The Power of Relativity is a great article by Spryfox CEO David Edery on game pricing, and how important relative pricing can be. Spryfox develops LeapDay, Highgrounds, and Triple Town, so has a ton of experience with what works and doesn’t in mobile. Great feedback that matches what we see every day.
Whether it’s through anchoring, making sure consumers see the right substitutes, or simply making sure supply is meeting demand at the optimal point, pricing psychology plays a huge role in making money, so developers need to think about the right approach. Read David’s article for some hard-won lessons.
Want to increase profits by 20-50%? That’s transformative for most businesses!
But, as noted in this great article from MIT’s Sloan and some McKinsey research, fewer than 15% of companies do any pricing research to take advantage of the opportunity.
Smart pricing is a skill that can deliver outsized returns. But it takes real skill & analysis to take advantage of the opportunity. Most businesses yield too much power to the sales forces or fall back on simply using cost as a guide.
The Sloan article provides a nice overview of three types of pricing strategies:
- Cost-based pricing,
- Competition-based pricing, or
- Customer value-based pricing
Of the three, Customer value-based pricing has been shown to yield much better results. But it’s infrequently used because the data is hard to come by, hard to organize and analyze, and hard to put into practice.
A shameless plug: this is where Think Gaming comes in. We make it easy to put a smart pricing strategy in place that leverages customer demand data for freemium games.
Lots of great info in the article that is worth reading….