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One Price Does NOT Fit All
  (or how games are different from vegetables)

                   Noel Llopis
                  @noel_llopis
          http://gamesfromwithin.com
Who am I?
Who am I?
Worked in the games industry
for many years.
Who am I?
Worked in the games industry
for many years.




                Went “indie” 4.5 years ago
One Price Does Not Fit All
One Price Does Not Fit All
One Price Does Not Fit All
One Price Does Not Fit All
TL; DR
TL; DR




Your game with
  fixed price
TL; DR




Your game with      Your game with
  fixed price         flexible price
Fixed-Price Model
One Price Does Not Fit All
One Price Does Not Fit All
Price



                                     Units
        Cost of manufactured goods
Price

                 Initial design costs
                                        Units
        Cost of manufactured goods
Price

                 Initial design costs
                                        Units
        Cost of manufactured goods
Price




                                        Units
            Cost of digital goods
Price

                 Initial design costs
                                        Units
        Cost of manufactured goods
Price




                                        Units
            Cost of digital goods
Value
One Price Does Not Fit All
One Price Does Not Fit All
$$ ?
Price


$60




         People interested
Price


$60




         People interested
Price


$60      Area == revenue




              People interested
Price


$60      Area == revenue



$40




              People interested
Price



$10



$5


$1
        People interested
Price



$10



$5


$1
        People interested
Price



$10



$5


$1
        People interested
Price



$10



$5


$1
        People interested
Price



$10



$5


$1
        People interested
Price



$10



$5


$1
        People interested
Price



$10



$5


$1
        People interested
Price



$10



$5


$1
        People interested
Price



$10



$5


$1
        People interested
Price



$10



$5


$1
        People interested
Price



$10



$5


$1
        People interested
Price



$10     Revenue (ouch!)



$5


$1
                      People interested
Price   Flexible Pricing

$10



$5


$1
                  People interested
Price   Flexible Pricing

$10



$5


$1
                  People interested
Price   Flexible Pricing

$10



$5


$1
                  People interested
Price   Flexible Pricing

$10

        Power curve
$5


$1
                      People interested
[...] 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.
[...] 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
One Price Does Not Fit All
One Price Does Not Fit All
One Price Does Not Fit All
One Price Does Not Fit All
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price


        5% extra revenue?


$60




                            People interested
One Price Does Not Fit All
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price


        8-10% extra revenue?


$60




                         People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price




$60




        People interested
Price

        2x revenue?



$60




                 People interested
Price
Price
Price
2x extra revenue?
Price
2x extra revenue?
Price




$60
$??

        2x extra revenue?
Price




               What’s that? $150,
                $300, $1000?




$60
The Power of Free
As an artist you want
as many people as
possible to hear your
work. Word of mouth
is the only true
marketing that
matters.
Price




 $0
        People interested
Price




 $0
        People interested
Price




 $0
        People interested
Free Players Are Very
     Important!
Free Players Are Very
      Important!

• Word of mouth
Free Players Are Very
      Important!

• Word of mouth
• Other people compare against them
Free Players Are Very
      Important!

• Word of mouth
• Other people compare against them
• Some % will convert to paid players
Price




 $0
        People interested
Price




 $0
        People interested
Fill in the blank
Fill in the blank


• 80-90% of profit comes
 from ____% of users
Fill in the blank


• 80-90% of profit comes
 from 0.5 of users
      ____%
Price




        People interested
Price




        People interested
Price




        Magic number: 2%




                  People interested
Hard Data
Hard Data



 1% of users responsible for 25-50% of
            Zynga revenue
http://www.businessinsider.com/zynga-whales-2011-7
6% of Skype users account for
      almost all revenue

http://techcrunch.com/2010/08/09/skype-ipo/
One Price Does Not Fit All
3.8% users purchase some IAP
One Price Does Not Fit All
Introduction of IAPs
Introduction of IAPs
Flower Garden
Flower Garden
• Some disclaimers:
Flower Garden
• Some disclaimers:
 • Counting only purchases (bundles count
    as 1)
Flower Garden
• Some disclaimers:
 • Counting only purchases (bundles count
    as 1)
 • Counting only UDIDs (not App Store
    accounts)
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)
Users vs. number of purchases
                  30,000




                  22,500
Number of users




                  15,000




                   7,500




                      0
                                     Purchases
Users vs. number of purchases
                  100,000




                   10,000




                    1,000
Number of users




                     100




                      10




                       1
                                      Purchases
Users vs. number of purchases
                  100,000




                   10,000




                    1,000
Number of users




                     100



                                                            Wow!

