Lessons Learned From 'Pay What You Want'
from the don't-knock-it-til-you-try-it dept
The 'pay what you want' business model is popping up all over the place. It has been applied to music, movies, games and even food. Some instances have been successful; some not so much. phreakindee alerts us to the results of one of the latest experiments in this business model.Joost "Oogst" van Donge, the creator of the game Proun, wrote a very thorough examination of his 3 months long experiment with 'pay what you want'. It's really nice to see a developer so open with this much data. Very few companies or developers will do this. I really recommend that you read the whole thing. He shares some very good lessons about this model and how it can bring in some money, but maybe not enough to succeed as a game developer.
So rather than rehash all of his points, I want to take a look at his experience and what lessons we can learn from it when taken into consideration with the overall 'pay what you want' landscape.
One of the first things that come to mind when I read about these experiments is the Humble Indie Bundle (currently up to five sales). The Humble Indie Bundle made a name for itself by bringing together a number of great indie games and allowing the buyer to pay what they want. On top of that, they offered the buyer the ability to give all, part or none of the purchase price to two charities, the EFF and Child's Play. This could be seen as one of the biggest draws of that bundle and is something that Proun's sale lacked. While not a sure thing, a charitable option in these sales has been shown to change buyer behavior and pricing.
The roller coaster experiment showed that buyers paid 5 times more for the charitable version of the sale over the version that lacked the charitable option. This also brought in far more revenue than any option whether 'pay what you want' or not. Had Joost offered a portion of the buyer's price to a charity, he may have seen an increase in the number of people willing to pay and an increase in how much they paid. Again, that's not a sure thing but it would have added another variable to the calculations made by the customer. This could be something for him to try as he continues the experiment.
Let's look at some of the numbers now. The first interesting set of numbers spring from the fact that this sale allowed buyers to pay nothing for the game. As Joost points out:
The $0 price point here is people who used the same store as the paying folks but filled in $0. They didn't have to fill in there Credit Card details as a result. I cannot know the exact number of Torrent downloads, but since every install of the game contacted my server, I do know the total number of installs, so I can estimate how many people got the game from something other than my server.Based on his estimates he found that 247,379 people either paid nothing and downloaded from his site or downloaded from a torrent. Now he did expect plenty of people to pay nothing. After all, he did offer that option. He is not mad and comes to a very valid conclusion to this:
I think the main reason why so few people chose to pay for Proun is this: the free version did not require a Credit Card transaction and was thus way easier to download.That is quite the lesson and quite true. Users want things to be as convenient as possible when making a purchase. The more steps you add to the process, the less likely someone will make it to the end. This is a very difficult lesson for some game developers. Many game developers are adding more and more steps to not only the process to purchase the game, but also to the process of installing and subsequently playing the game.
Ask any gamer and they will most likely tell you, they simply want to get, install and start playing the game as soon as possible. Anything that slows that process down is a no go.
Next, we see that Joost recognizes that he may have made more money had he set a floor price on the game:
So I think if I had set a minimum price of $1, way more people would have decided to pay a couple of dollars for Proun. Simply because they already had their Credit Card out for the $1 and figured the game was actually worth a bit more. Fewer people would have played Proun, but I think more people would have paid, making Proun a bigger success financially.However, that was not the main goal of this experiment as he says immediately:
Note the emphasis on financially: my main goal was to get as many people as possible to play my game, and the scheme I used was definitely a good choice for that!If all you want is to get people to play the game, then, yes, you probably should offer a free version, even if the vast majority of people choose that option. This again is a hard lesson for some game developers. While the industry is trending toward free to play models, many other models that allow gamers to try a game for free have disappeared. We no longer see shareware games or even game demos from major game companies.
Next, we have some interesting trends in the prices actually paid. Most people who paid for the game chose a price between $2 and $2.99. Joost explains that $2 was the minimum price a customer needed to pay to get the free track along with the game. What this shows is that with a proper incentive, most people are willing to pay at least the minimum in order to get everything that is offered. This is also something the Humble Indie Bundle has shown. When it offered a bonus to people who paid higher than the average price paid, it tended to get even more money.
What this price trend also shows is that for a lot of people, $2 is about the max they are willing to pay for a game. We see this trend with the iPhone. When the iPhone was released, the price of games and other apps quickly shot down to the $1 range and the majority of the top grossing games are free to play. What this means is that when users have greater control over pricing, either through market pressure as with the iPhone or through a 'pay what you want' system, the price paid will almost always trend to the lowest possible price.
In the end, Joost is looking to continue the 'pay what you want' model, this time with a floor of $1. He feels that the first stage was a success. He got 250,000 people playing the game and hopes that word will continue to spread.
