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#1 Re: News » Why Rampant Sales are Bad for Players » 2014-01-16 22:08:31

Honestly, I joined this forum just to post a reply to this...

Jason.  You sound like an intelligent individual.  You've thought out your argument on multiple levels and that by itself stands to reason that you've considered quite a few things. 

However, you _must_ realize, that you're attempting to discard over 1000+ years of sound economic theory, human psychology, and experience right?  Right?

Here's what you miss:

A.  A community isn't formed by a bunch of people buying something.  It's formed by the following:

* A shared interest.  You're game is their interest.  The mechanics of play, the engine, the author, all of these aspects about you, and your game establish a set of circumstances, in which forums, groups, and other communities form around.  Sometimes these communities form completely _unrelated_ to your interest (such as groups that hate your games, or just like to play together on multiple games and are friends otherwise, who just happen to play your game too).  The 'community' of your game, is nothing but an architecture of the human condition which compels us to share the excitement we have in regard to a feeling with others.

Fostering a community isn't something that you do by pricing.  It's something that you do by planting seeds of interests in many forms.  You do that by spreading the word about your game, and the community you're trying to form.  You do that by spreading the word about yourself and your ideals.  Otherwise known in the real world as MARKETING.  THAT is what forms a community.  The game itself is nothing but a catalyst.

It has nothing to do what-so-ever regarding pricing.  The game could be _FREE_ and still not form a community if no one knows about it, or no one is interested, or finds nothing compelling about it that they want to share with others.  You have to establish those FEELINGS in people regarding your product for a community to form.

* Tools for connecting players to each other.  These forums for example, are a means for doing so.  They are methods of communication which your players, friends, etc. will use to spread and engage within.  Those tools are essential for people to be able to express themselves.  Without them, a community will whither due to the inability to communicate.

B.  Pricing isn't based on what _YOU_ think.  Pricing in itself, is an economic shuffle.  Money is nothing but a means to do bartering without either side having to establish a set of pre-determined trade parameters.  Instead of establishing customary mechanisms for trading grain, food, hard goods, or other items for your product, both parties can instead establish a 'price' against a common 'currency' which allows for an efficient mechanism of trading value.

On one side you have the seller, who prices their 'product' based upon what they consider a fair trade for the effort that they put into it.  On the OTHER side, you have the customer, who is either willing, or UN-willing to value their time in the same manner as yours.  If the interest they have in the 'product' exceeds their value limit, then you make a sale.  If it does not, then you get nothing.

Pricing is all a matter of 'perception'.  For someone to purchase something, they have to FEEL that your good is worth the amount of value that they have in the money that they have procured.  It must be WORTH something to them, for them to be able to trade their hard-earned time, in trade for your effort in your product.

Pricing 'tiers' are an established mechanism for regulating the perception of value against different groups of purchasers.  Some purchasers make $$$$$$ and as such, price is no object.  Their perception of value can be minimal, and as such you can price your product sky high and they still will purchase, as their purchasing 'power' is immense.  However, this group is very small (the 1%).

Some purchasers make $$$ and as such, pricing is more nuanced.  They require a fair trade of value against their hard-earned cash, because to them, every dollar counts.  Unless they see a great value or interest in your product, they will pass in hopes to find something which more aptly values their definition of their effort and is 'affordable' to them (these are your common purchasers, the 80%).

Then you have your purchasers that make only $ and as such, value is EVERYTHING.  Their purchasing power is extremely limited, and so the value of your product will have to compete against the value of every OTHER thing that they may want and/or NEED and as such the value equation must be tipped quite highly in your favor for them to make a purchase (the rest).

The economics of SALES, is based upon the notion that to maximize the monetary return that you receive is to ensure that every product should be sold to EVERY purchaser. What that product COSTS in trade of value/time, is based upon both their ability to pay and sense of value in your product.  *Selling your product at a high-cost initially is a mechanism for bringing in the most money from those purchasers who have a high-value assignment (interest) or immense purchasing power against your product*.  SALES after that point are a means of balancing the price against different PERCEPTIONS of value of your product against the consumer's purchasing power/ability/sense of worth.

*This basis of economic theory is time-worn, tested, and verified.  Not because the masses are ignorant and brainwashed.  But because individuals value things differently and have different economic purchasing capabilities.*

Steam Sales in particular have multiple aspects associated with them...

1.  There is the discount associated with the sale, which re-balances the value equation in your favor in lieu of monetary return.
2.  There is the MARKETING factor that your product is HIGHLIGHTED FRONT AND CENTER and eyeballed by potential customers who had not previously known or were interested in your product.

As an example, look at the APPLE STORE.  Products which make the front page are almost guaranteed (even though most only cost $0.99) to make an immense profit.  WHY?  Because they suddenly KNOW of your product.  It's MARKETING.  Now you have sown the seed of interest, of which they will then follow with a possible purchase.

Get buried in page 1,432 (exaggeration) of the list of games, and you're guaranteed to make bupkis (not an exaggeration).

* You're problem is your confusing SALES with MARKETING.  The sale price entices purchases which had a lower value proposition against your product in trade for some monetary return.  In other words, you traded $10 off the price, so you could get another 100 sales at $15 instead of 25 at $25 (so you make $1500 dollars in total, versus $625).  You're maximizing total monetary return here.  By reducing the price, you may have a lost a few dollars to those customers who were willing to pay more.  At the same time, you also picked up additional people who were unwilling to pay previously, and now are happy to.

THIS HAS NOTHING TO DO WITH YOUR COMMUNITY.  Communities have formed around $0.99 games that have tight-knit and close relationships.  These communities form organically due to interest and shared ideals.  Whether they VALUED the game initially has little do with with anything.  Most of the time, players will value your game HIGHER after playing, than previously (hence why share-ware and free-trials are common, as they provide another mechanism to gain interest in your product).  This value has little to do with pricing.  In fact, in many cases, lower pricing actually can INCREASE the community relationship by tipping the perceived value of your product in the consumer's favor and thus they have a greater interest in SHARING that enthusiasm and fervor with others (providing more sales).

MINECRAFT worked so well because the perceived value was so immensely HIGH.  People saw the possibility, became enthusiastic about the product and purchased regardless of the price that they set, because their value of the product far exceeded the price ratio.

Did that maximize their return (monetary return)?  NO.  The developers of Minecraft and the community CONTINUOUSLY add value to the product.  It is still under active development.  As such, the price remains high because rather than lower the price of the product to maximize return against different purchase power arrangements, they instead add VALUE to the product until that value perception exceeds the purchaser's value limit. 

If it wasn't for that simple fact, Minecraft would have sold initially for a period and then continued sales would have declined as interest waned.

Unless you plan on adding continuous VALUE to your product, pricing high after the initial interest period will only reduce your overall monetary return.

WHY IS THIS SO DIFFERENT FROM OTHER THINGS (like hard-goods, food, etc.).  That is because digital products have negligible production costs.  Initial costs may be high, but it doesn't cost you anything to continue to churn out copies to customers looking to purchase.  As such, the 'limit' of purchase and perception regarding value (e.g. limited-edition, etc.) plummets as both the producer and consumer fully understand that it costs little for you to generate another copy for sale and can be done so indefinitely.  As a result, their value perception plummets unless there is continued interest (added value).

So, in conclusion while your feelings direct you to believe certain things regarding the perceived value and mechanisms for sale of your product, experience, theory, and scientific understanding of the mechanisms of human desire prove otherwise.

Either way, you'll see soon enough...

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