This seems to disagree with what I've heard of Valve and Steam sales. That the bigger the discount, the more (total) revenue is made, almost across the board.
$50 game -> 50% off, 100 sales $50 game -> 75% off, 500 sales etc
"No matter what price we choose, we always make the same revenue"
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Re: "No matter what price we choose, we always make the same revenue"
#62This seems to disagree with what I've heard of Valve and Steam sales. That the bigger the discount, the more (total) revenue is made, almost across the board. $50 game -> 50% off, 100 sales $50 game -> 75% off, 500 sales etc
Where did you hear that from ? On the contrary.
http://www.geekwire.com/2011/experiments-video-game-economic...
"What we saw was that pricing was perfectly elastic. In other words, our gross revenue would remain constant."
Re: "No matter what price we choose, we always make the same revenue"
#63Its easy then. Keep the price high and it will lower your support costs. Make more profit.
But if your growth is in some way viral/exponential due to word of mouth/recommendations, then you're better off having 5x as many users today. In very crude terms: $1 x 5x5x5x5x5 is a lot more than $5 x 1x1x1x1x1x1
Specious bit of hand-waving featuring made-up numbers. My rule-of-thumb is to disregard people who plead virality, especially if they call themselves marketeers.
High sales get you into the top 10 lists which is really worth having (you can call that viral if you're desperate), otherwise high sales increases both the support burden and the likelihood of negative reviews.
However, an app like this has niche appeal (writers) and there is no doubt that exposure within that niche is beneficial. So word of mouth is important, but is not gained by simplistic approaches. Promotion within the niche is likely to be more productive than promiscuous price cutting. For a game, a different strategy would be appropriate.
Re: "No matter what price we choose, we always make the same revenue"
#64Its easy then. Keep the price high and it will lower your support costs. Make more profit.
But if your growth is in some way viral/exponential due to word of mouth/recommendations, then you're better off having 5x as many users today. In very crude terms: $1 x 5x5x5x5x5 is a lot more than $5 x 1x1x1x1x1x1
On the other hand, there is a limited pool of potential customers in this world. If you have a pool of 100, better to sell 10x for $10 today than 100x for $1. In the first scenario, you have 90 more customers to pursue tomorrow. In the second, you either need to make a new unrelated product with a new purpose or different audience (ex. Sony), expand your audience (Nintendo + Wii) or invalidate/depreciate the old one (Apple) to secure any more sales.
Edit: I forgot, there is also, extend your product (DLC)
Re: "No matter what price we choose, we always make the same revenue"
#65Its easy then. Keep the price high and it will lower your support costs. Make more profit.
But if your growth is in some way viral/exponential due to word of mouth/recommendations, then you're better off having 5x as many users today. In very crude terms: $1 x 5x5x5x5x5 is a lot more than $5 x 1x1x1x1x1x1
If it were, revenue would be going up. Did you read the article?
Re: "No matter what price we choose, we always make the same revenue"
#66This seems to disagree with what I've heard of Valve and Steam sales. That the bigger the discount, the more (total) revenue is made, almost across the board. $50 game -> 50% off, 100 sales $50 game -> 75% off, 500 sales etc
Where did you hear that from ? On the contrary. http://www.geekwire.com/2011/experiments-video-game-economic... "What we saw was that pricing was perfectly elastic. In other words, our gross revenue would remain constant."
In that interview, Gabe distinguishes between silent price changes and sales: silently changing the price had no effect on revenue, a promotion discount increased revenue.
Re: "No matter what price we choose, we always make the same revenue"
#67Its easy then. Keep the price high and it will lower your support costs. Make more profit.
Not unless you want to build up your audience for future products.
Re: "No matter what price we choose, we always make the same revenue"
#68Earlier quoted context omitted.
It's hard to do that with a product that's specialized in removing features
So charge more for removing even more features. Call it Zen instead of Pro.
You're joking obviously, but I wonder if this has ever been successfully applied in some form or other.
Re: "No matter what price we choose, we always make the same revenue"
#69Earlier quoted context omitted.
Where did you hear that from ? On the contrary. http://www.geekwire.com/2011/experiments-video-game-economic... "What we saw was that pricing was perfectly elastic. In other words, our gross revenue would remain constant."
In that interview, Gabe distinguishes between silent price changes and sales: silently changing the price had no effect on revenue, a promotion discount increased revenue.
Only in certain cases, and he mentions that they do not understand it well enough so they are still experimenting.
Re: "No matter what price we choose, we always make the same revenue"
#70Earlier quoted context omitted.
So charge more for removing even more features. Call it Zen instead of Pro.
You're joking obviously, but I wonder if this has ever been successfully applied in some form or other.
Sony and other computer manufacturers will charge you more to deliver the computer _without_ the "bonus" software they usually include.
(Yes, it's probably a matter of the bonus/bloatware/crapware makers paying the manufacturer to include it vs. customers paying more to not. Flip side is a lot of that stuff _is_ useful, but many users just don't want it there to start with.)