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In a blog post at Gamasutra (part of Think Services, as is FingerGaming), Semi Secret Software’s Adam Saltsman offered his views on “The 0.99 Problem” — a major issue facing App Store developers in recent months.
Saltsman notes that lower prices in the App Store result in increased sales. Often, developers opt to sell their games at the lowest possible price point — 99 cents — in the hopes of earning a spot in Apple’s daily sales charts, attracting an additional sales boost.
“App store ranking and sales tends to be a little logarithmic; moving up a few slots can mean a huge increase in sales,” Saltsman explains. “Dropping your price from $1.99 to $0.99, chopping it in half, can mean increasing your actual units sold by a factor of 10, or 20, or 100. The benefits are pretty obvious!”
According to Saltsman, developers would actually be taking less of a risk in the long run by pricing their apps higher than 99 cents.
In a hypothetical example, Saltsman describes an eight-week project undertaken by a three-man team. By Saltsman’s math, the team needs to earn about $30,000 in revenue to cover its costs of development.
With an estimated 50,000 units sold in an unlikely best-case scenario, Saltsman lays out potential earnings at three pricing tiers:
50,000 copies x $0.99 = $49,999 – 30% = $35,000
50,000 copies x $1.99 = $99,500 – 30% = $70,000
50,000 copies x $2.99 = $149,500 – 30% = $105,000
“Selling your game for $0.99 means you have to get in the top 10 to make it worth your while,” Saltsman concludes. “Selling your game for $1.99 or more means you can get by and maybe even fund your next project even if you’re only in the top 100.”
Saltsman also explains the reasoning behind pricing his company’s recent hit Canabalt at $2.99: “We felt (and still feel) that the game is worth $2.99.” Saltsman feels that the company’s pricing intuition paid off, citing unanimous critical praise and sales figures that he describes as “very satisfactory.”
Canabalt was a hell of a game, but I never understood the rational of charging $3 for a game that was originally free. I know it takes work to port a game, but it presumably took work to make the flash version too, right?
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