Dynamic Pricing - yay or nay?

laxie

Dynamic pricing is the concept of charging people different prices for the same product, based on their willingness to pay. In other words, a game may present you a fluffy horse for 5$, while your friend Joe's store shows the same horse for 20$.

I personally don't agree with this practice. That said, it's a fairly new idea to me, especially in video games. I know travel agencies often do the same thing, but I've not realized some F2P games employ similar strategies.

What do you think about this?

Cryomatrix

Figured it was par for the course. 

justanothergamer

what reason is behind it?
how would you, as the company, determine who would be willing to pay more?
what would stop players from discussing how much they paid for each item, leading to players shit posting all over the place about being gouged price wise compared to others?

Surely it would be simpler to just set the mean as the price, instead of $5 for one player, $20 for another, just charge everyone $12.50

Sovrath

laxie said:

Dynamic pricing is the concept of charging people different prices for the same product, based on their willingness to pay. In other words, a game may present you a fluffy horse for 5$, while your friend Joe's store shows the same horse for 20$.

I personally don't agree with this practice. That said, it's a fairly new idea to me, especially in video games. I know travel agencies often do the same thing, but I've not realized some F2P games employ similar strategies.

What do you think about this?

Well, I suppose there are different ways to do this.

If a person spends a lot of money I can see them getting a discount off the person who rarely spends any money. There are companies that offer discounts to their regular clientele.

I can also see sales depending on a variety of factors. Heck, department stores do this. You can go in, buy something and find out a week or two later that there is a flash sale. Of course, some department stores will honor the lower price if you come in and bring a receipt.

I can see people who spend a lot of money liking this. I can see people who sporadically spend money hating this. Unless of course they are targeted for a sale because they don't buy and they want to be enticed to buy.

Personally, I will only buy something "extra" if it's reasonably priced and/or I want to support the game because I am enjoying it. I'm a big believer in paying for my content.

If I'm not willing to spend money then I should probably not be playing.

Sovrath

justanothergamer said:

what reason is behind it?
how would you, as the company, determine who would be willing to pay more?
what would stop players from discussing how much they paid for each item, leading to players shit posting all over the place about being gouged price wise compared to others?

Surely it would be simpler to just set the mean as the price, instead of $5 for one player, $20 for another, just charge everyone $12.50

You can see my post above.

As an example, I used to work for a company that rewarded our regular patrons by giving them a discount that took into account their past year of spending from the date of their purchase.

If they spent more money then we gave them a larger discount. But in order to maintain that discount they had to spend x amount of dollars to get it and as I said, a year back from the day of their purchase.

I suppose there are two things going on. You want to reward regular customers and at times you want to entice people to consider buying.

justanothergamer

Sovrath said:

justanothergamer said:

what reason is behind it?
how would you, as the company, determine who would be willing to pay more?
what would stop players from discussing how much they paid for each item, leading to players shit posting all over the place about being gouged price wise compared to others?

Surely it would be simpler to just set the mean as the price, instead of $5 for one player, $20 for another, just charge everyone $12.50

You can see my post above.

As an example, I used to work for a company that rewarded our regular patrons by giving them a discount that took into account their past year of spending from the date of their purchase.

If they spent more money then we gave them a larger discount. But in order to maintain that discount they had to spend x amount of dollars to get it and as I said, a year back from the day of their purchase.

I suppose there are two things going on. You want to reward regular customers and at times you want to entice people to consider buying.

I understand what you are saying, but is that what the OP means?

From the OP, it seems to me that he is saying games company X puts product Y in the cash shop, and charges player A $5, and player B $20, just because player B is willing to pay more.

Which is what prompted my questions.

rojoArcueid

I wouldn't commit to something like this. If I want to play X game with my friend and he pays $5 bucks for it and i see my price is $20 even though we are buying it at the same time. I wont buy the game. I'll just tell him to buy me a code for $5 bucks and give him the 5 dollars.

With that said, I wouldn't mind paying more than my friend if i'm getting a physical version of the game because digital copies should always be cheaper.

waynejr2

No thank you.

laxie

@Sovrath
I definitely agree with the discount policy you are mentioning.

From what I understand though, dynamic pricing is the opposite. It's when the company charges you more, because they think you can afford it. This was common when booking holidays - they would check your IP for location, if you were connecting from a "wealthy area", you'd see higher prices.

In gaming, I'd imagine a F2P game would sell you an item for 5$, then 10$. And if you buy both, the next item might cost you 20$. This is opposed to someone who would only buy the 5$ (because 10$ is too much presumably), so the new offer would be 8$ in their case (not 20$).

This feels a bit iffy to me. But I know some people on these forums have a bit more liberal opinion on monetisation, so I wanted to hear their take.

nariusseldon

We already have dynamic pricing.

Whales pays a lot.

Most players don't pay a cent. 

Works for me (i am not a whale). 

Sovrath

laxie said:

@Sovrath
I definitely agree with the discount policy you are mentioning.

From what I understand though, dynamic pricing is the opposite. It's when the company charges you more, because they think you can afford it. This was common when booking holidays - they would check your IP for location, if you were connecting from a "wealthy area", you'd see higher prices.

