Quote:
Originally Posted by Enoch Root
The primary problem with the "we'll sell enough extra units at the lower price to end up with more total sales' strategy is that this is not by any means certain. And it is a huge risk because, if you're wrong, you're screwed.
Using your original example, if you drop the price to $10 but then sales are disappointing, you have shot yourself in the foot, because you've already sold (at a low price) to your best customers. Now that sales have slowed, there is nothing you can do.
Another big issue that you have ignored, is the sales of future games. If you drop the price of one game, you cannibalize the potential price for future games (as well as undercut the price for other current games).
There is more to the economics of pricing a game than the simple math of $X x Y units.
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I never meant to get into an economics or accounting discussion at all. I just objected to the idea that you can assign costs to purely digital products in a way that you could be losing money by selling any single copy.
Anyways, obviously the $10 price point was just an extreme example to make my point easier to understand, and I don't disagree with your argument that precedent is important. Yes, if you drop the price of a new game now, then consumers will expect future titles to also be offered at a lower price. My point is that exactly this scenario has already happened.
The price of new, triple A games in the US has been $60 for many, many years. It's been that way for so long that I believe "new game = $60" is just assumed by American consumers and any game released at a higher price than that is likely to be rejected by a large amount of potential customers. Well, I think the same thing is now true for Canadian consumers. Sure, maybe we paid more for games in the past, but we've been at the $60 price point for quite a while now, too. I'm pretty sure it's been at least half a decade since we saw game prices go to the same level as in the US. My opinion is that Canadians, too, are at the point where it is just automatic to assume games are $60. I think it's going to be very hard for developers to put that cat back in the bag.
Consumers are fickle. They don't care that US companies are making less money per sale at $60 than at $80. All they care about is that the cost of a source of entertainment has gone up by 33%. What I don't know is how many people will be deterred enough by the increase to not buy, but I can tell you the answer is at least one.
How many people will not buy games at 80 bucks and will look to other ways to get entertainment?