The makers of World of Goo, a “physics-based puzzle game,” let customers pay what they wanted for the game — which normally sells at $20 — and a week after the offer, 57,000 people bought the game, bringing in over $100,000 in sales. A survey taken by some of the customers on the game’s website reveals the top two reasons customers chose to pay what they did: It’s all they felt they could afford, and they wanted to support the PWYW model. Few paid the amount they thought the game was actually worth. More analysis here. [%comments]
Pay What You Can Afford?
TAGS: games, pay as you wish
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“I only use it in cases where there is no per-unit manufacturing cost — desktop wallpapers, PDFs, etc.”
More proof that “intellectual property” isn’t property at all.
Re: Sam Carter
Actually they asked that so they could see who was answering the survey to highlight the selection bias as stated on their site. The people grabbing for $0.01 are unlikely to stop and answer the survey, those giving more stopped to explain themselves.
I downloaded the game at the fixed $20 cost. No regrets!
I don’t know what I would have paid prior to playing it if it had been up to me. Having played it and completely enjoyed it, I would have definitely, gladly, handed over $20. Maybe there should be a way to tip at the end of these models when the experience exceeds expectations?
Now could I please have my money back for all the bad games I’ve bought?
Upon reading this I decided to buy the game, and of course I wanted to pay as little as possible. When I read the linked article that mentioned their losing money on all who payed less than 30 cents, I decided I could take the 29 cent hit and will be buying for the marginal cost this evening.
They could have achieved the same effect by employing price discrimination, but still made much more revenue. That is, they should have gradually lowered the price from $20.
First lower it to $19 and some people will buy it (those whose willingness to pay (WTP) is between $19 and $20). Then lower it to $18, and more people will buy it (those whose WTP is between $18 and $19) and so on, eventually lowering it to, say, 30 cents. In the end, they would still have sold copies to everyone who did buy it through the PWYW model, but many of them would have paid a much higher price.
Sure, some people would just wait until the price fell somewhat to buy it, but they would endure some costs in waiting for get the game, making the optimal price to pay higher than what they would under the PWYW model (just as many people buy hardcover books rather than wait for the cheaper paperback to come out). The only downside of using the price discrimination method outlined above is that the game developers would have to wait a bit longer for their revenue, but that revenue would be much larger and certainly worth the wait.
“They could have achieved the same effect by employing price discrimination, but still made much more revenue. That is, they should have gradually lowered the price from $20.
First lower it to $19 and some people will buy it (those whose willingness to pay (WTP) is between $19 and $20). Then lower it to $18, and more people will buy it (those whose WTP is between $18 and $19) and so on, eventually lowering it to, say, 30 cents. In the end, they would still have sold copies to everyone who did buy it through the PWYW model, but many of them would have paid a much higher price.” – libert
You’re forgetting several factors:
1 – Part of the reason this was so successful is that it got a lot of press–something that wouldn’t happen for a long, slow price drop, partly because that’s not one event and partly because much of the press was due to the pay-what-you-want model.
2 – The number 2 reason people bought was to support the PWYW model, so price discrimination might well have resulted in less revenue.
3 – The costs of waiting to purchase the game until the price has dropped further is very small at this point, considering that the game has been out for a long time. It would be different if this had happened at the time of release.
@libert, no, gradually reducing the price will not work nearly as well. Part of the reason for the success is the advertising effect of the unusual PWYW. Slowly reducing prices is not news, nobody will notice. People are not eagerly waiting for the game to go down to the price that they’re willing to pay. A year from now there will be plenty of other shiny things competing for people’s attention. If they do notice then that this old game is now cheaper, it will probably be when the price has fallen far below the price they were willing to pay when it was new and fresh.
from a pure business standpoint, i dont see this a very profitable model.. I actually prefer business models like google where they offer you the thing for free and have advetisement on the side.. which can easily be done in “games” or else you could give the basic product for free and charge for additional features… something which Microsoft has done for some of its product lines.. e.g. Visual Studio and now office live..