As if making a game wasn't stressful enough, once you've made one, you then have to stick a price on it, and ask people to buy it. How the heck do you know what to charge? And, in a more existential sense, how can you put a price on your own creative outpourings? Well, think of it this way: if you don't get paid, this could be the last game you ever make—and none of us want that. So it's time to bite the bullet, put cap in hand, and finally get what you deserve for all those months of late nights and creative anxiety.
Setting the right price for your indie personal computer (PC) game is a key piece of the marketing puzzle, and, in a constantly shape-shifting market, it's a tricky one to nail. The price of your game is so much more than just the money someone hands over; it guides player expectations of quality and content, and—crucially for you, the developer—it's what stands between making or losing money.
There are commentators outside the industry who say games are too expensive compared to their movie cousins. However, some within the business point to rising development costs, increasing technical demands of hardware, mushrooming player expectations, and the many hours of fun that one game can deliver as evidence that games aren't expensive enough. Recently, PC Gamer* explored the question of underpricing in the indie market, leading to some weighty debate on the issue.
All debate aside, when it comes to pricing your game, stay focused on two things: making sure the player feels like they're getting a fair deal and ensuring you, the developer, get paid. The goal of this marketing guide is to help you tick both boxes by throwing some light on different pricing strategies for indie PC games.
The indie-game renaissance is showing no signs of abating, although with such buoyant success comes stiff competition. Steam* is at the forefront of bringing many of these games to its PC-playing public, and, according to one analyst, the platform was deluged with more than 6,000 new titles in 2017, almost as many as the total number released between 2005 and 2015. It's usually the indie success-stories that make headlines, the leading contender for 2017 being Cuphead. The self-published game was made by a small, independent team utilizing the free-to-use Unity* game engine, and sold for USD 20. Two weeks after release, Cuphead had sold over a million copies on PC and Xbox* One.
Massively successful indie games such as Cuphead, however, are anomalies, and not representative of most of what happens in the market. When it comes to the price, would Cuphead have sold a million more if it had cost less? Maybe it sold as many as it did because that was the natural limit of the market for it, regardless of the price. We can only guess.
Cuphead developer Chad Moldenhauer pretty much nailed it in StudioMDHR's MIGS 2017 keynote: "The commercial success really just means we get to keep making games for hopefully as long as we live." This is almost certainly what most indie developers want their games to deliver, and so the price needs to be set accordingly.
There's a lot to consider when making pricing decisions. The following checklist covers most of the key areas that you should check off and revisit as you approach the release of your game, with each one explored in more detail below.
Break-even pricing: How much money do I need to earn to be able to keep making games? If you're considering Kickstarter*, there are other factors to take into account.
Market pricing: How are my past, present, and future competitors priced, and what are the pricing limits for comparable games? Also consider downloadable content (DLC) pricing, episodic pricing (if it's relevant to your game), and geographical pricing.
Perceived value pricing: What else do I want to communicate with the price?
Promotional pricing: What kind of discounts and offers should I be thinking about and at what point in the product life cycle?
DLC pricing: How should I price post-launch content?
It may seem obvious, but the first thing you need to do is work out how much money you need in order to pay yourself and your team a living wage, both for the work you've done up to the launch of your game and to keep going afterward. Even if you have additional funding from an investor or a Kickstarter campaign, you still need to do the math.
The break-even point is the point at which your revenue covers your costs. Costs need to include not only your team's burn rate, but also the percentage of revenue that goes to the retailer (usually 30 percent in the case of Steam and GOG*, for example) and to your publisher, if you have one.
Once you've got that break-even figure, you can start working out how you're going to reach it by multiplying the price by the estimated number of copies you're going to sell. Since you'll never know exactly how many games you're going to sell, try different scenarios and make good use of all the historical data for comparable titles on Steam Spy. UK-based independent developer Ninja Theory* gave us a glimpse of how this process works in the post-mortem video it released for its 2017 self-published title Hellblade*: Senua's Sacrifice.
Figure 1. Ninja Theory's expected-versus-actual sales for Hellblade: Senua's Sacrifice*.
The image shown in Figure 1 was taken from the video and shows the projected sales (in blue) of the game compared to the actual sales (in green). Ninja Theory anticipated it would need to sell 500,000 copies in six months to break even, which means it was able to plan its finances in advance, with the aim of being able to stay solvent for six months following launch. In the end, Ninja Theory exceeded its own sales expectations, but, by creating this projection, the company knew exactly what it had to do and could price its game accordingly—in this case at USD 30.
It may be that you follow in the footsteps of many successful indie teams and launch a Kickstarter to help fund the development of your game. Crowdfunding a game on Kickstarter is something of an art in itself. The pricing process is complicated by the number of different reward tiers, often involving the production and distribution of unique physical and digital items, as well as the game itself.
If you're heading down the Kickstarter path, you need to calculate the true cost of the rewards—not just the goods themselves, but the resources required to fulfill them. Items such as figurines, art books, and vinyl records are expensive to produce and ship. Add everything to your costs—including labor costs—and use that to help set the prices of each reward tier, and work out your overall break-even point.
