The experiment begins! New site and new games!

[KNau]

Hi all!

I am about to uncover the answer to the age old question that has plagued these boards since our early days on Dexterity: Do game prices matter as a means of competition?

My new site and new games went on-line yesterday and I am putting all my effort and resources behind it full-time to test the theory that, yes, customers will choose value pricing if given the opportunity.

By December of 2004 I will have at least 8 games available for sale from the site and an even mix between arcade, strategy and puzzle genres, 2D and 3D titles. I'm not worried about success or "failure" (if you believe in such a thing as failure) in this venture, mostly I am really excited to find out if the experiment will work.

The official marketing stuff begins here:

Mybrainplay.com is proud to announce the launch of their first round of quality, value-priced games for Windows PCs, available immediately from their website:

www.mybrainplay.com

The Mybrainplay.com website launched on September 2, 2004 and finally gamers have a real choice when it comes to how much they pay for entertainment. Starting with 3 exclusive titles - “The Mighty Muddles�, “Ghost Manor� and “Marine Meanies� (coming Sept. 13) all games will be available for only $4.95 each! That’s less than 1/3 the price of most competitors’ products!

Games:

Ghost Manor
Ghost Manor is a fun take on the classic game of minesweeper with atmospheric graphics and sounds and the biggest play areas you will find anywhere! Once you've played Ghost Manor you may never go back to plain old minesweeper again!

www.mybrainplay.com/ghost.htm
www.mybrainplay.com/ghost/ghost_demo.exe

The Mighty Muddles
The Mighty Muddles is a challenging yet relaxing game in which you must unscramble lines of quoted text that have been "muddled" up with random letters. Its easy to understand gameplay, relaxing music and fun graphics make this a great "coffee break" game to help you unwind from the stress of work or the home.

www.mybrainplay.com/muddles.htm
www.mybrainplay.com/muddles/muddles_demo.exe

Enjoy! More games to come very soon and I'm progressively working my way up to larger and more advanced game mechanics but I plan to always stick to the value price and (hopefully) the tiny file sizes no matter what I develop.

I will be sure to share the results of this experiment with the members of this board! Here's hoping Incidentally, I'm also working on a game to test the opposite theory - create a site with a single game on it and sell it at a premium price, but that won't be until November.

[Jack Norton]

Well that's a very interesting experiment, congrats
I wanted to do that too but every game I start grown on its own into a complex simulation game

Good luck with your games!

[Greg Squire]

It sure is hard to put a price tag on “Fun�, after all that is what we are selling here. “Fun� is also very subjective; what’s “fun� to one may not be “fun� to another. I think a lot of us here may our price our games based on what everyone else is charging (the big boys seem to do this too). While that may work fine for real estate and commodities, I’m not sure that is always the best way for us. I’m not sure on this. As some have suggested, reducing the price could also have a negative effect (some people might think the game is junk based on the price tag).

As for me, I know there are certain (retail) games that I’d be willing to spend more than $30 on, but they are few, and there are lots of others that I wouldn’t buy no matter how low the price goes (the game just doesn’t interest me). I’m the kind that generally waits for a retail title to dip below the $20 mark before I’ll buy it. Sometimes I’ll make an exception, but is rare. Call me a cheapskate if you want, but I’m patient and don’t need to play most AAA titles right away. I barely get any time to play games anyway with the other demands on my time (Work, Kids, Home Repairs, etc.). Value Pricing may bring in more registrations, but then again it may not. I’m not sure that price is the only thing that keeps some from registering.

Anyway, Good Luck with your experiment. Let us all know how it turns out.

[KNau]

Thanks for the comments.

Thinking about it, I may be in for a challenge. Perhaps successful budget games are primarily a retail phenomenon? I know I dig through the bargain bin all the time and rarely buy brand new "AAA" titles anymore. I just can't justify the price tag.

For example, I just bought an Atari "Military 2 Pack" with Tiger Hunt and Steel Tide. Both games wouldn't be on any mainstream site's top 10 list but I've had an absolute blast playing them (going on 4 weeks of daily playing now) - and it only cost me $9.95!

