FD have considered you'd make more money by lowering prices?

[Darth Wayner]

Just logged in after a break excited to try out the new Mandalay only to be hit by the prospect of dropping $13 on the new ship.

OK so you have to fund development, I get it, but I'm not buying for that price. Do I have $13? yeah all day long but I'm not buying for that price.

But that also made me realize I probably would have dropped a couple hundred bucks on this game in paint jobs, kits, COVAS, etc. if you weren't charging an arm and a leg. How much have I spent on Arx over my ~10 years playing? Zilch!

It's digital content, you aren't shipping anything here. There are more than enough paint jobs so no one is ever going to buy them all, meaning you're not going to run out of things to sell. So why are you charging $3 on a low end paint job that I can't even see unless I disembark?

Take a queue from those people over at Candy Crush. All in all I've probably dropped hundreds on that lousy game because it's really easy to drop 49 cents or 99 cents at time.

Listen or don't but you've missed out on considerable sales from this guy alone because the value of what you're selling isn't worth what you're asking.

Just trying to help...

 

[Agony_Aunt]

You can be sure FD's beancounters have done the maths.

Ok, the image isn't 100% relevant, since supply is in effect infinite, but factor that in and there is still a sweet spot to be found where you get the max revenue for a given price point, and what we have is what FD's beancounters have decided upon as being optimal. Are they right? Who knows? But did the consider other prices, both higher and lower? For sure.

Your "considerable" sales is a minor data point for them. They'd want hard evidence that a boatload of people felt the same as you. Presumably, the sales data they are getting are telling them that the current price is right.

Note, that things go on sale periodically, and they will look at the data from those sales as well to further inform them about whether their prices are right.

Now, you might be tempted to say "Ah, they sell more when things go on sale!" and you'd be right, but most likely this reinforces their belief that the price point they have normally is right. Because then you capture both those who buy at full price and those who buy when its on sale, maximizing profits. Especially important when dealing with virtual products where supply is infinite.... it costs them nothing to produce more.

Note, i'm not defending this or saying FD have things at the right point, just explaining how it works in the real world.

Take a queue from those people over at Candy Crush. All in all I've probably dropped hundreds on that lousy game because it's really easy to drop 49 cents or 99 cents at time.

And this is what is wrong with the industry in general, and you happily contribute to it and even advise others to do the same.

 

[alexzk]

Note, i'm not defending this or saying FD have things at the right point, just explaining how it works in the real world.

There is fundamental issue with your picture. Supplies of the digital products are infinite and cost of it equals to supply of 1 item.

 

[Agony_Aunt]

There is fundamental issue with your picture. Supplies of the digital products are infinite and cost of it equals to supply of 1 item.

Tell me you didn't read my post without saying you didn't read my post.

I did address this.

Ok, let me make it simple for you.

Let's assume, for simplicity's sake, there is only 1 item for sale, and let's assume there are (again, for simplicity's sake) 100 players.

Now, we, as the developer (or their beancounters), we have some data from previous things being on sale what the market will tolerate in terms of prices, so we have a feel for this already. We have historical data (and FD does indeed have years of data).

So, there is this digital product, its a skin or something, doesn't matter. We paid for the development of it, the cost is already absorbed, so in effect, its free to produce.

So we release it, and set the price point at 10 quibbles. At 10 quibbles we sell 50 units. Its actually quite popular at that price point. That makes us a nice sum of 500 quibbles.

But someone on the forum says "Hey, that's too much, you should sell it for 5 quibbles!"

Ok, let's rewind time, they sold it for 5 quibbles instead of 10.

Now they make 70 sales, perhaps some people who though it was too expensive at 10 bought it at 5, and some who didn't really want it thought it was just too good to pass up at 5 quibbles. But not everyone wants it, even if they lowered the price to 3 or 2 or 1 quibbles.

So the company now makes 350 quibbles... and now the beancounters are in trouble, because they should have actually priced it higher. They'd have made more money at 10 quibbles.