The key to getting the price right is understanding the market you're entering. You need to ask some important questions about how competing games are priced, be they direct competitors in your genre, indirect competitors aimed at a similar market, or share-of-wallet competitors releasing at the same time as you.
Steam Spy and SteamDB give access to historical sales and pricing data for every game on Steam so you can see how they performed. If a certain price worked for a similar game, there's a good chance it will work for you—although it's always a roll of the dice, and, ultimately, nothing replaces having an excellent game to sell in the first place.
This is not to say that you can't do things differently if you want to—just make sure you've done the research so you know exactly why you want to do it another way and what the risks are. Relying on hunches alone is crazy when there's so much data available.
The clearest indicator of how you should price your game should come from your competitors, which you can group as follows:
- Direct competitors: Games competing in the same or similar game genre.
- Indirect competitors: Games that share a broad audience target, and have a similar amount of content and level of production values without being in the same genre.
- Share-of-wallet competitors: Games released in the same period of time as yours, competing for finite financial resources.
Build a representative list of a dozen or so recent historical competitors (from the last year or two) that fit into each of the first two competitor types, and then list the following:
- Competitor type (direct or indirect)
- Release date
- Release price
- Sales data (for example, from Steam Spy, or their own announcements)
- Revenue estimate (minus retailer percentage, which is approximately 30 percent)
- Time period between launch and first discount
- The sales the game has been in, with prices and percentage discounts
With that data, you will be able to paint a detailed picture of the effects of different pricing strategies on competitors' sales, glean information on best practices and pitfalls, and start to define what your own pricing strategy should look like.
Figure 2. Price history for Reikon Games' Ruiner*, released in September 2017 (SteamDB*).
For games coming out around the same time as yours—share-of-wallet competitors—look at the audience they're targeting and estimate the degree of crossover with yours, and then gather as much relevant information as you can about them. Check their pricing, pre-order strategy, media presence (including social media, streams, and YouTube*), and try to gauge the overall level of anticipation compared to your game. This will give you an idea of how you'll fare in the battle for market bandwidth at launch.
What's key is doing your research and not losing your nerve. Price your game at what you believe it's worth based on the data available and on the revenue you need in order to break even and keep going.
Downloadable Content Pricing
DLC is all about extending the life cycle and revenue potential of a game. It has become a regular fixture in the world of PC gaming, not least because it's much easier to do on a PC than a console (first-party certification demands are notoriously slow and complex to navigate). Publishers tend to favor a mix of paid and free DLC over a game's life cycle, so those who don't want to pay more than the shelf price still get a piece of the action.
The Season Pass signs up players for a whole set of forthcoming DLC for a game. The player gets a discount, and the publisher gets guaranteed income, and an indication of interest, which helps predict sales of the DLC, especially with the help of historical data. A win-win again.
Of course, it's vital to make sure the perceived value of your DLC matches the price you're asking. A couple of skins and a new map might be fodder for free DLC, whereas major new game modes and a new game world sound more like the stuff of paid DLC. Look at the DLC and relative pricing for other games, and if it's your first time avoid big risks—stick with what it looks like the market will bear easily.
Releasing a game in episodes has become an accepted way of delivering game content, and it can be a great way of generating regular revenue over a sustained period of time.
A recent success story is Life is Strange, which was sold in five episodes, at USD 5 per episode. The Season Pass pricing mechanic often used for DLC is also employed for episodic games, and with Life is Strange players could buy all five episodes for USD 20—a discount of 20 percent.
Selling a game experience in episodic form can put constraints on pricing—asking for USD 40 each for three-or-more episodes is likely to be somewhat contentious—but it's well-suited to narrative-driven experiences, for example, where relatively lower development budgets allow for accessible pricing per episode.
Figure 3. All five episodes of Life is Strange* were offered for USD/EUR 19.99, a 20 percent discount on the price when bought separately (since then, episode one has been made free).
In addition to generating revenue over a longer period, releasing a game in episodes can be extremely useful for small, resource-strapped development teams. Creating episodes allows them to release a part of the game, generate revenue, and reinvest in ongoing development. Ebb Software is intending to release the first part of Scorn in 2018; it will hopefully be successful enough to fund the development of part two.
Figure 4. Part one of Ebb Software's first-person horror game Scorn* is entitled DASEIN, and planned for 2018.
Another factor to bear in mind is the (often surprising) price differences in various geographical regions. At the time of this writing, on Steam DB, the USD-equivalent local prices for PlayerUnknown's Battlegrounds range from USD 14.94 in Indonesia to USD 37.41 in the UK, which is a phenomenal range.
Figure 5. Some of the geographical price variations for PlayerUnknown's Battlegrounds* (SteamDB*).
The availability of lower prices in certain countries encourages some buyers to purchase from another territory (using a VPN for example) or buy keys via resellers such as G2A*. This phenomenon is proving challenging to parts of the games market where margins are narrow; squeezing those margins too hard can mean the difference between success and failure. It is, however, possible to region-lock Steam codes, although the practice is not that widespread.
