Monday, April 20, 2009

Indie Games Should Cost More, Pt. 2, The Expensening!

Last week, I wrote about how Indie games are becoming too cheap and what factors we should use to price our games in the future. This post attracted some attention and the occasional explosions of misplaced rage. A quick summary of the article:

  • There are an increasing number of Indie game outlets where low, low prices are expected or enforced.
  • Not all Indie games, for a variety of reasons, can profitably be sold for so little.
  • Thus, the new markets are going to choke what Indie games can accomplish, not encourage it.

This isn't good for anyone. Developers. Customers. Distributors. Anyone.

This week, I talk about the reasons I've been given to make my games cheaper, why I ignore them, and what I think should happen now.

One Quick Point

Some people on forums criticized what I wrote because they mistakenly thought I was trying to repeal the law of Supply and Demand. This is unbelievable nonsense. I LIKE the idea of pricing according to Supply and Demand. It is our outlets to the marketplace setting arbitrary price caps that is countering the good work of economics, not me.

Refuting nonsense on Internet forums is such a Sisyphean task that I hate spending even a moment at it. But this particular misrepresentation was so common that I had to say something.

Why Do You Charge So Much? You Suck!

In the last fifteen years, I have heard just about every reason why my games should be cheaper. These arguments refute infallibly the old maxim that "The customer is always right." I prefer the much more accurate "You can't win an argument with a customer." Which is why complaints about my prices tend to go unanswered. So, without further ado, here is the litany of shame ...

"Your Games Are Too Crude and Old-School To Justify the Price"

Then dude, seriously, don't buy them. (And, if I may ask, why are you playing them?) I have my pride. If you don't think my games are worth it, don't give me money.

But consider this. I write plot-heavy old-school, turn-based RPGs. Almost nobody else does. I provide a quality niche service few others provide. Some people LIKE the crude, old-school thing I got going on. The scarcity of the service I provide justifies the price.

"If You Charged Less, You Would Sell More Copies"

This is true. The problem is that I won't sell enough more to justify the lower prices.

Microeconomics tells us that as we charge less, we sell more, but we make less per sale. At some point, there is a best price, a point where (number of sales) * (profit per sale) is at its maximum. The question is, where is it? Based on my experiences shifting prices up and down, I think I'm actually at the sweet spot.

Suppose I charged a World Of Goo price, like $15. This would roughly halve my profit per sale. (Because of the way credit card fees work, the less I charge per sale, the smaller percentage of profits I make.) To make up for this cut, I would have to double my sales. Double! That is a huge increase! Doubling would be big!

Based on data I've received from distributors, I believe that about 3% of my downloads turn into sales (this is called the Conversion Rate). To make up for the price cut, I would have to increase my conversion rate to 6%. This is a HUGE rate, pretty much impossible to get for a niche product like mine. If I had a more casual-friendly product, I might manage it, but that's not my niche. I have to set a price to reflect the nature of my niche.

"Steam Cut Their Prices Way Back, and Their Sales Went Up"

True. But their brief sale got a lot of press. There is no reason to believe this would result in an increase of profits over the long run, for the reasons given above.

We have sales too. They got attention and an uptick in sales. Then that increase petered out and sales returned pretty quickly to the old levels (but with less profit per sale). If sales had stayed high, we would probably have lowered prices permanently by now, but that's not how it worked out.

"I Can Buy Better Old Games At the Game Store For Far Less"

This is, honestly, a pretty hard charge to answer. When someone says, "Why should I get your game when I can get Baldur's Gate 2 for $10?" what I think is, "Dude, you haven't played Baldur's Gate 2 yet? Go get it! It's awesome! And you know something? In a few weeks, when you're done with it, I'll still be here."

I can't compete on price with old classic. Nobody can. To expect me (or anyone) to match price with a handful of old games is completely ridiculous. Can't happen.

But my games have an advantage. They're new. Go ahead and play the old classics, or at least the ones you haven't played already. Go play Fallout or Planescape: Torment. They're SWEET.

You'll be done soon enough. And, when you are, I'll still be here.