                      10




                       1
                                      Purchases
Purchases vs. users
            120




             90
Purchases




             60




             30




              0
                  0   7,500         15,000          22,500   30,000
One Price Does Not Fit All
One Price Does Not Fit All
Drawbacks
Drawbacks
• Negative perception by some players.
Drawbacks
• Negative perception by some players.
• Mostly hardcore, and mostly because it’s
  different than the model they grew up with.
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.
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.
Ethical Issues
Ethical Issues

• Some people think this kind of games are
  “evil”.
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.
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.
Game Design
Game Design

• Not all games fit well into this model.
Game Design

• Not all games fit well into this model.
• A lot of freemium games feel the same.
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.
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.
Game Design
Game Design
Your mission:
Game Design
Your mission:

Create a compelling freemium
game that respects the player
and provides an engaging
experience.
Things Learned
Things Learned


• Extra game content isn’t a very good seller.
Things Learned


• Extra game content isn’t a very good seller.
• Things displayed in social setting very
  important (TF2).
Bundles
One Price Does Not Fit All
One Price Does Not Fit All
One Price Does Not Fit All
One Price Does Not Fit All
One Price Does Not Fit All
Flower Garden Bundles

                        Sales                    Revenue

80


60


40


20


 0
     Fert 20 ($0.99) Fert 80 ($2.99) Fert 200 ($5.99)Fert 1000 ($14.99)
Tiny Tower Bundles
            Sales             Revenue

 70


52.5


 35


17.5


  0
       10 bux       100 bux             1000 bux
Give It All For Free
One Price Does Not Fit All
Introduction of IAPs
Introduction of in-game
          currency to earn
               credits


Introduction of IAPs
Conclusion
Conclusion

• Abandon fixed-price games.
Conclusion

• Abandon fixed-price games.
• Hot in mobile and web games. Soon will
  expand to PC and consoles.
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.
Thanks!
• Noel Llopis
• noel@snappytouch.com
• Twitter: @snappytouch
• http://gamesfromwithin.com
Thanks!
• Noel Llopis
• noel@snappytouch.com
• Twitter: @snappytouch
• http://gamesfromwithin.com

          Questions?