But what do the smart beancounters do? They don't price it at 10...they price it at 15. 15???!!! Outrageous! Time to express my outrage on the forums, right?

But at 15 they still sell 30, which is 450 quibbles, which is almost the same as if they had sold at 10. Not quite good enough. But then, give it a few months, and you put it on sale! 50% off! What a bargain! 7.5 quibbles for something that cost 15?! Sign me up! (and keep in mind, this is close to our price in the cheaper scenario). Now we have another 30 people buying it, giving us another 225 quibbles.

End of the day, now we have 450+225, a princely sum of 675 quibbles. Much better than the originally suggested 10 quibbles and way more than the suggested 5 quibbles.

Sure, you could also put the 5 quibbles variant on sale, but by that point the extra income is barely a blip, no matter how many you sell within the playerbase of 100.

As a very rough rule of thumb, you will make more money by going with a higher price point and then on occasion doing a sale to capture those who oppose the higher price point than just selling cheap in the first place.

Its pretty much Economics, Marketing, or Psychology 101, and all 3 fields are involved in manipulating people like you and me into giving more and more money to companies.

You yourself said it, you give money to Candy Crush, just because they have found their optimal price point to be at a level which you will tollerate. You think this is a good thing? Sorry, you're just being manipulated into giving more money than you would otherwise.

 

[Agony_Aunt]

The ships aren’t expensive. You don’t have to spend any money to get them, just wait 3 months.

Now if you compare FDev to the competition, their ships are a quarter of the starter ships in SC and a tenth of the average ship backers have in their hanger.

I get people having a moral objection to the ships for real money, but saying they should be cheaper is, frankly, nonsense.

Exactly. I don't give FD money for early access to ships. For me, i'm not willing to pay. Plenty are though, and FD make money from them. And when they are available for credits, i will buy... and of course, i'll want a paintjob for them, and booyah, FD get money from me.

 

[alexzk]

You yourself said it, you give money to Candy Crush, just because they have found their optimal price point to be at a level which you will tollerate. You think this is a good thing? Sorry, you're just being manipulated into giving more money than you would otherwise.

It was not me. I don't buy things at all ..mostly I try to resist all those manipulations. I just saw your picture, and it is invalid here, because supplies are infinite at zero cost, so balance point can be anywhere set by manipulators.

 

[Nowski]

I get people having a moral objection to the ships for real money, but saying they’re too expensive is, frankly, nonsense.

I dunno if "nonsense" is justified - it's a subjective call whether they're worth it: to one person, yes; to another, no. But the question as to whether lowering the price would increase revenue is quantifiable. Maybe it wouldn't for ships, but I'm not so sure for the cosmetics.

I've been willing (very!) to fork out for ships but I've been (almost entirely) resisting paintjobs and other cosmetics since the price hike despite coveting several, and though I see general sentiment has softened they still appear overpriced to my eyes. They also don't become free after a few months.

I think the current cosmetics prices were likely scaled for consistency with the price differential between Stellar and Vanilla prices on new ships, probably determined ahead of time by "bean counters" as mentioned above, and I suspect that the pure cosmetics would generate more revenue by themselves if current prices were halved and consistency be damned (though as a committed cheapskate I would still buy in bulk at the next sale.)

 

[Darth Wayner]

I think Agony_Aunt took a class on economics and wants everyone to know about it. Thanks, I understand supply and demand already, and can probably point you to some graphs and plots you couldn't hope to ever understand, but my personality is a bit less predisposed to grand-standing.

 

[Agony_Aunt]

It was not me. I don't buy things at all ..mostly I try to resist all those manipulations. I just saw your picture, and it is invalid here, because supplies are infinite at zero cost, so balance point can be anywhere set by manipulators.

Once again, reading the actual post would help you see that I did already cover the zero cost aspect of production, which I then took the time to elaborate further in my next post.

If you think i've failed to adequately explain it, by all means, provide a counterpoint.