I think success will boil down to coming up with a game that people will line up to play. I don't expect a lot of sales from Ghost Manor and The Mighty Muddles but Marine Meanies (when it's released) may fare better. The way I envision it is that the site slowly grows in traffic and sales as the number and quality of games on it increases. It's a gamble but it just feels better to me to experiment a little, I was getting really bored with the "indie" status quo.

[Jack Norton]

I've read your articles, and well, I disagree on some points:
If selling a game on-line costs less, why do publishers charge so much?
The truth is, publishers charge so much because they can and the consumer is usually unaware that the games they are buying are so overpriced. To be honest, I started out in this business charging $19.95 for games and it is pretty sweet to walk away with $15 dollars in profit from each sale - but it's not fair to the customer
I don't think that you can say that about ALL games... for example I had people buying UBM with extended download option the first month I released it (forgot to ask Plimus to remove it!! LOL) and that was the total price of 29.95$... and the first month I sold a lot
Surely there are some games, for example my Spin Around, that could be sold by much less, but the support comes to mind... even if you sell 100, you make 500$ (which is a nice sum) but you have to support 100 people (and there are ALWAYS problems). For the same sum I need to support only 20 people

Still, I think that is a very interesting experiment

[Hamumu]

Support is one thing, but there's also the development itself! It costs money (mostly in the form of time) to make these things. We deserve to be compensated for those labors. I'm not content with making $3 profit per game, because I simply don't have the visibility to get the thousands of purchases per month I'd need to make a living that way. You can't really say $X per sale profit is fair or unfair - you're selling an intangible, a piece of art, the result of months of labor. It's worth what people will pay, and what it takes to keep yourself in business. After all, if it was only worth the cost of its components, it'd be like $0.50, since it's just a little bit of bandwidth! Don't forget there's such a thing as labor costs, and a whole lot of labor goes into making a game. Luckily it can be subsidized across every copy you sell, since otherwise each coipy would cost (according to princec) $50,000. Retail publishers can make less per sale than we do (and often do) because they sell hundreds of thousands of copies! And most retail games still lose money.

I certainly don't disagree with the $4.95 experiment, I want to hear how that turns out. I was just furthering the disagreement with the quoted bit about fairness.

[Jack Norton]

I certainly don't disagree with the $4.95 experiment, I want to hear how that turns out. I was just furthering the disagreement with the quoted bit about fairness.

Well anyway I'm sure that he doesn't really think what he wrote in those articles and they're made only to convince customers... infact he's saying that will make another experiment with a fullprice game, exactly the opposite

[KNau]

Well, the articles were written to make a point but I stand by the general principle. The support and development costs are not the problem of the customer and the customer. Regardless of whether it took 2 weeks or 2 years to develop a game the price should remain reasonable. I quote Gandi:

"What is a man if he is not a thief who openly charges as much
as he can for the goods he sells?"

As Jack pointed out, I will be experimenting with premium pricing on another site but I think value pricing is good both for developers and consumers.

[GameStudioD]

Well, I guess this is worth a try. Let me point out some things about your site:

There is no contact info that I could find. No company info. Not even a support email addy. The support page looks like its the only support a customer would get. Its hard to trust an unknown company with your cc as it is. Make your company appear as professional as possible. Make an about page with company info, mission statement, your company's mailing address, privacy policy, contact, etc. Otherwise, people will get the impression that there is a catch: spyware, adware, spam, being ripped off, less quality, etc, etc, etc.

These things must be taken into consideration, because they may affect your results. I would even remove the article: 'Why Do We Need Budget Pricing?' After reading it, the only thing that goes through my mind as a customer is: 'Whats the catch?'

Good Luck.

[Hamumu]

Pardon the rant, but....

But that's exactly it... $19.95 isn't charging as much as you can. It's charging a fair price for the goods, that IS good for both developer and customer. It's very reasonable for the amount of entertainment they get, and for you, it's enough to keep yourself afloat on an indie level of sales. If it turns out that $4.95 can keep you going and fairly compensated for your work (after all, if you don't feel you're getting paid fairly for your work, why would you continue doing it?), then that would be a great way to go! Happier customers with no harm to you, sounds perfect.