For the rest of us, we can look at this experiment and other versions of this and learn a number of valuable lessons. For me, I don't think 'pay what you want' should be your only business model. I think it works great as a promotional opportunity, but if you expect to make a living this way, you have a hard road ahead of you.
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Filed Under: business models, pay what you want, proun, video games
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This is more how to manipulate customers than build good products.
But tricks with donating to charity and crippling the game below a certain price paid, hmm, confuse it at best.
Bottom line here is that downloads are easy, getting /money/ for them is difficult. You guys really need to focus on that fact. -- But you're only observers, not putting your own time and money into a product and then trying to get re-paid at least. I think if you did actually have money in the game, it'd change your opinions quickly.
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Re: This is more how to manipulate customers than build good products.
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Re: This is more how to manipulate customers than build good products.
Sure, here's a story that discussed that in detail:
http://www.techdirt.com/blog/casestudies/articles/20111003/15253616190/lessons-learned-pa y-what-you-want.shtml
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Re:
And yet only 86% of people who own Portal 2 have this achievement.
http://steamcommunity.com/stats/Portal2/achievements
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The number of companies with your credit card..
I agree with this 100%. This is precisely why I love Steam. I want as few places to have my Personal Information as possible; I call it my Personal Information Hurdle. With Steam, I give only one company my Personal Information - Valve - and nobody else gets their grubby little paws on it. Valve has overcome the Hurdle and is worthy of owning my information, like newegg and Amazon before it (for now, subject to change without notice).
I have found that with Steam sales, I am more than willing to throw $3-5 at a random puzzle game that seems sufficiently interesting. And I have been quite rewarded with some very fascinating games.
He should think about extending sales to the Steam platform and still doing pay what you want. The percentage of Steam sales that do $0 would probably be significantly lower thanks to overcoming the Personal Information Hurdle.
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Re: The number of companies with your credit card..
If a game has DLC, I wait for the DLC to be bundled with the game itself - I don't want to have to keep installing extras for my games. I'll usually wait about a year after the last bit of DLC before I buy it too, just to make sure there's not going to be any more.
If a game goes under USD$5, I'll generally buy it so long as I'm moderately interested in it.
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problem is..
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Re: problem is..
Insisting "I spent a billion dollars developing this game! You should buy it for $100 per installation!" will not override the consumer who decides that it worth only $20, or nothing.
And taking the route that the consumer is your enemy, you know, the pirates, the scum or the "Hopelessly Ignorant" and "Spoiled" people will not help.
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Re: Re: problem is..
More recently, they are applying this payment scheme to hotels. Check out this BBC news http://youtu.be/PzvNXI2pkGA
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I'll pay $40 for a game at a store, but I will not pay $40 for a download of same game. Where is my disc? Case? Instruction booklet? 1 on 1 advice/opinion?
They are also clearly gouging. When all you have to do is wait 3 weeks from release date for the price to drop...
I will not be jumping through hoops to get some game to play either. Create online accounts etc...I will do without and play my old games. Two of them have already installed on 7 without a hitch(FYI - GTR2 & GT Legends). No need even for XP Mode.
I am in the market for a new game at the moment, but I will not buy one that requires an internet connection. I play games on MS-7-Unplugged.
When I pay money, our transaction is complete. Making me fulfill other obligations? It better be written on the box, or both producer and retailer will have lost a customer for life as I will ask if it is not clear on the box.
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Re: Re: Re: problem is..
Yep, that's my opinion too though I'm more of a console gamer nowadays.
I'd love to be able to make full use of Xbox Live Arcade and buy full retail games as well as the Arcade-only ones. But, by the time they make it to Arcade, the full games are often more or even double the price of new copies at physical retailers.
Why the hell would I pay that asking price for a product that's worth less by definition? Convenience isn't even a factor since you often have to wait 6 months for the download version - if I wanted the game that badly, I'd already have it...
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Why should I expose myself to a virus to play a game I just bought?
Nor will I be playing a game everyday. I am not a gamer, just like paying games now and then.
So, if I don't bend to your will, do something that I don't want to do, to do something that I do rarely, I am lazy?
Sorry, but the sensitive info on my PC, pertaining to many people who trust me with it, is more important to me than playing any number of hours of a game.
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It has never happened to any one else like sony either right?
No inconvenience whatsoever.
Have a good week-end! Or will you be spending yours changing passwords, cancelling credit cards...?
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And no, I don't use steam. I like to have the actual game. Don't feel like sitting there all day waiting for a 6GB+ download to complete. Much easier to just buy the disc at a store. Especially when it's one of the games that comes with dl codes for stuff...lol.