In gaming, I'd imagine a F2P game would sell you an item for 5$, then 10$. And if you buy both, the next item might cost you 20$. This is opposed to someone who would only buy the 5$ (because 10$ is too much presumably), so the new offer would be 8$ in their case (not 20$).

This feels a bit iffy to me. But I know some people on these forums have a bit more liberal opinion on monetisation, so I wanted to hear their take.

That was just one example of where I think dynamic pricing makes some sense.

But think about it, if does make a sort of sense to charge more to people who can pay more. Just solely from a business perspective.

A company wants 15.00 for an item. (I didn't put "need" as that seems to open up a whole can of worms ... let's just say for whatever reasons "wants").

Group A can't really pay that and would probably just leave the game as they just don't see themselves being able to afford these items. They can pay 6 dollars.

Group B can pay that and then some. In fact it's no skin off their nose as they are in a much higher income bracket and just don't care. Sort of like asking someone to pay a nickel and then change the price to a dime. Most people would just shrug, rummage through their change that they never use anyway and toss you the dime.

So if Group B doesn't' really care and can even afford more and still not care, and if the company wants to make their money per item while still retaining customers (because some customers are better than no customers) they charge group A 6 dollars and group B $24.00.

They then get what they wanted per item and kept a group of customers.

It's sort of cynical but sort works. It works especially well if group A is from a much poorer region/country as they might also want to play but wouldn't be able to pay the same as someone from a far wealthier region/country.

anemo

No.

In order to get this system to work you need to develop extensive profiling of your users, and store it.  you don't just stop at what people are doing ingame,  you start tracking down their social media profiles, look at what cookies are on in their browser (you're logged into mmorpg.com, and that'll be noted in their databases and you'll be down as either being really against OR a whale to be narrowed down which with more research), you start sending out queries to third parties to see if they have profiles, and similar.   AAA's literally have so much work going into this "Creep Ware" that it's budget is higher than most Indy games (seriously cringe worthy).

Quizzical

From each according to his ability to pay, and to each according to his ability to convince them to pay?

Some games have a "get a better deal bonus the first time you spend money" offer to try to get players to spend at least something and get them used to paying for the game.  I have no problem with that.

What I actually thought of from the original post was regional pricing.  $15/month isn't that much for entertainment in the United States, but there are some places in the world where that's a lot of money.  Sometimes software is sold more cheaply in poorer parts of the world, though then you get a problem of people where it is more expensive trying to buy it where it is cheaper.

Nilden

Turning Players into Payers



Pretty sad.

AAAMEOW

I think most people will choose the cheapest price though?  It might boost the revenue a bit, but don't think large enough to matter.

Gdemami

laxie said:

What do you think about this?

I think scenario you proposed is illegal in most countries, dynamic pricing is not what you think it is.

anemo

Gdemami said:

laxie said:

What do you think about this?

I think scenario you proposed is illegal in most countries, dynamic pricing is not what you think it is.

You need so much data on users that it likely breaks a lot of privacy protection laws in the EU.

kjempff

Dynamic pricing or not is like asking do you want your rotten eggs scrambled or boiled.
Just say no .. then act on your no .. you can stop the f2p scourge.
They ARE listening .. intently .. ear to your wallet .. if you change behavior with your wallet .. they will change with it .. not today not tomorrow but next year and the year after .. the bubble must burst and you are the needle.

Gdemami

anemo said:

You need so much data on users that it likely breaks a lot of privacy protection laws in the EU.

No, it doesn't...

Phry

Dynamic pricing? if i discovered a game i played was engaging in such shady practices, then chargebacks would be initiated for any and all purchases i had made for that game.

anemo

Gdemami said:

anemo said:

You need so much data on users that it likely breaks a lot of privacy protection laws in the EU.

No, it doesn't...

Completely disagree.   The EU is in such a prissy fit over American Companies collecting  so much data that you need to agree to be tracked by a cookie in your browser (compared to the creepiness that has been going on this is pretty lol worthy).   And has very explicit laws of when and how data can be shared with 3rd parties or even within your own company.

In order to properly determine how much someone can bear to be charged,  you explicitly need TONS of data.  You're going to do everything in your power to get as much data as you can and as shadily as possible.   If you can get them on your website you're going to rip open and read any type of temporary file you can (cookies and similar) for fingerprinting their habits.   If they're on a phone you're going to grab any data possible, especially phone contacts since those are the easiest and cheapest thumbprint to use with third parties.   If you can get them to enter their Credit Card data you're going to do the Pizza Parlor/Web Shop trick of getting them to enter their name/address on a separate screen than the payment screen so you can use that data for tracking and thumb printing (since credit card companies will actually beat you down if you use card data for anything but payment processing). 

Aethaeryn

It would squeeze everyone just a little bit more. . do you toss that tiny orange because it won't give much?  Nah. . Squeeeeze out what it has to give.

In this case though others might complain. 

