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
It’s a digital good, just a bunch of 1s and 0s in a particular order. The manufacturing cost of making a copy is near 0. There are license fees, but those are almost always pencentage based. Valve takes 30%, the publisher takes a percentage, and so on.
Then it’s a balance of volume vs price. If you can sell 10,000 copies at $10, vs 1,000 at $15, ($100,000 vs. $15,000), it is more profitable to sell the game at $10.
And human psychology is manipulable. Seeing the original price at $15 will influence them to value the game around $15, and so $10 would be a good deal. If they want it, they should buy it on sale. Where as seeing the original price at $10 would influence them to value the game at $10, which could mean it’s not as good as a $15 game they can get for $10 on sale.
The developers need to make enough profit to cover the development costs’ debt. Then after that, the rest of the profit goes to the next project and maybe bonuses… Probably to the executives. Part of that is also to cover the cost of past and future non-pofitable games. Not all games make a profit and developers and publishers need to offset the cost of past and future failures.
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
Basically nothing is sold to cover the cost. That’s the basic of how making a profit works.
So let’s start from there. Second, when you make a digital product, you invest X and you have no idea how many copies you will sell. It’s much harder to compute the marginal cost compared to a physical item.
Videogames are a luxury item, they are by no means necessary. So there is no harm in letting demand and offer regulate the price. If you feel that paying a certain amount is not worth for a game, you don’t pay it, or you wait until the price drops.
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
It’s a digital good, just a bunch of 1s and 0s in a particular order. The manufacturing cost of making a copy is near 0. There are license fees, but those are almost always pencentage based. Valve takes 30%, the publisher takes a percentage, and so on.
Then it’s a balance of volume vs price. If you can sell 10,000 copies at $10, vs 1,000 at $15, ($100,000 vs. $15,000), it is more profitable to sell the game at $10.
And human psychology is manipulable. Seeing the original price at $15 will influence them to value the game around $15, and so $10 would be a good deal. If they want it, they should buy it on sale. Where as seeing the original price at $10 would influence them to value the game at $10, which could mean it’s not as good as a $15 game they can get for $10 on sale.
The developers need to make enough profit to cover the development costs’ debt. Then after that, the rest of the profit goes to the next project and maybe bonuses… Probably to the executives. Part of that is also to cover the cost of past and future non-pofitable games. Not all games make a profit and developers and publishers need to offset the cost of past and future failures.
Valve ceo is thinking about the next project from his mega yachts
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
https://luxurylaunches.com/transport/gabe-newell-luxury-yachts.php
Gabe Newell is not a video game developer
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
Basically nothing is sold to cover the cost. That’s the basic of how making a profit works. So let’s start from there. Second, when you make a digital product, you invest X and you have no idea how many copies you will sell. It’s much harder to compute the marginal cost compared to a physical item. Videogames are a luxury item, they are by no means necessary. So there is no harm in letting demand and offer regulate the price. If you feel that paying a certain amount is not worth for a game, you don’t pay it, or you wait until the price drops.
Not everything is made for infinite profits
Any profit requires charging more than cost. Nobody is talking about infinite. In fact games after a few years end up costing pennies.
You are literally arguing nothing. Devs have the right to profit off their labor.