Balancing act: Why finding the right price is so hard

Words by Sam Forrest, director of global communications and content

Perfectly calibrating prices is a fine art.

Depending on the type of game being built, and the specific game mechanics, some games would only be financially sustainable on a paid model, while others would be better off offering the app for free, while incentivising their players and really figuring out how to enhance the playing experience through paid features.

Once the business model is clear, it’s finding what’s the correct type of bundles to offer and “that” precise number that’s not just profitable but that customers also think is fair and enhances the playing experience. Generally, the most popular games released over any given year usually have a price range from free to $60 (and even higher if you take micro-transactions into account) which is an incredibly broad spectrum to work within.

Many developers know that the greatest advantages of free-to-play (FTP) is that it creates consistent revenue instead of a one-off payment often referred to as a “long tail.” That in turn gives developers the prospect of increasing player numbers. More importantly, it allows for more players to get exposed to the game and increases the likelihood for “down the funnel” conversions. On the iOS over 90% of mobile game revenue is generated by FTP games.

Who pays and what’s fair?

When it’s done the “right” way, FTP works beautifully. In the vast majority of FTP games, the payers “subsidise” the other players. Indeed, a recent survey found that, across the board, only 2.5% of gamers pay in FTP.

In Pokerist and countless other examples, paying customers see real perks but the playing field is even for all players. Conversely, developers can venture into choppy waters when they give paying players perceived unfair advantages.

The micro-aggressions of micro-transactions

The controversial “pay to win” model is one way to alienate a majority of your fans. Recently EA came under fire for “over-milking” the in game micro-transactions and leaned on the pay to win model with a recent product – Star Wars BattleFront II. This should have been one of the biggest gaming successes of the year. Instead, its onerous and expensive micro-transactions (on top of a cover charge) angered fans, saw a sales drop of over 60% after its first week, and even affected the company’s stock price.

Blurring the line

Micro-transactions are, of course, paid for with real-money, which often means purchases of virtual currency be it “chip” or “jewels” or “gold”. However, it’s not surprising to see that the line sometimes blurs between “real-money” and “virtual currency” creating a whole new set of headaches for developers and players alike.

The otherwise innocuous mobile game Smurfs’ Village caused an unexpected stir back in 2010. When children started to go on spending sprees, in one case racking up a bill of $1,400, politicians started to wade in.

Apple now requires a password for every in-app purchase.

FTP – The secret boss level

As accomplished and experienced developers flounder with FTP, and others flourish, it’s fair to say that the FTP formula is deceptively tricky and micro-transactions are still very much a work in progress with the industry still learning as it goes along.

The ideal FTP offers an equally enticing deal and UX to payers and non-payers alike. And as developers are looking to expand to foreign markets, their FTP model is also expected to withstand regulations across borders.

Just like a simple app game, mastering FTP is harder than it looks.

Sam Forrest, KamaGames director of global communications and content