It's worth building best- and worst-case financial scenarios based on the lowest and highest prices you estimate your game will be sold at. While it will never happen that all your players, worldwide, buy at the cheapest price available, you'll be prepared if some of them do.
Perceived Value Pricing
When pricing your creation, you need to get inside the head of your customer, and try to figure out what price they think is fair. It's all about perception and context.
The price communicates information about where your game sits in the market and its intrinsic value—the perception of which depends on the context. For example, a USD 60 price immediately suggests a AAA-quality game or blockbuster, for which gamers would expect to receive a significant amount of content (hours-of-play being the simplest yardstick) and high production values. At the other end of the spectrum, a USD 5 or USD 10 indie game may be equally or more creative in its ideas but will have less overall content and lower production values, whether in terms of the graphics or in other areas.
Where it gets really interesting, and more complicated to judge, is in the mid-market, especially in the digital space. Indie games with higher production values may be priced anywhere from USD 20 to USD 40. Shadow Warrior 2 from independent team Flying Wild Hog was released in October 2016 and has sold around 355,000 copies with a standard price of USD 40 (not including discounted sales). In terms of price expectations, Shadow Warrior 2 was consistent with its predecessor and with what players expect to pay for a complex first-person action game with relatively high production values—certainly for an indie game.
Figure 6. Flying Wild Hog's Shadow Warrior 2*, an indie game with high production values.
There's no doubt that 2017 release Cuphead also has high production values, but its genre is a simpler one—a 2D side-scrolling platformer. Hence its USD 20 price—half the price of Shadow Warrior 2—feels about right, perhaps even generous to the consumer, given the game's impressive artistic realization and commitment to its creative vision. While Cuphead has sold more copies (1.3 million on Steam as of January 2018), in revenue terms, both titles have performed well. The real test is whether they've covered costs and entered profit, while being priced at a level that is acceptable to buyers, according to their perception of the game's value. That's the sweet spot you need to find.
The world of digital game distribution is littered with sales and promotions, from pre-order incentives, to seasonal sales and bundling. You need to watch the markets, study the competition, and work out the right timing and type of promotions to support the success of your game.
Many games offer pre-order discounts (typically 10 percent on Steam) or added value, such as exclusive in-game content. The former option can eat into revenue, while the latter risks alienating players who don't want to pre-order. A well-judged pre-order incentive is worth it, however, as it can provide a guide to future sales—especially when combined with historical data from previous titles.
Discounting and Sales
Steam, GOG, Green Man Gaming, and other digital marketplaces have had a profound effect on consumer behavior when it comes to discounts and sales. As with physical retail, day one of release is still the moment when the sales are likely to be highest, but the endless shelf-life of digital products means that the life cycle can last years, and many buyers are happy to wait to bag a bargain.
Games compete with each other not only within their genre, but also for a share of the finite amount of money consumers have to spend at any one time (share-of-wallet). With so many games hitting the market each month, gamers have to make tough choices on how to spend their money. Looking for quiet gaps in which to release a new intellectual property has become something of a sport for many publishers. Crowded release periods can reduce day-one sales and encourage potential buyers to wait for a discount.
In that context, it's important to look beyond day-one sales figures and consider the number of people who have put your game on their wish list for an indication of the game's potential over time.
When it comes to discounting, don't do it too quickly after launch—you risk devaluing your product ("Why is it on sale already? Is it no good?") and annoying your early buyers who picked it up at full price. A couple of months post-release is probably a good guide, but watch the market, competitors, your sales, and make a smart call.
You may find that deep discounts of 75 to 90 percent don't deliver a proportionate increase in sales for the massive slice they take out of your revenue. Generally, reductions on digital stores are more modest, with the majority of games in the Steam 2017 Autumn Sale on offer with discounts of between 20 and 60 percent.
Again, the price of your game communicates more than just the hard cash spent, so always discount thoughtfully, and take your lead from the market and other comparable games.
Humble Bundle has put PC game-bundling on the map, offering limited-time bundles and donating a portion of the profits to charity. It's a fascinating model, and one that many publishers use to monetize digital content that would otherwise be gathering virtual dust.
Bundles are also a permanent fixture on Steam and other digital stores, and they're a win-win for both the consumers and the game publishers. The buyer gets a bunch of games for a great price, and the publisher generates revenue from games that may otherwise have stalled by bundling them with more desirable ones. It's a useful strategy for further into the product life cycle once sales have reached a plateau and can breathe new life into a game's sales.
The final word: measure everything for the entire duration of your marketing campaign, pre- and post-launch. Log every article, stream, YouTube video, social-media post, and user review, and after-launch look for correlations with peaks and troughs in the sales data. Compare your sales with your initial predictions, build up a picture of what works, what doesn't, and how you can do it better. Then do it better.
This guide gives you a good start to find a pricing strategy that works for you. As you go through the process of releasing games, gathering data, and gaining experience, you will become your own expert on using price to increase your chances of success in the fascinating, frustrating, challenging, and rewarding indie game market.
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