On App Store pricing (again)

Over recent months, WoSblog has railed on more than one occasion about the sort of idiots who constantly try to force App Store prices higher, because they don't understand the people who buy stuff in the App Store.

But it's always been hard to definitively refute the argument that cheap apps make less money, because there haven't been many opportunities to compare oranges with oranges.

There is now.

Pac-Man has every possible advantage in terms of trying to charge a higher price. It's arguably the best-known videogame of all time, and along with Space Invaders it's certainly (in general videogaming terms) the best-known one that you can buy in the App Store.

Anyone buying Pac-Man knows exactly what they're going to get (and in the unlikely event that they don't, there's a free Lite version), so there's no element of being put off by the unknown, rather than by the fact that it's (relatively) expensive.

Another pertinent fact is that in App Store terms as well as absolute ones, Pac-Man is ancient. It's been in the App Store for almost two years (launching at an ambitious $9.99), and has maintained respectable chart placings for most of that time. So if – as we're often told by stupid people – customers judge pricing in absolute terms (rather than in the context of what competing apps sell for), Pac-Man hasn't been hampered by its premium cost.

So given that iPod Pac-Man has been out for almost the entire life of the App Store, and has sold pretty well, those who decry 59p as not being a viable price point would presumably have claimed (until last week), that cutting its price wouldn't make enough of a difference to its sales to compensate for the loss of money per unit. After all, it rather looked as if anyone who was interested in buying Pac-Man for their iPod would have bought a copy by now.

(A further interesting thing to note is the fact that while Namco regularly slashes the price of its back-catalogue titles to 99c/59p in promo sales, including games like Ms Pac-Man, Pac-Man Remix and Pac-Man Championship Edition, and has often shuffled the price of Pac-Man back and forth between $4.99 and $2.99, in that entire two-year period Pac-Man has NEVER been reduced lower than $2.99 until now. So the chances that there were lots of potential purchasers just holding off in expectation of a price cut would also appear quite low.)

But hey. You've already looked at the image, so there's not much point in me building up the suspense. Cutting the price of Pac-Man to 59p has seen it absolutely rocket up the charts. Despite all the brand awareness, despite all the time it's been available, despite having already sold hundreds of thousands – probably millions – of copies, having its price cut to 59p has suddenly propelled Pac-Man into the all-categories top 3, and it's still climbing.

Now, I don't have solid evidence for what I'm about to say, so I'm not going to claim it as any sort of empirical fact. However, I'm prepared to take a £100 bet from anyone that the following statement of belief is indeed factually true:

At any given time, the App Store all-categories No.3-selling app sells more than five times as many copies as the No.70 app in any single-category chart.

I think my money's safe, don't you?

Because that's the difference that the 59p price point has made to Pac-Man. A game that was languishing around the lower reaches of the games-only chart at five times that price has been catapulted in four days to the No.3 all-categories app. I'm guessing that the actual increase in sales that represents is closer to 50 times than five times – in other words, making TEN TIMES as much money.

(Pac-Man is also flying up the Top-Grossing charts, currently at No.12 and rising, with two of the titles keeping it out of the top 10 being £52.99 satnav apps.)

I'd call that game, set and match, viewers.

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26 Responses to “On App Store pricing (again)”

  1. Troggles Says:

    I'm not convinced it's such a great surprise that something cheaper sells more that when it was expensive.

  2. Troggles Says:

    I've read it, twice. What;s your point? And please, for the love of God, don't say "See above."

    • My point is that you seem to have somehow failed to read the parts with deal with your complaint, by pointing out exactly why the magnitude of Pac-Man’s rise IS remarkable.

      Indeed, you seem not to have noticed that the MAGNITUDE of that rise is what was being discussed in the first place, not the mere fact that there WAS a rise.

  3. El Stevo Says:

    The point, Troggles, is that it is making more money at the lower price.

  4. Troggles Says:

    I don't see a single sentence referring to the "magnitude" of the rise. In fact, I see lots of paragraphs talking about how it sells more now it's cheap.
    "Because that's the difference that the 59p price point has made to Pac-Man. A game that was languishing around the lower reaches of the games-only chart at five times that price has been catapulted in four days to the No.3 all-categories app. "
     
    I'm not criticising the article, I'm just saying – it's not a surprise. It's a comment, you know, like commenting on a review.