Like I said, we deal in intangibles. There IS no fair price for our goods. If you are selling something tangible, the fair price is easy to find - it's the cost of materials plus some reasonable hourly wage for the work you put into it. But our games are intangible, any number of copies can be made, so we are subsidizing those costs over an unknown number of sales. It just comes down to whether customers feel like they got a good deal for the money, and my most expensive game at $29.95, I KNOW my customers consider it an incredible deal. They are HAPPY. That's what I'm shooting for. I look forward to the day my sales are so good that I can sell games for really cheap, I truly am in this for the fun of it and the happy customers, as long as I can make a living. I'm not selling for the most I can, I'm selling for what I think is fair.

When you say support and development aren't the problem of the customer, that's just wrong. They are. Customers are our source of income, therefore they ARE funding support and development. We MUST price according to what support and development will cost us, or we will go out of business (unless we price over what it will cost us, I suppose!). That's like saying it's not the customer's problem that the ring he wants to buy is gold instead of tin. It is his problem. Because it costs the seller much more for the goods, he has to charge much more. If our development and support cost more, we have to charge more. We just don't have a choice (well, the alternative is to get more sales - but in reality, that will take spending too, in marketing dollars, which again has to come from the customer).

I just take offense to the blanket notion that if you are retaining $15 of a sale, you are ripping the customer off (especially since I retain typically closer to $20!). No, that money has to go to the development and support costs (and my mortgage, electricity, DSL - the costs of my business existing!). You're calling it pure profit, and it simply isn't. It's funding expenses. That's the lie of your argument, and I think you're doing a disservice to indies by stating it publicly. If I didn't make a good profit per sale, I wouldn't be in business. I'm not rolling around in piles of money, I'm spending it on my business.

I'm sure there comes a point when you can reasonably condemn a price that an indie has set, but that point is certainly not $19.95. If you want to rip on me for selling Supreme at $29.95, go ahead. That's much closer to those crazy retail prices, and I probably would do fine selling it at $19.95. But what it comes down to is fairness to everyone, including me - I deserve fair compensation for my work. Just as I shouldn't rip off customers, I also shouldn't intentionally rip myself off. Developers are people too!

My wife is a bottom-of-the-ladder public school teacher, and makes 50% more money than I do. Don't tell me I'm ripping people off. I look forward to hearing how your experiment goes, but in the meantime I'll continue charging the amount that earns me enough to pay my mortgage. And I won't feel bad about doing it. I know that 'sweet $15' is keeping me around to provide my customers with new games. And I know that they're getting incredible dollar value, better than anything else in entertainment. I don't feel bad about that at all.

[Andy]

@Hamumu:

Agreed!

No, seriously! I'd like to "vote" for this opinion and don't like to repeat so long speech one more.

@Everybody

If to talk about clean experiment of this type. It could be interesting how it works with some good games. Such as Doom3, or Ricochet or Mike's Bugatron (from shareware). But if you place something with freeware quality and trying to charge for it and pose it like an experiment - I'm not sure if results would be useful at all.

Anyway @KNau: Good luck!!!

[Chris Evans]

Mike pretty much said what I was going to and more.

Unless you're significantly overcharging, there's really no right or wrong. I don't think anyone here is trying to rip-off customers, but we're all trying to run a business. The price of your goods and the volume which you sell them have to be able to sustain your business and give you a little profit.

By the way, there's nothing wrong with making a profit! Just because we're Indies doesn't mean we have to be poor and always struggling. Also I'm sure the customer will prefer to buy from a company that's healthy and strong over a company that's always on the brink of financial ruin.

Good luck with your experiment, but I'm personally not really in favor of budget pricing. For example, if sell your game for 19.95 and get $15 profit per copy, if you sell 10 copies you make $150. To make that same amount selling at $4.95 (assuming a $4 profit per copy) you'd have to sell 50 copies. As Mike mentioned it will require a lot more marketing resources to get higher volumes of traffic to the site and plus you'll have 5x more supports issues to deal with it. It's a lot more time and resources spent for the same amount of profit.

Cas had an interesting experiment because he wasn't just lowering the price, he had an overarching strategy that he was using budget pricing for. But still I don't think there's a single Indie out there who's successful strictly from selling their games at budget prices. It's not like no one hasn't tried lowering their prices. It's just usually when they lowered their price to budget levels, sales stayed the same or went down.

So simply lowering the price to sub $9 isn't enough. There has to be something else involved. I know more marketing must be involved, but I don't know what the other "somethings" are.