"I Can Play Games Just Like Yours For Free on Kongregate Or Whatever"

No. You can't. I make sure to write games that aren't already being done by everyone else. That's why I can charge so much for them. And, prospective Indie developers, if there is a similar version of the game you're writing already available for free, write a different game.

"You Don't Deserve That Much Money. Period."

Then don't pay. The day nobody thinks my games are worth the price, I will fold up shop and go get a real job. But I will never, ever be shamed into charging less than what I feel is a fair price for my labor. I work hard, and I have earned a living. The service I provide to my fans is worth the ability to keep food on my family's table and a roof over their head.

If you disagree, that is your right. But I am not going to send everything I've built over a cliff to appease your wrongness.

What Should Be Done

After all this griping and ranting, I should offer some actual suggestions for what should happen in the future. You shouldn't complain without suggesting a better alternative, amirite?

If all of us (developers, customers, distributors) want a healthy Indie scene in which we can all make money, we should all want the people who make the content to be able to make a living. If you agree, there are things each of us can do to help this happen.

Customers - Don't pirate Indie games. Sure, it's wrong to pirate any game, but not all crimes are equal. But when the game is the direct source of the cash that puts food on a family's table, that is an extra-intense level of Bad.

Anyone who would deny the two guys who made World of Goo their lousy fifteen bucks deserves a good, sharp kick.

Developers - Figure out the right price for your game and stick with it. Don't let anyone shame you into going lower. It stings to pass on distribution on Amazon, sure. But if you can't get the price you need to charge, swallow hard and move on. Maybe if they aren't able to sell more of the titles they want to sell, they will change to a wiser path.

Distributors - Don't set arbitrary price ceilings (like at Amazon or XBox Live Community Games). If you are setting the price yourselves, use the developers price as a guide. Then let the magic of the marketplace do its work, punishing the foolish and rewarding the smart. If a game is too expensive, the price can be lowered later. But if your overly low prices don't support the people who make the products that make you money, well, that is not in your simple, dollars-and-sense best interest. Don't cut the developer off at the knees before his or her product even reaches the market.

None of this is unreasonable. I'm not being all idealistic or hippy-dippy. I'm just using hard, simple business sense. This accelerating rush to give our products away is simple craziness.

So go ahead. Try it. Charge what you're worth. See what happens. You might as well. Because we'll all have to do it sooner or later. You might as well do it while you're still in business.

69 comments:

  1. Good post.

    I have no problem paying what developers are asking (fair price) for a good game. I think I'm old fashion but I think games are much more than just flashy graphics; especially RPGs. Story and game play are equally (if not more) important.

    Also, it is my contention that indie developers are the new mainstream. They are the ones who are making innovative and new games that the so called mainstream developers don't seem to touch. It makes sense to me that I need to support the indies. They make the games I enjoy.

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  2. Jeff, I can't say I've had the pleasure of listening to someone who makes as much sense as you do.

    I found your blog (and thus your company) via some press you yourself have received on Slashdot and Reddit over the past few months.

    I really hope your games are as well written as your arguments; I'll be playing Geneforge this summer (with a bought-and-paid-for copy, of course).

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  3. Your games give us old school types more pleasure than even the AAA titles. This weekend I gave up on Fallout 3. The gameplay is just crap. It is a crappy tactical RPG (neither I, nor anyone online can find a reason to do anything other than a headshot) and a lack-luster shooter (the controls are crap, and the GameBryo AI is ridiculously slow).

    How this got selected for Game of the Year at GDC is beyond me.

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  4. ...yep, that's pretty solid business sense. Not that I debate the reasons for your prices. Shareware is dead. Long live shareware (Indie games). ;)

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  5. Two thumbs up to this post and the first half! Good writing all around.

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  6. Spot on. Another reason the pure supply and demand model does not always work so well is that price is a proxy for value such that if you lower your price that is a signal to the buyer that your product is worth less and conversely, raising the price is a signal that your product is worth more.

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  7. What really leaves me scratching my head is why people (myself included) will balk at paying $20 for a game that they will be playing for weeks, yet won't blink an eye at spending the same amount of money to take a family of four to a fast-food restaurant.

    Somehow we got that double-standard programmed into our brain.

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  8. 20 USD are about 15 Euros.