  5. Troggles Says:

    Yes but that's obvious, El Stevo. I mean, yes Namco (or whoever) might be silly for not seeing that, but the seveteen gajillion apps and stuff priced lower show that almost everyone knows that.
    That's what I was saying.

  6. "I don't see a single sentence referring to the "magnitude" of the rise. "

    Then have another go at this one, which I helpfully put in bold and everything:
    "At any given time, the App Store all-categories No.3-selling app sells more than five times as many copies as the No.70 app in any single-category chart."
    The point being, in case you're still having trouble with some pretty simple English words, that in order to make more money Pac-Man didn't have to just sell more copies at 99c than at $4.99, it had to sell FIVE TIMES more. “Five times” is a description of magnitude, and also the entire fucking point of the article, as further explained by the bit just after it:

    “Because that’s the difference that the 59p price point has made to Pac-Man. A game that was languishing around the lower reaches of the games-only chart at five times that price has been catapulted in four days to the No.3 all-categories app. I’m guessing that the actual increase in sales that represents is closer to 50 times than five times – in other words, making TEN TIMES as much money.”

    If you can’t grasp that I can’t help you.

  7. Troggles Says:

    Oh the magnitude of the rise in sales? Well yes, of course. I can grasp that, I'm just saying that it's pretty much universal knowledge. For the most part I was agreeing with you.
     
    But thanks for calling me thick! I hope you enjoy having one less reader!
     
    Bye

  8. I can definitely live with having one less reader I have to waste my time re-explaining things to as if they were a drunk child. If these facts were "universal knowledge", all apps would be 59p.

  9. Well I think everyone knows it, but these facts sometimes don't filter up to the people in power.
     
    Greed > common sense

  10. nixonradio Says:

    "I don't see a single sentence referring to the "magnitude" of the rise. In fact, I see lots of paragraphs talking about how it sells more now it's cheap…"

    20 minutes later…

    "Oh the magnitude of the rise in sales? Well yes, of course. I can grasp that."

    I'm kind of with Stu here on the "thick" issue, TBH.

  11.  
    The article you link as "Idiots" at the top of the page is now 2 years old, in it he points out he's writing a game and because he's not some kind of buffoon, he'll price it at "$9.99 or higher".
     
    Surely he's written the game by now, so of course, unless he's a dribbling loon case it'll be $9.99.
     
    http://losingfight.com/blog/2010/03/30/hearts-attack-1-0-announced-fun-card-game-for-the-iphone/
     
    "Hearts Attack 1.0 is $2.99 (USD)"
     
    Oh.
     
    Sales incidentally fell off a cliff after day 1 (unsurprising when Hearts Attack appears 79th in a search for Hearts on the app store, below many, many others that are 59p and look virtually identical to me). The following…
     
    http://itunes.apple.com/gb/app/hearts-premium/id326299607?mt=8
     
    http://itunes.apple.com/gb/app/card-shark-collection-deluxe/id306967807?mt=8
     
    http://itunes.apple.com/gb/app/hearts-deluxe/id313089379?mt=8
     
    and er.. http://itunes.apple.com/gb/app/spl-news-scottish-premier/id327027867?mt=8
     
    being just a smattering of the 59p fun to be had from further up the search than this guy's game.  And that's ignoring the several that have demos.
     
    So in short, he's already proved himself wrong, but he's kept going. His solution to his sales being utterly abysmal after the first day?
     
    Increase the price to $4.99.
     
    http://itunes.apple.com/gb/app/hearts-attack/id364674253?mt=8
     
    Oh dear.

    • Yeah, I’d investigated the progress of Hearts Attack the first time I read the piece. What puzzled me was how anyone could be mental enough to think people would pay $10 for a Hearts game, of all things, in the first place. That’s what I call a misplaced sense of entitlement.

  12. Despite all the brand awareness…
    While persuaded by your criticism of Finnell's position, I suspect Pac-Man's notoriety actually cuts both ways (ie rather than knowing I want it "because it's Pac-Man innit", I might just as easily know that I only want it cheap "because it's Pac-Man innit") and that a title for which there is no brand awareness will exhibit a shallower curve when similarly cut. Minor point — really do appreciate the posts on this topic.

