Tuesday, October 18, 2011

When Money Feels Like No Money

While I can't say I consider myself an indie author -- I am, after all, still trying to go the traditional route -- I keep an ear to the ground regarding what's going on. I am also a fan of the indie gaming scene, and I think young e-pubbing writers could learn a lot from them. After all, what e-publishing does is to leverage the internet as a delivery platform for content, something which indie game developers having been doing for years. So when I chanced upon this post from Jeff Vogel, a prominent indie game dev, I thought what he had to say might be relevant. I quote:

"There are two sorts of prices we developers figure can charge for a game: You can charge an amount of money that feels like money, or an amount of money that doesn’t. In other words, you can charge an amount of money that is so low that most people will feel like they aren’t spending anything, or an amount of money that makes you go, “Hmmm. Do I want to spend this?”
Where is the line? How much money feels like money? Well, in my own mind, I use what I call the Frappuccino Rule. A frappuccino is one of those super-sweet caffeinated milkshakes they sell at the many Starbucks that have infected our Earth. The rule is that the price for a large frappuccino is the maximum amount you can charge and have your customers not think twice about it. This means that, once your game is around five bucks, it feels like spending money. Three or less, than it doesn’t.
Within these two ranges (cheap and expensive), there isn’t a huge amount of difference. Your game will make pretty close to the same amount if you charge a dollar or two dollars. (At $2, you only need to sell half of the copies to make the same amount of money as if you charge $1. Not difficult.) Similarly, the difference between a game selling for $10 and $15 isn’t huge. But the thinking process that goes into deciding to spend $1 on a game versus spending $10 on a game is entirely different. Before people spend $10, they will think about it. At $1, they won’t."

This is an important point, I think. A lot of self-pub authors try to increase sales by lowering the price, or increase profit per unit by increasing the price. But if you think about your own buying patterns, you probably have threshold values. For $0.99, you'll buy anything that looks mildly interesting. But as price goes up, you eventually hit the point where you have to think a bit before laying out the cash. Below that point, though, lower price just means less money. Which means e-pubbers are well served if they can get their hands on the statistics to determine those threshold values and price with them in mind.


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