the big Super Market chains get rid of the small shops on the corner streets. So the local butcher shop who cuts the meat how you like it, with all the extras will just become some graying looking meat pumped full of water and wrapped in plastic...

    The sad thing is people will let this happen!
     
  13. jessicalolz

    jessicalolz Well-Known Member

    Dec 12, 2009
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    EA & Gameloft are dominating app store that way.
     
  14. Intruder_qcc

    Intruder_qcc Well-Known Member

    Mar 28, 2009
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    Yes everyone is free to set the price we want... but...

    What Nick Falk wanted to say is that if developer like our self are making some discussion and we decide jointly to set all our price to let say 1.99$ then this is what is called Price Fixing (http://en.wikipedia.org/wiki/Price_fixing) which is illegal in several countries such as USA, Canada, Australia, New Zealand, European union. And its prosecutable by the laws and you will need to pay some big fine.

    I saw this happen here in Québec were many gas station last year made some deals to set the price at the pomp higher then it should have been and everyone in that unholy alliance was setting the same price. Which in the end is very bad for the consumer and it doesn't follow the basic principle in economy of offer vs demand.
     
  15. mobile1up

    mobile1up Well-Known Member

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    price fixing is only relevant if you exclusively exhaust the market with your services. if your talking about only indie developers; it will be more like a union; where you are fighting for your own rights to keep in business. you cannot say that not selling at 0.99 is illegal; this price point is only feasible because apple uses an accumulative "purchase system" meaning not every purchase is a single transaction.

    i've been selling software for years; and in some places, like www.esellerate.net; a merchant for indie developers - the lowest price you can set is $5.. is that price fixing? no.

    i think a collection of indies protesting against $0.99 is fine - the bigger concern; as another poster mentioned was that the large companies put the price low to push out the indies and make them go bankrupt. thats competition strategies, not 100% illegal.. some wish it was :)

    PS: price fixing is related to a single commodity; computer software you can buy in many forms and variants; you are not forced to buy the indie developers software - you can always buy the big companies games; so the price fixing element isn't relevant at all here. gas/petrol != software.
     
  16. Intruder_qcc

    Intruder_qcc Well-Known Member

    Mar 28, 2009
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    @Mobile1up

    Ohh that's true nobody is forced to buy our indied stuff ;) which is indeed different then petrol (well most cars at some point need some form of petrol).

    But the union ideas could be interesting as this is what they did in other market like with artists so they can get a certain minimum for their work and not get abused by larger corporation.

    Indeed big corp such as EA, Gameloft really hurt smaller indie dev :( when they put their big AAA title develop by a team of 10 people having invest large budget in development/marketing. Compare to a 1-3 people operation running from the garage/basement of your home with shoe string budget is very rough.

    Sometime I wish that Apple had never have put that 0.99$ option available, like you said some other place the minimum that you can put that isn't that low. Consumer would have been used to pay a minimum of let say 5$, developer would have done more revenue to keep stay in business and continue to develop great game. A bit what you see in the bigger console market where most game comes out at around 60$ and gamers buy them in a blink (just looking at the last NPD chart for Call of Duty Modern Warfar 2 is any indication...).

    Wonder what will happen in the new year 2010, how the AppStore market will evolve to. Are we going to still see that race to the bottom? Is the price going to rais up a bit? Only have big developer left? I hope the situation improve for all of us.
     
  17. mobile1up

    mobile1up Well-Known Member

    Nov 6, 2008
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    sad.. but true :)

    the difference with petrol is that it is the same petrol - it isn't like selling software.. so it has more of an impact on general consumers if you fix a price for something people need to survive (petrol, milk, bread etc)

    a $5 price point also means you tend to release something with value as well. not a basic application (ie: mirror, fart app etc) and try to catch impulse buys for $0.99. my games were on previous platforms sold for $5 a pop; the more advanced games were $10 or $15.. a real commercial title; licensed etc was selling for $30.

    but, apple has opened up a new market; impluse buy.. cheap.. brings the value down but also brings new people who try to make a quick buck. this means serious competition and dilution of the market with so many players trying to go for those $0.99 sales. one could argue the customer wins; but with this solution - there is a lot of crap out there that needs to be sorted through, effectively a the expense of the customer.
     
  18. Uptown Arts

    Uptown Arts Well-Known Member

    Unfortunately, the term "herding cats" comes to mind.
     
  19. TrueAxis

    TrueAxis Well-Known Member

    Sep 7, 2009
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    Well, forming a union is a good idea because that becomes a large pressure group of people that can force talks with Apple to set the min price to 3.99USD. But I suspect it will not happen...

    Better yet why not form a group, say an Indie Label that handles marketing, where a website is built that has links to iTunes, then group together with money to buy up banner space on the big sites that link to the website. And better yet each game should give a small % of revenue towards marketing. In the end your marketing budget will grow, then you can afford magazine adverts - and then you will be competing with the big boys like EA.

    So in respect this Indie Label gives an identity to small individuals, where the games buying public perceive the games as one group, like the EA brand. This Indie Label decides from the members of the group that allow new members and games into the fold - quality all the way to make this work.

    This site could also connect skills between the different members and also highlight new games on the way.

    Anyone up for this?
     
  20. Intruder_qcc

    Intruder_qcc Well-Known Member

    Mar 28, 2009
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    @TrueAxis

    The indie label idea isn't new ;) other developer are already making this such as AppTreasures and I know the guys from RPNinteractive are also working on building up an indie label (Rogue Pirate Ninja Interactive are the guys that made the puzzle game IRISag).

    From what I see so far is that most of those labels are usually smaller in scale as like you say they want a bit more control on who to let in (quality instead of quantity). Which is normal as you want that label to represent a certain quality/value.

    The best would have been a large association of independant developer but sadly it will be difficult to set up :(. But who knows maybe someone will find a way to make it happen :).
     

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