There would have to be a ceiling on cost. . or the "regular" cost.  If people start getting less for their money they will stop buying eventually.  Also the person who didn't spend much and then gets an item cheap is not likely to continue as much as the prices go up dynamically based on what he has spent or is willing to spend.  It could work but it wouldn't be popular.    It is not much different to me than those "starter" boxes that you get cheap to encourage you to buy into the game more.

Albatroes

Aren't games pretty much already done like this on a global scale? like for MMOs, some regions have the game as a sub only and in other regions there's f2p (i.e. FFXIV in China/Korea all versions having a cash shop go figure...).

CrazKanuk

kjempff said:

Dynamic pricing or not is like asking do you want your rotten eggs scrambled or boiled.
Just say no .. then act on your no .. you can stop the f2p scourge.
They ARE listening .. intently .. ear to your wallet .. if you change behavior with your wallet .. they will change with it .. not today not tomorrow but next year and the year after .. the bubble must burst and you are the needle.

This is a nice idea, but it doesn't work in the real world. See, games which are funded exclusively by the fewer than 10% of people who actually buy something don't really care. The 0.15% who are whales, REALLY don't care. Their motivations are much different than yours. Furthermore, their money is what is used to entice people like you to try the game just to keep population numbers high while they squeeze the whales. Ultimately you'll move along because you're not content with anything anyway, and they'll bring someone else in to replace you. Whales DO vote with their wallets, and they are saying "This is great, but could I just give you $100,000 to have all the best shit?" 

Loke666

anemo said:

Gdemami said:

I think scenario you proposed is illegal in most countries, dynamic pricing is not what you think it is.

You need so much data on users that it likely breaks a lot of privacy protection laws in the EU.

Probably but Googles dynamic banners are as fishy and they seems to get away with it. They store a lot of information to show just the right banner after all.

In any case, giving out discounts to some people in hopes of getting more paying customers is not really a problem as such, the question is just how they will find out who is someone that should get that discount.

kjempff

CrazKanuk said:

kjempff said:

Dynamic pricing or not is like asking do you want your rotten eggs scrambled or boiled.
Just say no .. then act on your no .. you can stop the f2p scourge.
They ARE listening .. intently .. ear to your wallet .. if you change behavior with your wallet .. they will change with it .. not today not tomorrow but next year and the year after .. the bubble must burst and you are the needle.

This is a nice idea, but it doesn't work in the real world. See, games which are funded exclusively by the fewer than 10% of people who actually buy something don't really care. The 0.15% who are whales, REALLY don't care. Their motivations are much different than yours. Furthermore, their money is what is used to entice people like you to try the game just to keep population numbers high while they squeeze the whales. Ultimately you'll move along because you're not content with anything anyway, and they'll bring someone else in to replace you. Whales DO vote with their wallets, and they are saying "This is great, but could I just give you $100,000 to have all the best shit?" 

Well maybe you are right, but I think it is too early to roll over and give up. In fact I am not sure it is such a hard fight to take, and the change might just come by itself as natural cause and effect.

First. I hope I don't have to explain why monetization result in crappier games, if you can't see that, you haven't been paying attention.
So. Lets say enough players start to take a stand against f2p, then I believe there are more factors at play. 


-Numbers: Whales, Donkeys need non payers (Do I need to explain why?). If enough non payers decide to not play, that will have an effect on the number of payers. Less profits, and what follows from that.

-Evolution: The evolution in mobile games will come to pc and console too. This predicts increasingly more focus on monetization and crappier games. This will continue to the point where the schemes become too obvious to an increasingly larger amount of players, which will result in them also voicing their opinion (including with their wallet). There is a difference between mobile sheep who want to kill time and pc and console players who wants to play games; I believe this difference will further the effect because those players will start to leave the f2p crap and buy those quality games that are still being made. 

-Focus: As numbers of no sayers grow, voicing their opinion, and game journalists chime in, will create increasing focus on the issue. Obviously this will pressure the gaming industry, and some gradual change will happen. Some developers will consider their player base willingness to certain models when deciding how to finance their games, some may stay f2p but apply various rules of to how far their monetization may go, while a few will switch from f2p entirely. And some will ignore the problem and keep going down the money grabbing scheme path, and therefore be the displaying the issue in full view again creating more focus.

-Morale: There will always be developers who wants to make quality games who will not let their work be tainted by shop solutions. I don't think we should ignore that many game developers deep down wants to make good games, and that will start to result in projects rejecting those things that works against that wish. Many game devs say they wont touch mobile games because it is only about monetization and not about games, but because that mobile trend will increase taking over pc and console games, then they will have their back against the wall and some will react to that.

-Leading by example: As all of this happen, we will see games that makes money because they are superior games (a recent example could be Divinity: Original Sin 2) and not because of shady f2p schemes. The more f2p and therefore worse games, the more those quality games will sell and prove profitable, and thereby set examples that others will follow.

Remember all of this is not something observable right now, this is a gradual change over the next 10 years. Unfortunately for mmos, I am pretty sure we will hit rock bottom (mobile style, eastern practises) before the change comes, as mmos change at a much slower rate due to development cycle, but for other games it may come faster.