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Practical business says that you charge what the market will bear for your product
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Practical business says you charge what the market will pay for it. It's better to sell three copies for $50 each than 6 copies at $20.
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You know you have a good thing here with Dominions but you also have to look realistically at the production values of your game over others, along with the standard pricing policies of the industry
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Two things:
1. Price drops in shops are usually the retailer's perogative, the loss is kicked back to the publisher. Given the choice, most publisher's wouldn't lower the price at all - look at other online only stores/distribution services, most keep the price steady since they can afford to set the initial price lower than other sources. The fact is that it's the retailer's stranglehold that allowed the practice to start in the first place (since you either agreed with them, or you didn't see your title on the shelves)
2. Shrapnel are a small publisher. Larger publishers can afford to spread their costs. To a company like EA, it doesn't matter if they lose a few thousand on one or two titles when they can rake in a few million with another title. They know they'll make huge profits on a couple of franchises which will more than cover the losses they make on the majority of their other games. For a smaller company with a smaller audience you just don't have that flexibility.
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Charging so much for this series is really just a lose/lose situation. You don't get my money, and I don't get a good game.
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Only if they were counting on your money. Since the game has already broken the pre-order record (given the work they've had to put in to ship the pre-orders, I suspect it nearly broke their capacity too!) they're still getting their money, it's you who loses out on a great game
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Is Dominions anymore of a niche game than say Europa Universalis, or Supreme Ruler 2010?
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Probably not (though EU did quite well commercially). The thing is, I wouldn't consider either game to be worth the same price. I didn't buy EU until it was in a sale. I'm more than happy to pay full whack for Dominions though, which to be honest is probably the first time I've said that for a while. It's somewhat silly to base how much your willing to pay on the production values rather than the quality (i.e. the value to you) of the product. Many premium products don't cost significantly more than their counterparts to produce, however they sell for a lot more because people are willing to pay much more due to it's percieved value or quality. It's simple economics again, if a great game costs $10 to make, people are going to be willing to pay more than they would for a poor or mediocre game, even if it cost substantially more to produce.
Actually, CD Rom provides a good example for those old enough to remember when they first appeared. It's way cheaper to produce a game (or audio for that matter) on a CD than it was to produce it on diskette or audio cassette. You wouldn't have thought it from the price they sold at though, since CD was always more expensive than it's counterpart.