I quote myself

Ok, the image isn't 100% relevant, since supply is in effect infinite

 

[Agony_Aunt]

I think Agony_Aunt took a class on economics and wants everyone to know about it. Thanks, I understand supply and demand already, and can probably point you to some graphs and plots you couldn't hope to ever understand, but my personality is a bit less predisposed to grand-standing.

By all means, supply some counterpoints to the points i've made.

As I said, i don't like it, the world would be better off without this sort of thing, but its just the reality of it.

 

[Darth Wayner]

You yourself said it, you give money to Candy Crush, just because they have found their optimal price point to be at a level which you will tollerate. You think this is a good thing? Sorry, you're just being manipulated into giving more money than you would otherwise.

You wrote a small dissertation only to prove you didn't quite understand the argument afterall. It's not manipulation if you're conscious of it and choose to do it anyway. I have no problem spending money on Candy Crush, frankly because I have the disposable income and find it worth the price paid to spend 49 cents on a level I've struggled with for days. Just the same as I might find it worth the price to buy a paintjob if I could actually see it, hence products are only worth what someone is willing to pay.
Now since we're on the topic of manipulation, one could easily make the argument that someone who just spent the better part of an hour chest-puffing on a video game discussion board may have been manipulated. Or were they conscious of it and did it anyway?

 

[GJ51]

With all this evident financial expertise...

I'm surprised that no one here hasn't already bought out FD so they can make their dream come true

 

[Agony_Aunt]

It's not manipulation if you're conscious of it and choose to do it anyway.

And there you go. Welcome to Psychology 101.

But please, let's get back to topic instead of casting aspersions.

Please explain why my "dissertation" is actually wrong.

Your initial point was that the price is too high, that FD would make more money if lowered the price.

I mean, maybe you're right, if they lowered it a bit, perhaps they would. Or maybe if they increased the price, they would make more money.

Neither of us are in a position where we can say for sure what would be better for FD financially speaking. It would require FD experimenting with the price to see the results (and they have over the years changed prices). But i think you we can be sure they chose those prices because they think its right, it gives them the best profit.

All i did was lay out the maths.

 

[Agony_Aunt]

With all this evident financial expertise...

I'm surprised that no one here hasn't already bought out FD so they can make their dream come true

Unfortunately, most of us don't have millions in the bank

 

[Robert Maynard]

Reminder to participants: please discuss the topic. Other participants are not the topic. Failure to comply will result in advisories, warnings, reply bans and / or thread closure.

 

[Markov Chaney]

With all this evident financial expertise...

I'm surprised that no one here hasn't already bought out FD so they can make their dream come true

Well, I did have £93m lying around but unfortunately I spent it all on paintjobs for the new Cobby.

 

[HRDiagram]

All i did was lay out the maths.

And if FDev now introduce a new currency system, let's say Quibbles, on top of ARX, we'll know who to blame.

 

[CMDR Daiyus]

I used to regularly buy cosmetics. When pre-release ships came out and the cosmetic prices up to tripled overnight (and the range got significantly cut!) I stopped buying cosmetics and have only bought the Standard pre-release ships. Would Frontier have more of my money if they'd handled that differently? Absolutely! Do I have enough data to state categorically that they made a mistake and would overall be better off doing something that I'd prefer? Not even slightly.

I'll continue to vote with my wallet, and hope the prices come back to what I consider more reasonable levels. It won't happen though. To be honest, if they reinstated all the missing items I probably would actually bite the bullet and pay the prices as there'd be enough things that I really, really want. As it stands now the store is too limited, and doesn't have the products that I know exist and want.

 

[Elfener]

I think they decided that selling fewer types of things at very high prices is (somehow) better for them. (Which still doesn't explain the oddities like how glasses for your CMDR are still only 20 arx, and the entire tattoos and warpaints category is gone).

I would've thought this would significantly affect their reputation in the community but that hasn't happened yet (?).

 

[aRJay]

You have been reading the wrong threads if you think that.