    You must have some awfully cheap fast food restaurant if a family of 4 can eat there for that amount of money.

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  9. ido, he said fast food. As an example, Subway has a promotion that you can get a footlong sub for $5 and that's a lot of food, so you can feed a family of four with $20 here. Other fast food places have dollar menus with individual items costing a dollar each. I wouldn't recommend eating there. :)

    Jeff, I love your blog, and I know many other indies do too.

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  10. "...I will never, ever be shamed into charging what I feel is a fair price for my labor."

    That's an interesting moral perspective, but it might fit better with the rest of your arguments if there was a "less than" in there somewhere...

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  11. Ido, it's quite easy to eat at a fast food restaurant for under $20 assuming the "family of four" includes smaller kids. Most restaurants in the US have special kids prices to lure in the adults.

    The thing that always gets me is why people who are willing to pay several thousand dollars for the latest hardware balk at paying $20 (or even $40 or $60) for the software to run on it.

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  12. Glad you're making such posts. Basically is what I was saying since years. Now finally a very successful developer says the same things, so maybe other indie will listen :)

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  13. Jeff, I think the price you charge per game is perfect, don't change a thing!

    Where else can I play $28 dollars for a game that I can play for months at a time? The gameworld is so huge and so involving, and there are so many quests and characters to talk with.

    Plus your games have great replayability value! You can play different characters, join different factions, get NPCs to join you, play on different difficulty levels. I've never tried singleton on Torment but I'm sure I will one of these days, lol.

    In fact, we're talking about games that keep people entertained for years! Also, in Blades of Avernum you can download/make scenarios so that you always have a new game to play. :)

    In conclusion, I would like to say I am a huge fan and your prices are fine the way they are. I would probably pay up to $40 if you charged that much.

    Keep up the fine work!

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  14. Hi Jeff,

    I think that a good follow up post would be suggestions on how to get around the price caps of distributors and ways for the consumer to find good sources of information on Indie Games such as TIGSource or GameTunnel.

    The distributors should understand that if they put artificial price caps on games that the Indies will find other means of selling their product at better margins that do not rely on mainstream traffic.

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  15. Lol @ all the fast-food talk. $3/person can get you a lot at McDonalds... but it will make you sick with Stom-McAches.

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  16. @Vlad: I think that food prices are higher in Europe - even for fast food.

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  17. It's worse when the distributors want to charge *more* than your price! That happened to me. I charged $15 for a game and all the distributors sold it for $20. The customers got a bit pissed when they found my website, although interestingly enough it sold better on the distributors sites...

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  18. @thornae: Ouch. Typo fixed. Thanks!

    - Jeff Vogel

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  19. Like you said about Steam, their lowered prices are simply "weekend deals", and wouldn't sustain for longer periods. This makes people buy impulsively, knowing the price may never be that low for another year possibly.

    On a similar topic, about how much percent more games do you sell in your October Sadness Sale? And, more importantly, in percentages, what is the profit from that month compared to others?

    On a slightly different topic, do you think you may ever go work for a "big" game company? Valve is right there in Seattle, right next to you. Or is your pride of being a successful Indie developer too great to break loose?

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  20. @OrigamiR - We get a sales bump from the sale, in part from the impulse buys and in part from the PR. I think if it went year-round, I'm pretty sure it'd lower our profits.

    As for big game companies, I'd love to sell out, but nobody is buying. There's no shortage of good game designers.

    - Jeff Vogel

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  21. This comment has been removed by the author.

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  22. You haven't exploited the intellectual property angle for all it is worth. Where are the Spiderweb baseball hats and the Geneforge t-shirts? Where is the series of fantasy novels set in Avernum? Why can't I sip a mushroom beverage while fighting the Empire? My kid is going to grow up without any Shaper action figures. Have you even pitched the screen play?

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  23. @drew - "You haven't exploited the intellectual property angle for all it is worth. Where are the Spiderweb baseball hats and the Geneforge t-shirts?"

    Ain't it the truth? Phil Foglio (http://www.studiofoglio.com/) has been trying to convince us that we're leaving lots of money on the table there and we're totally right. Don't be surprised if we have shirts available on Cafe Press before Summer's end.

