Can you elaborate where your confusion lies? It’s a digital good, there is no marginal cost. So they can pretty much price a game however they want. So pricing is mostly about maximising revenue, i.e. get as many sales as you can at the highest possible price.
A sale is a relatively straightforward strategy where you first sell the game at a high price to all the people who are fine with paying a lot, then you lower the price to sell more copies to the people who weren’t willing to pay the higher price. The result is more total profit. There is a time limit too to create a sense of urgency (“I better buy now so I don’t miss the opportunity”).
Real goods have a limited lifespan, they usually go on sales when they are about to reach the end of their life or when you physically have to get rid of them. Software doesn’t expire.
A price is usually set to cover the initial costs and to make a reasonable profit not to squeeze how much money you can from people.
A price is usually set to cover the initial costs and to make a reasonable profit not to squeeze how much money you can from people.
There are exceptions, but usually that is absolutely not true. Making as much money as you can is 100% the goal for the vast majority of goods produced, physical or digital.
Games on Steam are not usually recurring purchases, one person won’t buy the same product over and over like they need to for food. This means the market of people willing to pay the full price gets saturated over time.
Sales are a way to increase the market size by lowering the “barrier to entry” (price). Sometimes a price will be permanently lowered, however usually not because a temporary sale encourages people to buy now instead of later.
Sounds like videogames sales are made to make money and the original price has not much to do with cover costs bur rather making as much profits as people are willing to pay
Of course they are made to cover costs and make money, but you can cover more costs for future games or ongoing development the game if more people are buying the game, even if it isn’t at full price
Can you elaborate where your confusion lies? It’s a digital good, there is no marginal cost. So they can pretty much price a game however they want. So pricing is mostly about maximising revenue, i.e. get as many sales as you can at the highest possible price.
A sale is a relatively straightforward strategy where you first sell the game at a high price to all the people who are fine with paying a lot, then you lower the price to sell more copies to the people who weren’t willing to pay the higher price. The result is more total profit. There is a time limit too to create a sense of urgency (“I better buy now so I don’t miss the opportunity”).
Real goods have a limited lifespan, they usually go on sales when they are about to reach the end of their life or when you physically have to get rid of them. Software doesn’t expire.
A price is usually set to cover the initial costs and to make a reasonable profit not to squeeze how much money you can from people.
There are exceptions, but usually that is absolutely not true. Making as much money as you can is 100% the goal for the vast majority of goods produced, physical or digital.
We are talking in a platform that has not such greedy goals
Games on Steam are not usually recurring purchases, one person won’t buy the same product over and over like they need to for food. This means the market of people willing to pay the full price gets saturated over time.
Sales are a way to increase the market size by lowering the “barrier to entry” (price). Sometimes a price will be permanently lowered, however usually not because a temporary sale encourages people to buy now instead of later.
Sounds like videogames sales are made to make money and the original price has not much to do with cover costs bur rather making as much profits as people are willing to pay
Of course they are made to cover costs and make money, but you can cover more costs for future games or ongoing development the game if more people are buying the game, even if it isn’t at full price
yes you can also buy a billionare fleet of mega yachts
Yes famously all video game developers are billionaires
That’s how sales of anything works. Everything is sold at the highest possible price that people are willing to pay.
That’s not true, especially for software that has infinite supply