The Pricing Game
Part II - Determining What to Charge and How to Deliver It
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"Perhaps the reason price is all your customers care about is because you haven't given them anything else to care about."
The pricing game involves more than just the price you set; it also involves the way in which consumers acquire the offering at the price you've established. We refer to this as the delivery model. Think about the automobile industry. It has evolved from a direct purchase to short-term financing to long-term financing (6 years) to leasing model. This shift has resulted in consumers perceiving the price of a car, not to mention the value of a car, differently.
In the video game industry, price delivery models have also changed. It began with a single transactional game purchase. If you liked the game and wanted to continue the experience of that game, you had to purchase the newest version. Then, digital arrived and subscription models came along which allowed gamers to pay monthly to stream a game. If they wanted to add to their game, they would purchase additional content.
Finally, free-to-play or Freemium arrived, and gamers didn't have to pay for the basic game... Instead, they got it for free and could make in-game purchases to enrich their experience. All of these changes resulted in an entirely new consumer perspective on the price of a game and its accompanying value.
In Part I of this article series focused on pricing, we provided some historical perspectives on the industry's approach to pricing, along with an in-depth discussion of pricing itself. In Part II, we will focus primarily on industry delivery models or how our industry presents its prices and value to the marketplace. Furthermore, we will take a look at what the future may bring in respect to price delivery models.
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