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But honestly, stop being paranoid. Unless you actually like adjusting your entire life just because of what one idiot did to sony. Playing an online multiplayer game isn't going to infect your computer. That's why anti-virus and firewalls were invented. If you have a good one and not one of the crappy free ones that never work, you shouldn't even have to worry. I've been playing online games on console and pc forever, and the only "hackers" you are probably gonna deal with are the noobs on cod that can't get a kill without hacking.
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Not because of one idiot doing something to sony. I got sick and tired of maintenance required to ensure MS is free and clean. I use F-Secure Anti-virus suite. Sonys' rootkit got by it. That is what changed my habits(the one and only thing to get by it). Not what one guy did to sony, but what sony did to me and countless others. They owe me a week-end. You think I should trust say, EASports? Why should I? They, too, along with most content producers, use drm. When they buy me a PC, they can put what they want on it. Until then, I decide what goes on my PC thank-you very much.
Takes me 5 minutes to re-install Linux(10-12 minutes on old PC). Takes me 6 minutes, so far, to do a virus scan on MS(80-90 minutes on old PC). Time is money. My free time is even more valuable.
By the way, Identity theft is the last thing on my mind at all times. How they going to do it? Gotta steal my wallet. I wish them luck.
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I would be very interested to see what would happen if the base games were given away for free, but additional levels or access to other games by that developer required a payment, either monetary or a contribution back to the project in the form of documentation, testing, developing new maps etc. This would have a couple of interesting effects: the developer would see which percentage of users really value the game, it would demonstrate what users value more - their time or their money, and it may create a dedicated core group of users who keep the game alive and fresh.
Personally, I have had multiple experiences where I've started using an open source program and have liked it so much that I have contributed to the original developer. However, in every single instance, I have only done this after extensively using the software and the developer was an individual, not a group. Again it goes back to psychology: I feel more of a connection to an individual who has shared his hard work with me than to a large group or an anonymous developer. Guess in my case CwF is more important than RtB.
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Totally Agree - If payment is diffiicult, less people will pay
Paying was about 90% of the work - for example the website shopping cart didn't tell me that it would email me the order details, so I had to copy-and-paste and send my own email in case.
This was a physical good, so I couldn't pirate it, but I can absolutely see why people would pirate digital goods to avoid hassle.
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Re: Totally Agree - If payment is diffiicult, less people will pay
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Making free pay
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I suspect that, however, if enough stuff was offered in this manner, that it would rapidly become the net "free!" source for many people, and the effectiveness of this sort of marketing might be lost.
Like many of the ideas discussed here, it risks becoming a game of trying to find the one or two people willing to pay significantly over the average, to support everyone else. As more and more people become resistant to the urge to pay (or the moral need to pay), it falls apart as a system.
If you depend on people's morals to pay the bills, in the long run you will almost always be disappointed.
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250,000 people downloaded Proun. That doesn't say anything about the PWYW sales model.
I downloaded Proun. I played it. I thought it was crap. I didn't pay any money for it.
In a similar vein, I paid $25 for the Frozen Synapse Humble Indie thing, but I pushed the payment slider for the developer to $0, and donated most of my money to the EFF.
I did this because I never liked the (vaguely) similar Laser Squad Nemesis, and the game itself didn't (and still doesn't) appeal to me in the slightest. I played the tutorial to give the game a chance, it played exactly like I expected, and I deleted it from my harddrive. If I'd actually liked the game I probably would have "bought" a second copy and actually given the developer some money.
There simply isn't enough data on PWYW models out there to come to a conclusion yet. The Humble Indie bundles are probably the most well-known, but they have a significant charity tie-in and a limited period of availability, which will skew any of their data.
HIB is obscure enough, and most other PWYW work has been even less well-known.
Saying PWYW has "failed" one guy selling a (in my opinion) bad game by making him ten thousand dollars so far and an ongoing ten-dollar-per-day income uses a very peculiar definition of "failed"...
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Maybe some help with his model
>:-D
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Pay for Play
Visited parents in Phx, played 18 w/cart in 110 weather and paid $10. They were happy, I was happy.
Moral of Story: I wouldn’t have played otherwise.
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PWYW is a promo strategy
The points raised about barriers to buying are very important for developers to note. It's easier to get 250K free vs 1,000 paid sales regardless of the product, its quality, etc.
Great lessons/case study and kudos to the developer for sharing info.
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Misleading Piracy/torrent numbers
It would be interesting if he had displayed playtime relating to payment amount. Although I can understand it if his software wasn't invasive enough to record that data, seems more like something valve would be able to do with steam.
There wasn't a demo option available so I imagine a good chunk of torrented version numbers can be discounted.
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