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One Price Does Not Fit All

Editor's Notes

  1. \n
  2. \n
  3. \n
  4. Stumbled on flexible pricing with Flower Garden, which went on to be (and still is) very successful\n
  5. Lots of in-app purchases\n\n
  6. Most recently made Casey’s Contraptions... which is fixed price.\nSo this talk is about “don’t do what I did” :-)\n
  7. Do I have your attention? :-)\n
  8. Do I have your attention? :-)\n
  9. 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
  10. It makes sense for manufactured good. They have an associated cost with making each of them.\n
  11. What about digital goods though?\n
  12. Price plots (initial design cost, plus manufacturing per unit)\nDigital goods virtually free to duplicate\n
  13. Price plots (initial design cost, plus manufacturing per unit)\nDigital goods virtually free to duplicate\n
  14. Price plots (initial design cost, plus manufacturing per unit)\nDigital goods virtually free to duplicate\n
  15. Price plots (initial design cost, plus manufacturing per unit)\nDigital goods virtually free to duplicate\n
  16. Price plots (initial design cost, plus manufacturing per unit)\nDigital goods virtually free to duplicate\n
  17. The price of most things we buy in the store are tied to the cost of producing them.\n
  18. 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
  19. 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
  20. Of course, we’re all different. Some people might pay more than others.\nThe area of those sections is the revenue\n\n
  21. Of course, we’re all different. Some people might pay more than others.\nThe area of those sections is the revenue\n\n
  22. Of course, we’re all different. Some people might pay more than others.\nThe area of those sections is the revenue\n\n
  23. Of course, we’re all different. Some people might pay more than others.\nThe area of those sections is the revenue\n\n
  24. Of course, we’re all different. Some people might pay more than others.\nThe area of those sections is the revenue\n\n
  25. 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
  26. 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
  27. 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
  28. 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
  29. 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
  30. 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
  31. 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
  32. 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
  33. 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
  34. 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
  35. 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
  36. Flexible pricing let’s people who enjoy your game spend as much as they want.\n
  37. Flexible pricing let’s people who enjoy your game spend as much as they want.\n
  38. Flexible pricing let’s people who enjoy your game spend as much as they want.\n
  39. Trent Reznor had great advice about this for new musicians years ago\n
  40. We have been doing this in a small scale in the games industry for a while with collector’s editions\n
  41. And more recently with DLCs\nWhich incidentally, I worked on one of the first games with DLCs\n
  42. And more recently with DLCs\nWhich incidentally, I worked on one of the first games with DLCs\n
  43. And more recently with DLCs\nWhich incidentally, I worked on one of the first games with DLCs\n
  44. And more recently with DLCs\nWhich incidentally, I worked on one of the first games with DLCs\n
  45. 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
  46. 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
  47. 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
  48. 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
  49. 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
  50. 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
  51. \n
  52. For this to work, we need many DLCs\n
  53. For this to work, we need many DLCs\n
  54. For this to work, we need many DLCs\n
  55. For this to work, we need many DLCs\n
  56. For this to work, we need many DLCs\n
  57. For this to work, we need many DLCs\n
  58. For this to work, we need many DLCs\n
  59. For this to work, we need many DLCs\n
  60. For this to work, we need many DLCs\n
  61. For this to work, we need many DLCs\n
  62. 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
  63. 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
  64. 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
  65. 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
  66. 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
  67. 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
  68. 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
  69. 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
  70. 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
  71. 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
  72. 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
  73. 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
  74. 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
  75. 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
  76. 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
  77. 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
  78. 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
  79. 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
  80. 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
  81. 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
  82. 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
  83. \n
  84. \n
  85. \n
  86. \n
  87. \n
  88. \n
  89. \n
  90. \n
  91. 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
  92. \n
  93. \n
  94. Usually around 2% of players choose to spend some money in game.\n
  95. Usually around 2% of players choose to spend some money in game.\n
  96. Let’s back up the claim\n
  97. Let’s back up the claim\n
  98. Skype isn’t a game, and you can’t get everything for free, but it still shows the power law.\n
  99. \n
  100. Not nearly as successful, but I have a lot of data on it :-)\n
  101. \n
  102. \n
  103. \n
  104. \n
  105. \n
  106. \n
  107. \n
  108. Textbook power curve\n
  109. Fixed price. Don’t do this!\n
  110. \n
  111. \n
  112. \n
  113. \n
  114. A lot of “social” games are too much on your face about posting messages and doing useless stuff.\n
  115. A lot of “social” games are too much on your face about posting messages and doing useless stuff.\n
  116. A lot of “social” games are too much on your face about posting messages and doing useless stuff.\n
  117. \n
  118. \n
  119. \n
  120. \n
  121. \n
  122. \n
  123. \n
  124. \n
  125. \n
  126. Having a few options, makes the consumer more likely to buy\n\n
  127. Having too many has the opposite effect\n
  128. People like to get a good deal\n
  129. Bundles also represent an investment in your game\nThey’ll keep coming back\n
  130. It also means that your app will get more exposure and has a chance to spread more\n
  131. \n
  132. \n
  133. 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
  134. \n
  135. \n
  136. \n
  137. \n
  138. \n
  139. \n