  13. It's interesting, but not conclusive. People are not simply buying a 59p version of Pacman; they are buying a £2.99 version of Pacman for 59p. People sense a bargain, so sales will naturally rocket.
    Perceived value is important; Nintendo being the money squeezing blood sucking leaders at this. If people knew there would be a Platinum range eventually, they couldn't sell Mario Kart DS continuously at full whack for something like 5 years. If that title was dropped to a tenner for a while, it sales would spike even more ridiculously but revert to mean, maybe a bit higher. Over the long run Nintendo are probably still better off doing what they are doing.
    There is obviously an optimum price point. Even three quid sounds too high. It may not be 59p though. To prove your point you need two similarish games released at the same time at different price points, and compare sales and profit over a longer period.
     

  14. (Also, your argument doesn't really hold up, or all that anyone would have to do would be launch their game at $10, reduce it to 99c a month later and watch it hurtle to the top of the charts. The only rational conclusion that can be drawn from the evidence was that a LOT of people wanted to buy Pac-Man, but were only prepared to do so at 59p. So many, in fact, that reducing the price by 80% led to total revenues going dramatically UP. Which is basically what I've been arguing for the last 20 years.)

  15. And it's actually more true now, where the "per copy" cost is effectively zero, rather than back in the Amiga days where that half price copy would still consume a whole copy's worth of cardboard, postage and wholesaler costs.

  16. Indeed. Which is why I get extra angry at the dicks who keep insisting the prices need to go up.

  17. Stu's point rings true with me. There's plenty I'll take a chance on when they drop it but won't ever touch when it is higher. I've seen the same repeated recently for many with the Steam summer sale.

  18. Tom Feilding Says:

    Turnover and profit are two different things though. Sure, income revenue will rise, but if a flat fee is paid to apple per d/l, then the marginal costs increase greatly relative to the total revenue.
     

  19. It isn't. Apple takes 30%.

  20. Pac-Man went back up to £2.99 yesterday, btw. It's already fallen out of the top 10 (no.15 in All Paid earlier today, no.18 now) and is dropping fast in all charts, including Top Grossing.

  21. There's a shocker. Looking at the Steam thing again and remembering past discounts, it was the same there. There were some old and obscure games that have rocketed up the charts to be top sellers simply because of some short term offer. When the offer is cut, it disappears again. It would seem to support your observations with the App Store market too.
     
    Many of the standard download prices are far too high – often more expensive than a physical copy ordered online (bizarre when downloads were always meant to be cheaper thanks to the lack of manufacturing, shipping, storage and distrubution costs). I know I and many others simply won't touch anything unless it is low priced or has a good offer. If the offer is missed, then I won't touch that game. There's so many games and distractions out there I won't miss it.

  22. VinylPusher Says:

    As a consumer, I wait for luxury items to hit the right price point before I buy them. Surely that's just common-sense? OK, sure, the right price point for certain gaming luxuries is the full goddamn £34.99, but that's one excellent game to lure me into paying top-whack.
    Serious Sam HD 1 & 2 recently saw me performing some wallet surgery. £21.99 for the both of them is pretty decent. Sure, they'll drop to £6.99 each at some future point but they did start somewhere around £25 each (possibly, I'm not sure. I just remember thinking "fuck right off" when I saw the price on release day).
    Defense Grid at £6.99 was well worth the purchase. Not at £12.99 though, which is where it previously sat. I'd been playing a pirate copy for some time and there was just no way it was worth anything more than £7 to me. It's a great game and it absorbs hours, but it's a 'switch brain off, click mouse' game rather than some deeply involved, carefully crafted masterpiece of code, art and music. I did end up buying the Xbox version too, though. What can I say? I had points left.
    I haven't even bought Blur yet and I fucking love Bizarre Creations racing games (except PGR4, which is a steaming pile of shit. Which I still bought. Nggg etc.). It's not that I don't want it, it's just that it's not quite as attractive as PGR2 or PGR3 were when they came out. I'll pay £14.99 for it though, no problem.
    Fallout New Vegas is sorely tempting me, but I'll wait for a trusted review or two which specifically compare its goodness to that of Fallout 3 (which I hold in the mist high regard). If it's even close to as good as Fallout 3, I'm paying my £29.99 for a Steam download.
    This isn't a difficult theory. Eager gamers will pay £40-45 for an anticipated game. Shit, they'll pay £80 for some stupid limited collector's edition if it's got the audio CD of the game music and a little plastic figurine of the main character. All that happens is the price ends up at £24.99, then £17.99, then £14.99… blah blah blah until the sales curve ceases to peak at further price drops. That's the market well and truly squeezed dry. Job done.

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