    - Jeff Vogel

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  24. No way. For real? Now I really want a coffee mug with a fyora on it.

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  25. Great post. You get what you pay for. Not all games cost the same, partly because some are better than others.
    We don't expect every restaurant to charge the same price, because McDonalds is not Michelin-star cuisine.
    Never be swayed by people whining on forums. People who whine on forums are the insane 1% of the gaming public.

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  26. @Jeff,

    I would totally buy a Spiderweb Software t-shirt!

    I think it's a great idea to expand your merchandise line with clothing.

    Oh, and coffee mug with Fyora? Awesome. :)

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  27. If you do happen to finish all five Geneforge games, I can see why someone would want a souvenir. Right now all you get is happy memories.

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  28. "Now I really want a coffee mug with a fyora on it."

    Agreed.

    As for shirts, what kind of quality do you get from CafePress?

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  29. Go with Zazzle! Their quality is 1000x better than CafePress.

    Jeff, thanks again for these great blog posts.

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  30. I can't compete on price with old classic.Out of curiosity, do you drop the prices on your games after a certain amount of time?

    Somehow we got that double-standard programmed into our brain.Clever and unscrupulous advertising.

    Compared to some of the crud put out by big-name developers these days, the Geneforge games are a steal at half the cost. I'm waiting for them to go on sale, but only because I'm poor.

    Now I really want a coffee mug with a fyora on it.I just might buy something like that.

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  31. I would totally buy Spiderweb ferret gear, if a hat and t-shirt could be made tiny enough.

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  32. @Wadjet Eye
    The story there is, if the Distributor says he can charge $20, you can charge $20.

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  33. Jeff, I've grown up on your games since the first Avernum, all the way though Geneforge. I've watched my little brother grow up playing them, and some day I'll see my kids playing them.
    The one thing that really drew in my attention as a child was the writing. I love reading, so when I started throwing lightning bolts around while developing plotlines and changing the world...yeah.
    It's awesome. I've dreamed of a geneforge novelization....

    ...

    Even if it's something we've never seen before, writing a book might inspire you to make more games. Plus, people pay more money for books (as a student, 120$ for one dumb textbook(that you might not even need). 25$ for a novel is pretty common too) and yeah, writing would be cool.

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  34. Heh, I would totally buy Spiderweb merchandise.
    It's great when you're wearing a t-shirt from some obscure franchise, and someone else recognizes it.

    I've never thought Spiderweb charged too much.
    I gladly put down 25 bucks for the first Geneforge after pouring hours into the demo, and I've gotten every one since. Never ever felt that ti wasn't worth my money.

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  35. 25$? It's probably a good price for someone from a Western country.
    But for me?
    I don't see an excessive 25$ very often - and when I see, I have other needs too - music, books, etc. Which is I didn't buy any Spiderweb games yet, and I probably won't if they'll stay so expensive.

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  36. "I don't see an excessive 25$ very often - and when I see, I have other needs too - music, books, etc. Which is I didn't buy any Spiderweb games yet, and I probably won't if they'll stay so expensive."

    Well, that's fair enough. But at the same time, if you buy a $5 game, it'll probably last you till the end of the week. You can listen to a $5 CD in an hour. The first Exile kept me playing it for around 3 months. And that's 3 months of constant enjoyment and exploration. And that was the OLD Exile with the truly clunky graphics. Fond memories.

    But in that case, surely there's lots of things you can't afford in the gaming market because of this. Almost all new games, for example.

    I'd buy a T-Shirt with a "1st Edition" Goblin sprite on it.

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  37. Hi Jeff,

    I mostly agree with you and understand it must be frustrating when distributors for services such as Xbox Community Games set a fixed price (no free market!)

    However, if Microsoft didn't allow indie developers to sell games through XBox Live, then indie developers would have use alternative distribution channels, like making pc games instead. It might not be nice how Microsoft and Apple fix their pricing, but it must work for a lot of developers - otherwise they would go and do something else right?

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  38. From what I've seen, some people have been growing used to the $5 game these days and so they demand that all indie games (or smaller digital distro'd game) be $5 or less and anything more than $10 is an outrage.
    You could blame certain distributors, but it won't change much until they change their attitude toward price fixing, sales, and such. I agree with your points.

