Actually No, We Don't Know How Much Video Games Should Cost.

"How about Free? Will you pay us zero dollars? Do we need to pay you?"

I admit that using Morty to beat up Batman while Ariana Grande watches would make me smile. What is the rational economic value of one smile?

I wrote a kind of tossed off blog post last week about pricing in video games. The jumping off point was seeing how much people were willing to pay for cosmetics in games like Fortnite or Valorant: Stuff that doesn't make you stronger but gives you a better sense of customization and style.

The post got a lot of really interesting comments. They were very thought-provoking, even the ones that disagreed with me.

The header of the post was, "Do we understand anything about pricing video games?" And you know something? I think we really don't.

A few more thoughts.

1. People Will Pay Money For Fun

One commenter told a really interesting story about how they played Fortnite for a while with siblings. They spent over $250 on cosmetics. Why? Because it made the game more fun and made them laugh. It made their limited, precious family time a little more special, and no regrets.

Now compare this with other sorts of entertainment. For example, here in Seattle, going out to a nice dinner for 4 with drinks can cost $250 easy. Game nerds routinely buy board games that cost $60 and only play them 2-3 times, but that's OK because four people having fun together for 3 evenings is easily worth that much money.

Game cosmetics are an instant pipeline from abstract cash to real enjoyment. It seems silly, but it works.

But, of course, everything I just wrote applies to a fairly affluent people with money to burn. The next time we get a serious recession (which always happens eventually and might be starting now), a hard rain is gonna fall.

Or maybe nothing will change! Who know!?

2. I Don't Think It's About 'Whales'

In mobile games, a whale is a compulsive person who spends enormous amounts of money on upgrades in a game. For a lot of titles, the business model is that most the profit comes from the 1% of players who are whales, while 90% play for cheap or free. (See also: Real life gambling.)

Note, however, that whales are generally spending their money on becoming more powerful in the game. Making upgrades unlock faster, and so on.

My question is: Do cosmetics work the same way? It's hard to find out, because the companies who make these games guard this information very closely.

My gut tells me no. I mean, sure, there are going to be obsessive collectors who buy EVERY. SINGLE. THING. But I bet most who buy cosmetics just buy fancy skins for their favorite gun every so often, to freshen up the experience and generate a few smiles. If you have a link to data that proves me wrong (or right?) I'd love to see it.

I actually really enjoyed studying Economics in school. Its theories are very, very interesting. Just, you know, with limits.

3. Basic Economics Don't Apply To Me, Alas

But back to my business, small indie games. In a rational, economics-based world, every dollar I increase the price of my game by decreases the number of customers. This means there is some ideal price that will maximize my revenue. This is called the Demand Curve.

Alas, as so often happens, the beautiful, crystalline theories of economics smash against the hard reality of erratic human psychology.

Some people have a mental block against spending more for video games. Especially indie games. For a long time, the standard price for an indie game has been $15-20, so increasing it about that seems painful. Plus, it will probably be placed on sale soon. Or put in a Humble Bundle. Or given away for free on Epic.

$25 for a full-length game is cheap entertainment. People routinely spend more on other games for less. ($250 on Fortnite is TEN GAMES.) Yet, for an indie game, it feels expensive. Part of this is that, if you buy a game at full price and it's given away for free the next day, you will feel like an IDIOT. People HATE that.

I think that the customer's fear of feeling dumb is a major factor in how we must price our games.

Of course, nothing can be done about that. Since the market for games in entirely glutted and the most popular games are given away for free, I feel lucky that I can get anyone to give me any sales at any price.

So all I can do will charge a price that will, if I get the usual number of sales, keep me in business. And that is how it will be for all of us from now on, forever.

But I Like To Be Sunny

A large number of the developers who deserve who have success end up getting success. I am very lucky to have my job. The games industry is still growing.

But it's a new industry. How best to price a game was still being worked out a year ago, and, now that the global economic system is all topsy-turvy, we'll have to figure out everything out again.

Thank you for humoring me as I make guesses about where we go from her. If I'm half wrong, at least I'm also half right.

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We have announced our next game, Queen’s Wish 2: The Conqueror, an all-new, innovative, Empire-building indie RPG, coming late Summer. Wishlist it to be told when it is released!