One Price Does Not Fit All

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Did the biggest fans of your game spend more money on it than someone who played it just a few times? If not, you're leaving a huge percentage of money on the table. This session will talk about how digital distribution has made fixed prices obsolete and how you can take advantage of flexible pricing through in-app purchases in your games. We'll also talk about the consequences (good and bad) of making a game free to play. The session will present hard data from iOS platforms, but applies to all digital distribution platforms.

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  • \n
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  • Stumbled on flexible pricing with Flower Garden, which went on to be (and still is) very successful\n
  • Lots of in-app purchases\n\n
  • Most recently made Casey’s Contraptions... which is fixed price.\nSo this talk is about “don’t do what I did” :-)\n
  • Do I have your attention? :-)\n
  • Do I have your attention? :-)\n
  • I love my road bike. I bought it 10 years ago and I must have ridden 50,000 miles on it. I paid $2000 for it. Exactly the same as someone who bought it and used it only a few times.\n
  • It makes sense for manufactured good. They have an associated cost with making each of them.\n
  • What about digital goods though?\n
  • Price plots (initial design cost, plus manufacturing per unit)\nDigital goods virtually free to duplicate\n
  • Price plots (initial design cost, plus manufacturing per unit)\nDigital goods virtually free to duplicate\n
  • Price plots (initial design cost, plus manufacturing per unit)\nDigital goods virtually free to duplicate\n
  • Price plots (initial design cost, plus manufacturing per unit)\nDigital goods virtually free to duplicate\n
  • Price plots (initial design cost, plus manufacturing per unit)\nDigital goods virtually free to duplicate\n
  • The price of most things we buy in the store are tied to the cost of producing them.\n
  • Astute salesmen have known for a long time that the value of an item is not its manufacturing cost, but how much it’s worth to the user.\n
  • Astute salesmen have known for a long time that the value of an item is not its manufacturing cost, but how much it’s worth to the user.\n
  • Of course, we’re all different. Some people might pay more than others.\nThe area of those sections is the revenue\n\n
  • Of course, we’re all different. Some people might pay more than others.\nThe area of those sections is the revenue\n\n
  • Of course, we’re all different. Some people might pay more than others.\nThe area of those sections is the revenue\n\n
  • Of course, we’re all different. Some people might pay more than others.\nThe area of those sections is the revenue\n\n
  • Of course, we’re all different. Some people might pay more than others.\nThe area of those sections is the revenue\n\n
  • So we need to be asking, how many people would be willing to pay $x to play the game?\nNow imagine we pick one fixed price point. That’s the revenue!\n
  • So we need to be asking, how many people would be willing to pay $x to play the game?\nNow imagine we pick one fixed price point. That’s the revenue!\n
  • So we need to be asking, how many people would be willing to pay $x to play the game?\nNow imagine we pick one fixed price point. That’s the revenue!\n
  • So we need to be asking, how many people would be willing to pay $x to play the game?\nNow imagine we pick one fixed price point. That’s the revenue!\n
  • So we need to be asking, how many people would be willing to pay $x to play the game?\nNow imagine we pick one fixed price point. That’s the revenue!\n
  • So we need to be asking, how many people would be willing to pay $x to play the game?\nNow imagine we pick one fixed price point. That’s the revenue!\n
  • So we need to be asking, how many people would be willing to pay $x to play the game?\nNow imagine we pick one fixed price point. That’s the revenue!\n
  • So we need to be asking, how many people would be willing to pay $x to play the game?\nNow imagine we pick one fixed price point. That’s the revenue!\n
  • So we need to be asking, how many people would be willing to pay $x to play the game?\nNow imagine we pick one fixed price point. That’s the revenue!\n
  • So we need to be asking, how many people would be willing to pay $x to play the game?\nNow imagine we pick one fixed price point. That’s the revenue!\n
  • So we need to be asking, how many people would be willing to pay $x to play the game?\nNow imagine we pick one fixed price point. That’s the revenue!\n
  • Flexible pricing let’s people who enjoy your game spend as much as they want.\n