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  39. I don't think 30 bucks is an-awful-lot-of-money. I don't understand people being so cheap in buying games! When I go buy the latest XBOX 360 game, it costs about 80$, maybe 90 or even 100 if I REALLY want the collector's edition with soundtrack CD, t-shirt, artbook and all the stuff. I agree with it. People pay for World of Warcraft every month something around 15-20$ !! That is a whole lot of money!!

    Alright, we're not talking about whatever already known company, but that's exactly the thing! Indies do everything by themselves.. people forget that. A well established company has so many employees and a (or more) professional for each and every thing they want to do. An indie might be alone, or several as 2, 3 or even 4 persons, probably programmers and artists that want to MAKE an original game different from what's out there. Do these morons that replied in the forums even know how much it costs just to pay say 2 employees for a whole year? It takes time to get a video game project done. Every problem encountered must be solved, every unknown situation, and every time you want to do something that's not directly related to making a video game, you need to look hard. Ever made a market analysis? A business plan? How long have you spend reading about niche markets? That's job related but you're not paid for it. All those companies like Square Enix and Ubisoft started somewhere, because people let them do so. If making a bunch of pixels coherent back in the time was worth 20 bucks (and we know that 20 years ago 20$ was a lot), well people would pay for it.

    If they want to keep playing Spiderman games in 50 years, they've started pretty well.

    >:(

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  40. Hey Jeff,

    Posting for the first time on your blog - first to say that I've been a fan of your games for roughly 13 years. As a 7th-grader I found Exile III back in 1997 - played the crap out of the demo - and then forced my parents to buy the full version. I still remember the day after I got the registration key, daydreaming in every class about finally being able to go to Lorelei and Gale. And as importantly, about getting some serious loot from the lairs of the troglodytes I could only encounter in the wilds before then! About a decade later I rediscovered your games and loved Avernum 3 and 4, and after a few years hiatus am just starting Avernum 5's demo right now.

    Anyway, on the post's topic, I definitely agree with Jeff about the pricing for his games - basic Economics 101. Those bringing up the Steam discount example ignore the facts that the games they discount are hugely well-known, mass-market titles (such as Call of Duty: Modern Warfare in the last sale), that Steam has advertising access to tens of millions of users every week, and that there are also many comparable "substitutes" to each game in their genre. A half-off sale will easily attracts thousands of extra buyers who are only moderately interested in the game and to whom the price drop made the difference for buying it. Since they have a general appeal but also many substitutes (e.g. Battlefield v COD - and I do admit to wasting 100+ hours playing Modern Warfare 2 so far), they are a much more elastic product on the supply/demand curve.

    Spiderweb's games are the complete opposite - they have a small and intensely dedicated fanbase and few comparable substitutes in the turn-based RPG genre, but also obviously are much less well-known than the blockbusters. Hence their sales probably match an inelastic curve well, where changes in price affect the demand for the game much less, and where halving the price would almost certainly lead to lower profits due to an insufficient increase in purchasers. The curve at a much higher price, say $50+ would probably be much less inelastic though (given that the classic inelastic goods are necessities like food, which getting Pachter's Plate comes close to but does not reach in importance). So I'd guess that $30 or so is probably close to the optimal price point - and despite the competition from the <$10 price wars, his games will continue to make a profit at $28 due to his established and loyal fanbase.


    Finally, totally unrelated - one question I really hope Jeff can answer: why did the awesome area-of-effect spells like Fireball or Blade of Walls in Exile go away in the Avernum series?!? The 100+ spells were the favorite part of the Exile series for me, and while I'm not a whining Luddite like some other crazy gamers, I am curious why they were simplified so much. Was it because it was difficult to implement in the new engine, or because of a desire to make the game more accessible to more casual gamers? Since most buyers of your games are likely hardcore RPGers, perhaps restoring a more complicated spell and stats system would actually increase sales from the sizable group of gamers who want the most intricate gaming models possible...

    Anyway, hope you can just answer that q for me, and thank you for the great games!

    ReplyDelete
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