[KNau]

If you're only selling 10 copies a month, it's not up to me as an individual consumer to pay your mortgage. No one owes us a living just because we decided to be game developers. We shouldn't raise prices simply because most of us are poor salesmen and need to turn a profit on 10 - 20 copies a month.

It does cost $3 or less per copy to sell a game - you can't argue that - so what you're arguing is that the remaining $16 is owed to you because you wanted to be a full-time developer. As a customer, I feel it's not. As a result I have been buying fewer and fewer indie games when I used to buy 1 a month. I see the frustration growing, too - from offhand remarks by site editors to bulletin board postings "If I can get counterstrike for $20, why is your little puzzle game $23?".

Entitlement is the kind of thinking that gets small businesses crushed when a Walmart moves in next door. No one cares that you have a mortgage to pay or a new baby on the way. People prefer Walmarts and Blockbuster Video over mom and pop stores, even if they offer better service and selection, and that's a fact.

Also, can you honestly say the pricing system isn't arbitrary? Costs were never taken into consideration for 99% of the people here when they set their price. It was just "well, everyone else is charging x so I guess I'll charge x, too". My experiment is that "everyone else is charging x and therefore I will charge y".

It's not personal guys, just business. With this site I am wagering that I can make a living, support my business and my customers on $4.95 per game. Feel free to write a counter article on your site about how much you deserve the 600% markup, I don't think you would find a lot of sympathy - except maybe from like-minded developers.

Incidentally, if you're looking for company info, customer help, etc. you can either click on the big "Help" button at the top of the page or one of the links in the big "Player Support" menu on the left side of the page. Note the "contact" link

[KNau]

On the topic of developers experiencing a reduction in sales when prices dropped the reason behind it is because most developers here are competing on "content". That their game is special and different from everyone elses - and usually exclusive to their site.

Under that business model value pricing wouldn't make a difference because you are only looking at 1 or 2 games on their site. I don't expect any real sales to trickle in until I double or triple the number of games I carry. I'm using a completely different business model and I don't see the individual indie as a competitor. The article that is being so viciously opposed here was directed a big competitors who are charging a premium despite having the resources and volume of business to do otherwise.

I didn't make that distinction between "indie" and "portal" because it's too complicated to argue in a single page article. Call it an error of omission if you want, I'm not a professional journalist. Besides, I would still argue that the pricing for individual indies is arbitrary and too high.

[Hamumu]

Again you make the fallacy that the only cost of the game is the bandwidth. That's ludicrous. "600% markup" would be if the costs of creating the product were close to zero, but they're not. Developing the game DOES cost time and money (and so does maintaining your business - web site, electricity, even the mortgage that houses it all), which must then be subsidized across however many units we end up selling total (and since that can't be known in advance, yes, we do make a guess). $4.95 is one possible guess, so is $19.95. Either one could work, but the important thing to note is that the money you receive from it isn't profit! It's only profit once the entire cost of developing the game, and other business expenses, and maintaining the game and supporting the customers, are all recovered. Only then are you REALLY receiving profit. Money you can save up to buy a yacht - that's profit. Money you have to spend to keep the business going is not profit. This is not remotely unique to software, it's a part of the real world. If we create a culture where people don't think that (something software pirates diligently advocate - "information is free, man!"), then we are pricing ourselves out of existence. The costs of a big mac include more than mystery meat and bun - they include labor, electricity, heat, lighting, and horribly enough, even PROFIT. You know what else they include? R&D. McDonald's spends money on developing new burgers.

This has zilch to do with entitlement and everything to do with the realities of a business. It's clear you don't understand that, so go on and continue to mislead customers and make the rest of us look bad, enjoy. It doesn't bother me that you have this philosophy. It bothers me that you put UNTRUE (yes, calling it $15 of pure profit is a blatant falsehood) information up that, assuming it somehow magically spread to all consumers of video games, would destroy our industry, because people would assume that it was true and stop buying games that are fairly priced (and no, we wouldn't survive on $4.95 games - I know my sales wouldn't go up by 5x if I dropped prices to that level, and if they somehow did, the support and fulfillment work would overwhelm me... so I could hire somebody to help, but uh oh, now I need even more sales to pay his salary... so I market, but uh oh, it costs money to market! Where oh where could I get this money from?).