  • Flexible pricing let’s people who enjoy your game spend as much as they want.\n
  • Flexible pricing let’s people who enjoy your game spend as much as they want.\n
  • Trent Reznor had great advice about this for new musicians years ago\n
  • We have been doing this in a small scale in the games industry for a while with collector’s editions\n
  • And more recently with DLCs\nWhich incidentally, I worked on one of the first games with DLCs\n
  • And more recently with DLCs\nWhich incidentally, I worked on one of the first games with DLCs\n
  • And more recently with DLCs\nWhich incidentally, I worked on one of the first games with DLCs\n
  • And more recently with DLCs\nWhich incidentally, I worked on one of the first games with DLCs\n
  • DLCs are clumsy. Only a few, only extra content (how many people finish a game), very limited audience (had to pay $60 to start)\n
  • DLCs are clumsy. Only a few, only extra content (how many people finish a game), very limited audience (had to pay $60 to start)\n
  • DLCs are clumsy. Only a few, only extra content (how many people finish a game), very limited audience (had to pay $60 to start)\n
  • DLCs are clumsy. Only a few, only extra content (how many people finish a game), very limited audience (had to pay $60 to start)\n
  • DLCs are clumsy. Only a few, only extra content (how many people finish a game), very limited audience (had to pay $60 to start)\n
  • DLCs are clumsy. Only a few, only extra content (how many people finish a game), very limited audience (had to pay $60 to start)\n
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  • For this to work, we need many DLCs\n
  • For this to work, we need many DLCs\n
  • For this to work, we need many DLCs\n
  • For this to work, we need many DLCs\n
  • For this to work, we need many DLCs\n
  • For this to work, we need many DLCs\n
  • For this to work, we need many DLCs\n
  • For this to work, we need many DLCs\n
  • For this to work, we need many DLCs\n
  • For this to work, we need many DLCs\n
  • Even more importantly, we need to lower the entry barrier.\nLet people decide how much they want to spend along the way\nBut we’re not done. Because more people got to try the game, more people are willing to go beyond what used to be regular price.\n
  • Even more importantly, we need to lower the entry barrier.\nLet people decide how much they want to spend along the way\nBut we’re not done. Because more people got to try the game, more people are willing to go beyond what used to be regular price.\n
  • Even more importantly, we need to lower the entry barrier.\nLet people decide how much they want to spend along the way\nBut we’re not done. Because more people got to try the game, more people are willing to go beyond what used to be regular price.\n
  • Even more importantly, we need to lower the entry barrier.\nLet people decide how much they want to spend along the way\nBut we’re not done. Because more people got to try the game, more people are willing to go beyond what used to be regular price.\n
  • Even more importantly, we need to lower the entry barrier.\nLet people decide how much they want to spend along the way\nBut we’re not done. Because more people got to try the game, more people are willing to go beyond what used to be regular price.\n
  • Even more importantly, we need to lower the entry barrier.\nLet people decide how much they want to spend along the way\nBut we’re not done. Because more people got to try the game, more people are willing to go beyond what used to be regular price.\n
  • Even more importantly, we need to lower the entry barrier.\nLet people decide how much they want to spend along the way\nBut we’re not done. Because more people got to try the game, more people are willing to go beyond what used to be regular price.\n
  • Even more importantly, we need to lower the entry barrier.\nLet people decide how much they want to spend along the way\nBut we’re not done. Because more people got to try the game, more people are willing to go beyond what used to be regular price.\n
  • Even more importantly, we need to lower the entry barrier.\nLet people decide how much they want to spend along the way\nBut we’re not done. Because more people got to try the game, more people are willing to go beyond what used to be regular price.\n
  • Let’s zoom out a bit and look at the top. 7 DLCs. That’s a lot.\nConsumables make it infinite. It could easily be 2x revenue\nYes, people can spend as much. But never if that’s the entry cost.\n
  • Let’s zoom out a bit and look at the top. 7 DLCs. That’s a lot.\nConsumables make it infinite. It could easily be 2x revenue\nYes, people can spend as much. But never if that’s the entry cost.\n
