Why you may be underpricing your video game

I've got opinions, if you've got pricing?

[Hi, I’m Simon Carless, and you’re reading Game Discoverability Weekly, a regular look at how people find - and buy - your video games. Or don’t. You may know me from helping to run GDC & the Independent Games Festival, and advising indie publisher No More Robots, or from my other newsletter Video Game Deep Cuts.]

So, video game pricing. You'd think this was a simple subject, but I'm convinced that at least 50% of all people launching games in 2019 get it wrong. And the core of the reason is this - you're undervaluing your game.

Just to give you context, when I say 'undervaluing your game', I mean that you're simply not charging enough money for it when you first release it. (And maybe that you overdiscount too quickly. But that's an issue for another time.)

In my view, with a few notable exceptions I'll go into later, your game should cost at least $20 USD or 18 EUR. Then sensible amounts for other local currencies, descending in a logical fashion down to about one third of that for the Chinese version - here’s an example for Descenders. Price your games regionally and tactically.

Generally speaking, there are three or four reasons why you might be making an error and undervaluing your game:

1. You don't feel like your game 'deserves' a higher price.

This happens a surprising amount, and I understand why. You feel like it was just you, or you and your buddies who made the game. Or you feel like there's better, more fully featured games at those 'higher' prices. (Or maybe everybody else is underpricing, and you’re just following their lead.)

But none of that really makes sense. If you subscribe to the '1000 true fans' theory, those fans are just fine with paying whatever the initial price point of the game is. You need to accumulate those people, obviously - they won't just appear. But those core fans are going to be less price sensitive.

So rather than saying 'I'll make the price lower because I don't have confidence in my game' - whether you're doing that consciously or subconsciously - just pretend that $20 is the price that all games should launch at. And then adjust accordingly.

This also plays into some inherent confusion about why people buy games. In my view, people generally purchase games because they saw a trailer/streamer play it, participated in a Discord, or somebody recommended it on social media or in person. It fulfills a perceived need for them.

They rarely, in my view, say 'oh, this game looks decent, but it's $8 instead of $12, so that seals the deal for me!'. I don’t believe price is always a driver. (Although if you can only afford to buy a couple of $8 games a month, it clearly plays into it. But then.. that’s what sales are for!)

Sure, there may be some sensitivity in terms of ‘everyone thinks this game is too expensive’ as you get very high up the price point tree. This is particularly true for AAA- games that try to go out there at $60, and are getting compared to very fully featured $30 games. But in the $20-$25 price range, for a decently sized game, it makes sense.

Side note of all this price maneuvering - one danger here is that you settle into an 'in-between' price point that feels safer - $14.99 is a common one in the U.S. I know Dicey Dungeons, which is doing spectacularly well, just launched there, but I felt like it was easily a $19.99 game. (And in their case, it probably doesn’t matter cos their units sold are making up for it!)

2. You think your game will sell more copies at a lower initial price point.

I see this one a lot, and I don’t really agree. The math(s) of how many copies you have to sell at lower price points is formidable. Are you really going to sell twice of many copies of a game in its first 3-6 months at $10 versus $20? (Spoiler: you are not.)

However, if you go out with a higher price point (such as $20-$25 USD), you can have 50% off sales that still gross $12.50 per game. Or 15-20% off sales are good as well because it brings a lot of people off the buying fence - don't rush to high discount numbers.

And whatever happens, you can take advantage of much higher visibility for on-sale games. This is true both on Steam in terms of wishlists, and on Switch (and PS4/Xbox) in terms of the high-profile sales. (Don't forget that Steam users will often get emailed when their wishlisted games are on sale, a major bonus.)

So yep, if people are SOMEWHAT interested in their game, and they see it at X% off, they may buy it (duh). It might be an impulse, or they might have been trained to buy in sales, but you want as much money from them as possible, at that point. So make your initial price higher. That’s my 2c, anyhow.

3. There’s a weird implied link between price and quality.

I do feel like sometimes people underprice because they think it stokes demand. But the opposite can often be true. Think about luxury goods that people consume. What is their ‘true cost’ versus price?

I'm not suggesting we all sell at Chanel handbag prices, but we know it's tough out there for devs. And ironically, charging a little more money for your game may underscore that you believe in its value.

You're basically saying 'buy this, it justifies the higher cost because it’s great'. And because somebody has spent a little more money on it, I think they're more likely to play it and try to understand it.

Think about all those impulse buys at 80% off versus the games you spent $25 on up front. You'll generally try to spend more time on the games that cost more. (Though you may just end up playing the discounted copy of Peggle 2 until the end of time like me, of course!)

Of course, your game doesn't magically get better if it costs more. But I don't think there's ever a justification to discount a game's day to day price on a store. You should always just participate in sales. Whereas you can increase the price of a game after release, if you feel like you've added enough good/major new elements to it.

4. Your geographical location isn't giving you good perspective into world pricing.

This one can be a bit tricky. Costs vary massively worldwide, and you can be developing games from almost anywhere. This can give you a skewed view of a 'fair' price in various parts of the world.

One thing I hadn’t bargained on was the ‘change of view’ on pricing based around the country you’re located in. For example, I was chatting to a dev recently who worked in a lower-GDP country, and for him, the idea of charging $20 USD or $25 USD for his game seemed a bit preposterous.

(This was partly he wasn’t sure his game was long/complex enough, but also because it seemed like a large amount of money when converted to his local currency.)

I actually think this is a really good point which cuts in both directions. If in a high-GDP country (like the U.S.), you should be really careful in your regional pricing to set the correct pricing for countries like Russia and China.

And if in a lower-GDP country, remember that premium pricing for AAA games in the U.S. is $60, and in Europe is as much as 70 or 80 euros! I know there are a lot less of those nowadays, but even $20 looks like a good price point in comparison.

(It doesn’t look like a good price point compared to the Humble Monthly business model of ‘lots of games for $12’, of course, but by all means let’s try to push back against too much devaluing.)

Finally, when should your game not cost $20 to $25? In my view, there's a few exceptions, including short/very short games, certain genres that map badly to expensive pricing like 2D puzzle games, and titles that are microtransaction or DLC-driven (often multiplayer!) that you want to get a higher user base on.

And if your game is a hobby game, and making money isn't a priority, maybe you should consider pricing it cheaply to see what happens. I’ve seen one or two good but hobby-style projects take off on Steam that way.

But I see very few $5 games gain a lot of sales momentum on PC or console, maybe because of the implied quality tied to that value. Or maybe because only basic or underwhelming games cost $5? Price/quality/sales ties can be quite circular and confusing!

Anyway, that’s my 2c. Thanks for reading and talk to you next time.

Take care,
Simon.