I know in the real world, it's not really going to have any impact, so I won't worry about it anymore. I just wanted you to consider the untruth of what you have up on your site, and how disrespectful it is to the rest of us that do follow this tried & true pricing strategy. Personally, I take enough pride in my work that I know it's worth more than $4.95 a copy. And my customers absolutely agree. I won't try to rant any further, the thread is yours.

[papillon]

I'd be perfectly happy to sell games for a lower price if I thought I could get decent volume out of it. But I don't, and even making a whole site of cheap games would, to me, start raising flags of "cheap CRAP games" like some sites that I will not mention here. (Not board members.)

I'm more hoping to be able to sell compilations when I get enough games to make it work...

[Valkilos]

I think, personally, that I agree somewhat with both sides here.

I've noticed a bit of a problem with the indie market lately, but it's not high costs; it's low value. I recently had a discussion with another aspiring indie on this very topic. With there being so much replayability and content in mainstream titles - and there are many good ones which you can find marked down to around $20-$30 - then selling a simplistic game with an hour of gameplay probably isn't worth $15, let alone $20-25. There have been many indie games I've looked at lately and thought "Hmm... well, that would be worth it if there were around three times as many levels." The whole value/cost ratio seems to be out of whack in a lot of games lately.

On the other hand, I think you're grossly underestimating costs. It would be like me saying "Hey, a hundred people are seeing this movie, and the only thing it's costing them is $15 to pay the projection room guy and a few dollars of electricity! That's a profit of almost a thousand dollars! After all, as the consumer, the costs of making a movie and building/maintaining a theater aren't my problem!" That being said, it's great to see someone going against the status quo

Do you have any plans as far as marketing goes? One problem might be that many marketing costs (advertising, press releases, Download.com listing, etc.) tend to be fixed. One solution that comes to mind might be to simply launch one major advertising campaign based on the site itself once you get a few more games. Bundle packs, once you get a few more titles up, might be a great way to get multiple sales from individual customers. I'm very curious how you're going to go about things, since you have such a different business model than most people here.

Keep us posted on how things are developing - I'll be rooting for you!

[Chris Evans]

Uh, I never said you should be able to live off 10 copies a month. I was simply giving example of how you have to sell 5x as much at $4.95 and use a lot more resources and time than you would at $19.95.

It does cost $3 or less per copy to sell a game - you can't argue that - so what you're arguing is that the remaining $16 is owed to you because you wanted to be a full-time developer. As a customer, I feel it's not.

That's ridiculous. Anytime I buy a product, I know I'm not just paying for the tangibles. I know the price of the product also helps subsidizes any marketing or development that went into the product. I also know the product includes a profit margin, so the company can stay in business or research and develop new products. I hardly ever expect products to be sold at cost.

If someone likes my game, but they feel I shouldn't be "owed" $16 "profit" per copy, then they don't have to buy my game. It's that simple. If they rather me go out of business so they can have a $4 game, then they can look elsewhere (Personally, I don't like buying products from companies that look like they're going out of business.). However, my goal is to make people feel the game was worth $20-30, but if they don't think it is, there's a money back guarantee or they don't have to buy it in the first place. Games are a luxury, not a necessity.

I think it's good to experiment with price points, you shouldn't just accept the $19.95 price point blindly. Set a price that makes sense for your game, your goals, and your target market.

I just disagree with your assertion that if you're not practically giving away your product, then you're cheating the customer. If everything should be sold at near cost, then I should be able to go down to the store and purchase PhotoShop, Flash, and 3D Studio Max all for $10. After all, according to you, why should I care as the customer whether those companies try to stay in business?

[Chris Evans]

Of course by the time I finished writing my post, everyone already replied saying the same thing. Doh!

[svero]

I agree with hamumu. The notion that a 20$ game is 16$ of profit is laughable. You have to factor in all your costs including R&D.

Say you had to pay to make a breakout clone in 2 months as a pure investment. These might be reasonable expenses.