  • Let’s zoom out a bit and look at the top. 7 DLCs. That’s a lot.\nConsumables make it infinite. It could easily be 2x revenue\nYes, people can spend as much. But never if that’s the entry cost.\n
  • Let’s zoom out a bit and look at the top. 7 DLCs. That’s a lot.\nConsumables make it infinite. It could easily be 2x revenue\nYes, people can spend as much. But never if that’s the entry cost.\n
  • Let’s zoom out a bit and look at the top. 7 DLCs. That’s a lot.\nConsumables make it infinite. It could easily be 2x revenue\nYes, people can spend as much. But never if that’s the entry cost.\n
  • Let’s zoom out a bit and look at the top. 7 DLCs. That’s a lot.\nConsumables make it infinite. It could easily be 2x revenue\nYes, people can spend as much. But never if that’s the entry cost.\n
  • Let’s zoom out a bit and look at the top. 7 DLCs. That’s a lot.\nConsumables make it infinite. It could easily be 2x revenue\nYes, people can spend as much. But never if that’s the entry cost.\n
  • Let’s zoom out a bit and look at the top. 7 DLCs. That’s a lot.\nConsumables make it infinite. It could easily be 2x revenue\nYes, people can spend as much. But never if that’s the entry cost.\n
  • Let’s zoom out a bit and look at the top. 7 DLCs. That’s a lot.\nConsumables make it infinite. It could easily be 2x revenue\nYes, people can spend as much. But never if that’s the entry cost.\n
  • Let’s zoom out a bit and look at the top. 7 DLCs. That’s a lot.\nConsumables make it infinite. It could easily be 2x revenue\nYes, people can spend as much. But never if that’s the entry cost.\n
  • Let’s zoom out a bit and look at the top. 7 DLCs. That’s a lot.\nConsumables make it infinite. It could easily be 2x revenue\nYes, people can spend as much. But never if that’s the entry cost.\n
  • Let’s zoom out a bit and look at the top. 7 DLCs. That’s a lot.\nConsumables make it infinite. It could easily be 2x revenue\nYes, people can spend as much. But never if that’s the entry cost.\n
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  • The result is that many more people will be willing to take the next step from free, so curve is scaled horizontally.\nThis is the “freemium” model. Often used in “social” games.\n
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  • Usually around 2% of players choose to spend some money in game.\n
  • Usually around 2% of players choose to spend some money in game.\n
  • Let’s back up the claim\n
  • Let’s back up the claim\n
  • Skype isn’t a game, and you can’t get everything for free, but it still shows the power law.\n
  • \n
  • Not nearly as successful, but I have a lot of data on it :-)\n
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  • Textbook power curve\n
  • Fixed price. Don’t do this!\n
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  • A lot of “social” games are too much on your face about posting messages and doing useless stuff.\n
  • A lot of “social” games are too much on your face about posting messages and doing useless stuff.\n
  • A lot of “social” games are too much on your face about posting messages and doing useless stuff.\n
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  • Having a few options, makes the consumer more likely to buy\n\n
  • Having too many has the opposite effect\n
  • People like to get a good deal\n
  • Bundles also represent an investment in your game\nThey’ll keep coming back\n
  • It also means that your app will get more exposure and has a chance to spread more\n
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  • Counterintuitive: Don’t make some things pay-only. Allow people to work to get everything in the game.\nFG anecdote if there’s time.\n
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  • One Price Does Not Fit All

    1. 1. One Price Does NOT Fit All (or how games are different from vegetables) Noel Llopis @noel_llopis http://gamesfromwithin.com
    2. 2. Who am I?
    3. 3. Who am I?Worked in the games industryfor many years.
    4. 4. Who am I?Worked in the games industryfor many years. Went “indie” 4.5 years ago
    5. 5. TL; DR
    6. 6. TL; DRYour game with fixed price
    7. 7. TL; DRYour game with Your game with fixed price flexible price
    8. 8. Fixed-Price Model
    9. 9. Price Units Cost of manufactured goods
    10. 10. Price Initial design costs Units Cost of manufactured goods
    11. 11. Price Initial design costs Units Cost of manufactured goodsPrice Units Cost of digital goods
    12. 12. Price Initial design costs Units Cost of manufactured goodsPrice Units Cost of digital goods
    13. 13. Value
    14. 14. $$ ?
