Virtual Goods Pricing Strategies, presented at Casual Connect 2010

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Virtual Goods Pricing Strategies, presented at Casual Connect 2010

  1. 1. Pricing Strategies for Virtual Goods Eric Gonzalez CEO, Doubloon Casual Connect 2010 Copyright Doubloon Inc. 2010 Virtual Goods Priced Right
  2. 2. Background <ul><li>800.522.1948 | virtualdoubloon.com | @virtualdoubloon </li></ul><ul><li>Eric Gonzalez, CEO,Doubloon (virtualdoubloon.com) </li></ul><ul><li>Everything You Need Run an In-Game Virtual Goods </li></ul><ul><li>Economy: Currency, Catalog, Pay Methods, Gifting. </li></ul><ul><li>Focused on Market Intelligence, benchmarking to </li></ul><ul><li>help you make smarter pricing decisions </li></ul><ul><li>Talking about Pricing Strategies Today </li></ul>
  3. 3. Why Optimal Pricing? <ul><li>800.522.1948 | virtualdoubloon.com | @virtualdoubloon </li></ul>You Can Make Lots of Money but it Requires Informed Decision Making 1. More Customers 2. More Retention 3. More Revenue from Each User
  4. 4. Context: The Big May Squeeze <ul><li>800.522.1948 | virtualdoubloon.com | @virtualdoubloon </li></ul>http://mthink.com/revenue/blog/chris-trayhorn/facebook-takes-profit-out-cpm-buys (May 2010) CPM to CPC http://www.bbc.co.uk/news/10472844 http://techcrunch.com/2010/05/11/f acebook-darth-vader-zynga/ (May 2010) 40% New Referrals Gone
  5. 5. Key Concepts <ul><li>800.522.1948 | virtualdoubloon.com | @virtualdoubloon </li></ul><ul><li>3rd Degree Price Discrimination </li></ul><ul><li>Price Elasticity </li></ul><ul><li>Player Lifecycle and the “Long Tail” </li></ul><ul><li>Arbitrage (for Segmentation and Profit) </li></ul><ul><li>Dynamic Pricing </li></ul>
  6. 6. Top 5 Tips for Virtual Goods Pricing <ul><li>800.522.1948 | virtualdoubloon.com | @virtualdoubloon </li></ul>(Simple Strategies You Can Use Right Away)
  7. 7. #5 Relative Pricing <ul><li>800.522.1948 | virtualdoubloon.com | @virtualdoubloon </li></ul>http://wordpress.tv/2010/06/07/dan-ariely-predictably-irrational-behavior/ <ul><li>Behavioral Economics </li></ul><ul><li>We’re Good at Assessing </li></ul><ul><li>Relative Value </li></ul><ul><li>But We Suck at Assessing </li></ul><ul><li>Absolute Value </li></ul><ul><li>Introduce Subpar Items at </li></ul><ul><li>Par Prices to Boost Sales ? </li></ul><ul><li>A/B Testing </li></ul>
  8. 8. #4 “Stealthy” Price Changes <ul><li>800.522.1948 | virtualdoubloon.com | @virtualdoubloon </li></ul>http://www.usatoday.com/money/industries/food/2008-06-11-shrinking-sizes_N.htm <ul><li>Real World - Smaller Tub of Ice cream </li></ul><ul><li>Virtual World - Subtle Sinks, like better arrows </li></ul><ul><li>contain less in the quiver </li></ul><ul><li>Currency buys = currency sinks </li></ul>
  9. 9. #3 Be A Good Samaritan <ul><li>800.522.1948 | virtualdoubloon.com | @virtualdoubloon </li></ul><ul><li>Get First Time </li></ul><ul><li>Buyers Comfortable </li></ul><ul><li>With Buying </li></ul><ul><li>Establish Relative </li></ul><ul><li>Baselines, Hold the </li></ul><ul><li>Line on Prices </li></ul><ul><li>7 to 12 USD </li></ul>
  10. 10. <ul><li>800.522.1948 | virtualdoubloon.com | @virtualdoubloon </li></ul><ul><li>Use the Crafter Lifecycle </li></ul><ul><li>Profitable at First </li></ul><ul><li>Then Dip Into the Red Just Before Max Level </li></ul><ul><li>Price in vCurrency </li></ul><ul><li>(Casino Psychology) </li></ul>#2 Arbitrage Segmentation
  11. 11. #1 Dynamic (Airline) Pricing <ul><li>800.522.1948 | virtualdoubloon.com | @virtualdoubloon </li></ul><ul><li>Visible to Users </li></ul><ul><li>Price May Rise as </li></ul><ul><li>Quantity Nears Zero </li></ul><ul><li>Demand based </li></ul><ul><li>Auto-price (within </li></ul><ul><li>limits you set) </li></ul>
  12. 12. Final Thoughts <ul><li>800.522.1948 | virtualdoubloon.com | @virtualdoubloon </li></ul><ul><li>Measure Obsessively </li></ul><ul><li>Use a Few Simple Strategies Sell </li></ul><ul><li>Use Market Data </li></ul>
  13. 13. Thanks! Slides will be posted at www.virtualdoubloon.com Copyright Doubloon Inc. 2010 Virtual Goods Priced Right

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