It’s a digital good, just a bunch of 1s and 0s in a particular order. The manufacturing cost of making a copy is near 0. There are license fees, but those are almost always pencentage based. Valve takes 30%, the publisher takes a percentage, and so on.
Then it’s a balance of volume vs price. If you can sell 10,000 copies at $10, vs 1,000 at $15, ($100,000 vs. $15,000), it is more profitable to sell the game at $10.
And human psychology is manipulable. Seeing the original price at $15 will influence them to value the game around $15, and so $10 would be a good deal. If they want it, they should buy it on sale. Where as seeing the original price at $10 would influence them to value the game at $10, which could mean it’s not as good as a $15 game they can get for $10 on sale.
The developers need to make enough profit to cover the development costs’ debt. Then after that, the rest of the profit goes to the next project and maybe bonuses… Probably to the executives. Part of that is also to cover the cost of past and future non-pofitable games. Not all games make a profit and developers and publishers need to offset the cost of past and future failures.
It’s a digital good, just a bunch of 1s and 0s in a particular order. The manufacturing cost of making a copy is near 0. There are license fees, but those are almost always pencentage based. Valve takes 30%, the publisher takes a percentage, and so on.
Then it’s a balance of volume vs price. If you can sell 10,000 copies at $10, vs 1,000 at $15, ($100,000 vs. $15,000), it is more profitable to sell the game at $10.
And human psychology is manipulable. Seeing the original price at $15 will influence them to value the game around $15, and so $10 would be a good deal. If they want it, they should buy it on sale. Where as seeing the original price at $10 would influence them to value the game at $10, which could mean it’s not as good as a $15 game they can get for $10 on sale.
The developers need to make enough profit to cover the development costs’ debt. Then after that, the rest of the profit goes to the next project and maybe bonuses… Probably to the executives. Part of that is also to cover the cost of past and future non-pofitable games. Not all games make a profit and developers and publishers need to offset the cost of past and future failures.
Valve ceo is thinking about the next project from his mega yachts