    15. 15. Price$60 People interested
    16. 16. Price$60 People interested
    17. 17. Price$60 Area == revenue People interested
    18. 18. Price$60 Area == revenue$40 People interested
    19. 19. Price$10$5$1 People interested
    20. 20. Price$10$5$1 People interested
    21. 21. Price$10$5$1 People interested
    22. 22. Price$10$5$1 People interested
    23. 23. Price$10$5$1 People interested
    24. 24. Price$10$5$1 People interested
    25. 25. Price$10$5$1 People interested
    26. 26. Price$10$5$1 People interested
    27. 27. Price$10$5$1 People interested
    28. 28. Price$10$5$1 People interested
    29. 29. Price$10$5$1 People interested
    30. 30. Price$10 Revenue (ouch!)$5$1 People interested
    31. 31. Price Flexible Pricing$10$5$1 People interested
    32. 32. Price Flexible Pricing$10$5$1 People interested
    33. 33. Price Flexible Pricing$10$5$1 People interested
    34. 34. Price Flexible Pricing$10 Power curve$5$1 People interested
    35. 35. [...] offer a variety of premiumpackages for sale and make themlimited editions / scarce goods. Basethe price and amount available onwhat you think you can sell. Make thepackages special - make them byhand, sign them, make them unique,make them something YOU wouldwant to have as a fan. Make apremium download available thatincludes high-resolution versions (forsale at a reasonable price) and includethe download as somethingimmediately available with anyphysical purchase. Sell T-shirts. Sellbuttons, posters... whatever.
    36. 36. [...] offer a variety of premium packages for sale and make them limited editions / scarce goods. Base the price and amount available on what you think you can sell. Make the packages special - make them by hand, sign them, make them unique, make them something YOU would want to have as a fan. Make a premium download available that includes high-resolution versions (for sale at a reasonable price) and include the download as something immediately available with any physical purchase. Sell T-shirts. Sell buttons, posters... whatever.http://forum.nin.com/bb/read.php?30,767183
    37. 37. Price$60 People interested
    38. 38. Price$60 People interested
    39. 39. Price$60 People interested
    40. 40. Price$60 People interested
    41. 41. Price$60 People interested
    42. 42. Price$60 People interested
    43. 43. Price 5% extra revenue?$60 People interested
    44. 44. Price$60 People interested
    45. 45. Price$60 People interested
    46. 46. Price$60 People interested
    47. 47. Price$60 People interested
    48. 48. Price$60 People interested
    49. 49. Price$60 People interested
    50. 50. Price$60 People interested
    51. 51. Price$60 People interested
    52. 52. Price$60 People interested
    53. 53. Price$60 People interested
    54. 54. Price 8-10% extra revenue?$60 People interested
    55. 55. Price$60 People interested
    56. 56. Price$60 People interested
    57. 57. Price$60 People interested
    58. 58. Price$60 People interested
    59. 59. Price$60 People interested
    60. 60. Price$60 People interested
    61. 61. Price$60 People interested
    62. 62. Price$60 People interested
    63. 63. Price$60 People interested
    64. 64. Price 2x revenue?$60 People interested
    65. 65. Price
    66. 66. Price
    67. 67. Price
    68. 68. 2x extra revenue?Price
    69. 69. 2x extra revenue?Price$60
    70. 70. $?? 2x extra revenue?Price What’s that? $150, $300, $1000?$60
    71. 71. The Power of Free
    72. 72. As an artist you wantas many people aspossible to hear yourwork. Word of mouthis the only truemarketing thatmatters.
    73. 73. Price $0 People interested
    74. 74. Price $0 People interested
    75. 75. Price $0 People interested
    76. 76. Free Players Are Very Important!