500$ for contracted artwork
1000$ for rent of office space
7000$ for development
200$ rental of computer equipment
100$ sound production
200$ contracted music
1000$ software (os, compiler etc... this is light but can be factored through many titles so hard to put a specific number on it)
400$ Utilities (electricity etc..)
100$ banking and accounting

I've probably left something out.. but if you had to pay to have it developed these seem like reasonably fair costs.. on the lower end. That's a CHEAP contract programmer in the states. (especially someone with the necessary experience) -- So on the low end 10,500$ USD -- And I think that's quite cheap - good luck finding a company to develop a quality title for you in two months for that amount of money.

So now... Supposing the game sells 30 copies a month and each copy is 13$ to the developer after the costs of bandwidth and maintaining a website etc... That would be a game selling for around 20$ - 20% registration service fees - maintenance costs (100/30 ~3$ per copy) -- That would be an income from the game of 390$ a month. To recoup the initial investment of 10,500$ would take about 2 yrs and then you'd start to see some profit.

Generally though a game that cant make more than 400$ a month is a bit of a dud in my view. So really what you end up doing with the one hit game you get. (a game that sells well 10k+ USD a month) is financing all the losses you took on the games that didn't hit well with the public. So in my view, it's not even really entirely reasonable to look at the costs on a game by game basis.

[Kai Backman]

And to continue Sveros argument, the post-development costs are probably 1/2 of the total investment into a single title. Depending on how you value your time they might be even more. So you would actually start seeing profits after 4 years, not 2.

This was raised in another thread by Obscure (?), the big investment for most players is the time they put into playing the game. You are not competing with price, but for mindshare.

[svero]

Right. I didn't factor in any marketing etc... But you also have to assume that if you put money into marketing the game would start to sell more than 20-30 copies a month, so it's hard to factor that. All in all though I'd say I was more than generous billing the game at 10k.

[yanuart]

so what's the result of this experiment ??? it's november now and I really like to know how your games are doing with the "value price"

[Sirrus]

Well the site doesn't work, soo...

[EpicBoy]

Bear in mind that a low price isn't going to fly in a lot of cases ... people will look at a $5 or $10 indie game and ask, "Why is the price so low? What's wrong with it?" People expect to pay certain prices for things, and $15-$20 is right around the sweet spot of an impulse purchase. Any lower than that and they start asking questions...

[Red Marble Games]

And KNau's argument, if he's serious about it and not just trying to suck in customers, proves too much: how can he live with himself charging $4.95 per copy, when the bandwidth doesn't cost anything close to that?

The fact is, there is no great war of principles here. KNau is a capitalist like the rest of us, whether he wants to admit it or not. He thinks he can charge $4.95 and make it up in volume, which is not anything to be criticized; more power to him, if it works, and I sure hope we eventually hear the answer.

Advancing a low-price model by criticizing other developers' pricing is just competition, it seems to me. I could as easily put up a pitch on my site that people who sell games for $4.95 are pushing shovelware and customers ought to reach for games of quality instead. Whatever. Saying that the $16 (or more) is "pure profit" is just flat inaccurate, for the reasons Mike and others explained quite well above, but if we're going to pillory people for exaggeration in their marketing, well, there's a lot of pillorying to do.

[princec]

I tried it out last year, and it didn't make any difference to sales, but seeing as my sales were shitty it'd be hard to know one way or the other. Super Elvis is available in 4 difference prices, so it'll be interesting to see which one is the most popular and compare this will KNau's findings.

One thing's for sure - if he makes more sales then he's expanded his customer base more rapidly, if not his profits. And customer bases are the most valuable asset any of us have, not our games.

Cas

[Red Marble Games]

One thing's for sure - if he makes more sales then he's expanded his customer base more rapidly, if not his profits. And customer bases are the most valuable asset any of us have, not our games.

Absolutely right. The value of any sale (if the customer will let you have his/her email) is way more than the profit from the first game ...

[cliffski]

so what's the result of this experiment ??? it's november now and I really like to know how your games are doing with the "value price"

me too. I suspect not well though.

[Jack Norton]

Absolutely right. The value of any sale (if the customer will let you have his/her email) is way more than the profit from the first game ...

Since I put the checkbox "subscribe to our newsletter", I had very few people answering YES.
So about 20% of my customers are interested in getting news about my games (new patches, updates, new games).
Wonder what the other 80% bought the games for then...?!?

N.B. the option is turned on YES by default so they have to intentionally click it to disable...