Fair game pricing

I’ve written about piracy a while ago and hypothesised that players are more likely to pirate a game if it is expensive and, inversely, more likely to buy game that’s cheap. I’ve thought and read more about this topic, and I think that I may be close to an – at least in theory – fair pricing scheme.

For some reason, almost every game developer is blogging about game length today, which lead me to an older yet insightful post by Jeff Vogel. Vogel suggests a pricing scheme for independent games that takes the following factors into account: The length of the game, how niche the game is and how much money the developer needs to live. This is a pretty pragmatic scheme, yet I came up with a slightly different one from my point of view. I essentially claim that the primary factors for a game’s price should be its length and its quality. They influence each other: Artificially lengthening a game reduces its quality, while increasing the quality increases the effort required for each hour of gameplay.

There is at least one problem I didn’t consider in my previous post: I’ve used the amount of $5 as an example of cheap, but what’s conceived as cheap is relative. Consider a car: $5 is cheap for a car. Heck, $500 is cheap for a car. $500 is, on the other hand, unbelievably expensive for a video game. But it’s quite cheap for Adobe Photoshop. See where I’m getting at? It all depends on what people are willing to (or: used to) pay, so I will try to consider this in my scheme. If there is really a trend towards lower game prices, $5 will some day be rather expensive for a game and people will be more likely to pirate it. That’s a disturbing trend, and if all developers reduce their prices hysterically, this will lead to a chain reaction endangering the whole industry.

So let’s not make it cheaper, let’s make it fair. In my opinion, a price is fair if neither producer nor consumer feel ripped off and if both basically agree on the pricing scheme. Here’s what I think should work, illustrated with highly unscientific formulae:

If you calculate your game’s price from its quality and length, you will probably get to a nice sum:

dream price = quality * length

If it’s too high, you can reduce quality or length, at least in theory (as many of the game length posts today, I’m in favour of reducing length instead of quality, but neither should become extremely low). If it’s too cheap, you probably need to increase either.

If you then, after careful consideration of your target audience, determine the average price people would be willing to (or: are used to) pay for a game like yours (this takes Vogel’s niche factor into account), you can use that and the average price you personally assume to calculate a price that might be perceived as adequate:

fair price = (dream price * average price) / personal average price

If multiplying the result with the expected number of sold units leads to an acceptable amount, why not try it?

But how to make that long story-intensive $60 game cheap to avoid piracy? I think that releasing a game in several episodes of (naturally) reduced length and hence reduced price is a viable alternative.

This is more from a player’s viewpoint than from a developer’s: I’ve never sold a game and never depended on it financially, so I can’t dismiss Vogler’s final factor: How much the developer needs to live. I will probably sell a game someday and see for myself. In any case, I think that the topic of pricing deserves careful consideration from both developers and players – that’s the only way everyone can think of the prices as fair.

On piracy

Arr, disclaimer matey: This isn’t an article on real pirates, but on their incredibly lame and improperly named namesakes: Software pirates.

I’ve just read about Machinarium‘s pirate amnesty. We own Machinarium and I urge everyone to buy it now, because $5 is incredibly cheap for such an exceptional game. Nonetheless, I think of it as amazing that 5-15% actually bought the game. I would have guessed along the lines of 1% because it does not have any copy protection at all. A piracy rate of 90% is nothing special in the gaming industry, even for heavily DRMed games. That said, I’m careful with piracy statistics: Their data is often rather subjective and even if they were accurate, a pirated game is not necessarily a lost sale.

I have profound symphathy for game developers (especially independent) and don’t pirate anything, but I’m not naive enough to believe that everyone is like that. Neither do I think that people pirating games are intending to harm anyone, they are probably just taking the path of least resistance. No matter how great it is, $60 for a video game is a lot of money. Many people will – even if they can afford it – try to pirate it, since such an amount might justify hours spend on warez and crack sites. Now think about the same game being available for $5 per download: Would you even think about trying to get it cheaper? I don’t. There are also players that could never afford $60 because that’d be a tremendous amount in their currency, as this story tells. They probably couldn’t afford $5 either, so whether they pirate the game or not decides whether they play it, not whether they buy it.

I suspect that there are also non monetary reasons for piracy: Many probably pirate merely for the sake of getting the game ASAP, not having to go to a store or wait on Amazon (the success of Steam and other online shops confirms this). Other players might want to try the game before buying it, but many studios don’t make representative demos anymore – especially not for consoles.

These problems cannot be solved with more restrictive copy protection but with different approaches to publishing. Publishers have to do something revolutionary, and if they are too big, it’s next to impossible for them. Independent game developers can, and I hope most of them are actively thinking about better publishing strategies. I likewise urge all gamers to reward them by buying their games.

Update

Amanita Design has sold more than 17,000 copies of Machinarium in just one week. Even at the cheap price of $5, they’ve earned more than $85,000. That confirms my hypothesis of least resistance 🙂