    77. 77. Free Players Are Very Important!• Word of mouth
    78. 78. Free Players Are Very Important!• Word of mouth• Other people compare against them
    79. 79. Free Players Are Very Important!• Word of mouth• Other people compare against them• Some % will convert to paid players
    80. 80. Price $0 People interested
    81. 81. Price $0 People interested
    82. 82. Fill in the blank
    83. 83. Fill in the blank• 80-90% of profit comes from ____% of users
    84. 84. Fill in the blank• 80-90% of profit comes from 0.5 of users ____%
    85. 85. Price People interested
    86. 86. Price People interested
    87. 87. Price Magic number: 2% People interested
    88. 88. Hard Data
    89. 89. Hard Data 1% of users responsible for 25-50% of Zynga revenuehttp://www.businessinsider.com/zynga-whales-2011-7
    90. 90. 6% of Skype users account for almost all revenuehttp://techcrunch.com/2010/08/09/skype-ipo/
    91. 91. 3.8% users purchase some IAP
    92. 92. Introduction of IAPs
    93. 93. Introduction of IAPs
    94. 94. Flower Garden
    95. 95. Flower Garden• Some disclaimers:
    96. 96. Flower Garden• Some disclaimers: • Counting only purchases (bundles count as 1)
    97. 97. Flower Garden• Some disclaimers: • Counting only purchases (bundles count as 1) • Counting only UDIDs (not App Store accounts)
    98. 98. Flower Garden• Some disclaimers: • Counting only purchases (bundles count as 1) • Counting only UDIDs (not App Store accounts) • Counting only 6 months (starting from the time only a few IAPs where included)
    99. 99. Users vs. number of purchases 30,000 22,500Number of users 15,000 7,500 0 Purchases
    100. 100. Users vs. number of purchases 100,000 10,000 1,000Number of users 100 10 1 Purchases
    101. 101. Users vs. number of purchases 100,000 10,000 1,000Number of users 100 Wow! 10 1 Purchases
    102. 102. Purchases vs. users 120 90Purchases 60 30 0 0 7,500 15,000 22,500 30,000
    103. 103. Drawbacks
    104. 104. Drawbacks• Negative perception by some players.
    105. 105. Drawbacks• Negative perception by some players.• Mostly hardcore, and mostly because it’s different than the model they grew up with.
    106. 106. Drawbacks• Negative perception by some players.• Mostly hardcore, and mostly because it’s different than the model they grew up with.• No different than subscriptions when they came out.
    107. 107. Drawbacks• Negative perception by some players.• Mostly hardcore, and mostly because it’s different than the model they grew up with.• No different than subscriptions when they came out.• Lots of traditional game developers also feel threatened by this model.
    108. 108. Ethical Issues
    109. 109. Ethical Issues• Some people think this kind of games are “evil”.
    110. 110. Ethical Issues• Some people think this kind of games are “evil”.• The way I see it, you’re giving a chance for players to get more of what they want.
    111. 111. Ethical Issues• Some people think this kind of games are “evil”.• The way I see it, you’re giving a chance for players to get more of what they want.• Forced waits is common, but not evil. Other ways to make consumables.
    112. 112. Game Design
    113. 113. Game Design• Not all games fit well into this model.
    114. 114. Game Design• Not all games fit well into this model.• A lot of freemium games feel the same.
    115. 115. Game Design• Not all games fit well into this model.• A lot of freemium games feel the same.• Still in its infancy. Devs figuring it out.
    116. 116. Game Design• Not all games fit well into this model.• A lot of freemium games feel the same.• Still in its infancy. Devs figuring it out.• Harder with competitive games.
    117. 117. Game Design
    118. 118. Game DesignYour mission:
    119. 119. Game DesignYour mission:Create a compelling freemiumgame that respects the playerand provides an engagingexperience.
    120. 120. Things Learned
    121. 121. Things Learned• Extra game content isn’t a very good seller.
    122. 122. Things Learned• Extra game content isn’t a very good seller.• Things displayed in social setting very important (TF2).
    123. 123. Bundles
    124. 124. Flower Garden Bundles Sales Revenue80604020 0 Fert 20 ($0.99) Fert 80 ($2.99) Fert 200 ($5.99)Fert 1000 ($14.99)
    125. 125. Tiny Tower Bundles Sales Revenue 7052.5 3517.5 0 10 bux 100 bux 1000 bux
    126. 126. Give It All For Free
    127. 127. Introduction of IAPs
    128. 128. Introduction of in-game currency to earn creditsIntroduction of IAPs
    129. 129. Conclusion
    130. 130. Conclusion• Abandon fixed-price games.
    131. 131. Conclusion• Abandon fixed-price games.• Hot in mobile and web games. Soon will expand to PC and consoles.
    132. 132. Conclusion• Abandon fixed-price games.• Hot in mobile and web games. Soon will expand to PC and consoles.• Engage your players, delight them with your game, and let them spend as much money as they want.
    133. 133. Thanks!• Noel Llopis• noel@snappytouch.com• Twitter: @snappytouch• http://gamesfromwithin.com
    134. 134. Thanks!• Noel Llopis• noel@snappytouch.com• Twitter: @snappytouch• http://gamesfromwithin.com Questions?

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