Are we paying more for less?

[moodgiesanta]

First of all I choose to believe that Talleyrand is not trolling at all because he hasn't said anything inciendiery and seems just to be speaking (typing?) his/her mind.

I think it's rather simple in the short run why they would keep prices high. Shrapnel knows its audience. The turn based strategy market is small, but I'm gonna take a leap of faith and say that it is older, which means it has more money. The kind of person who is going to buy this game is also the kind of person who is willing to pay a premium to fit their specific needs. In other words, lowering the price to go after a more casual gamer (in other words a gamer that is less inclined to buy this game, evidenced by them not buying at the higher price) is an illogical thing to do. Think about it: the more casual gamer that would be attracted by a lower price is exactly the kind of person to be put off by the graphics and complexity. In other words you're lowering your price to chase after a market that isn't there. In the meantime the folks that were going to buy it anyway at the higher price after being introduced to it are giving you less money.

There is no reason for them to simply follow suit with retailing practices for mass-market games because they are not selling mass-market games. They have no pressing need to clear inventory like a retailer (not to say they have no need at all to clear inventory but it isn't nearly the situation with a retailer where old product competes with new product).

There is also the following problem which has been alluded to but I guess I'll illustrate. Let's use some made up numbers and say that for the first 10000 games printed, the cost of the game to Shrapnel is 30 dollars including manufacturing. If they charge 40 dollars they make 100000 dollars in profit. If they charge 55 dollars they make 250000. That's hugely substantial. So that explains why they would start out at 55.

Now since this is software adding more copies sold decreases the cost per unit fairly substanially when compared to more "hard" goods like say a television. However Shrapnel, the folks with the data on sales and on their customers, have determined that the increase in sales for a lower price point doesn't make up for the loss in profitability even after the initial rush. If there is a market of 25000 copies at 40 dollars and a market of 15000 copies at 55 (assuming a cost of 30 per unit) it doesn't take a rocket scientist to figure out that you come out ahead charging 55. In fact the gain is 125000, a number which probably offsets the average cost decrease (the assumption of 30 per unit is not valid because the cost per unit is going to be less for the 25000 than for the 15000). Now these numbers are all made up but the point is that Shrapnel has numbers that *aren't* made up.

Of course the counter-point to all of this is, considering the steep marginal cost decrease once you recoup development costs, why not try and cash in? They lost money not charging less for Dominions 2 leading up to Dominions 3 if they had *any* inventory left, because the sales of Dom 2 after Dom 3 have got to be practically non-existent. They don't have any inventory left of course so that is a moot point VV

[Maltrease]

One thought on lowering the price after a certain time period:

Some people that would buy the game now would instead wait until the price is lowered. Knowing that the price is not going to be lowered means you do not have any reason to not buy the game now.

[Mortibus]

I do think that Dominions 3 is worth the price, and I personally think an actual manual is a real selling point.

However, I agree with Talleyrand that keeping Dominions 2 at full price for so long is rather unreasonable, and they lost a sale in my case.

I discovered D3 a few months ago, I had been looking for D2 for a long while (I just knew of a screenshot and some details, but not the name).

I myself would have snapped up D2 in a second for $20 while waiting for D3. But their "reduced" selling price was at $40, something I am just never going to pay for a game that is a few years old.

But $60 for an excellent new product by an independent developer, despite the lower production values? No problem here.

[Leif_-]

Maltrease said:
Some people that would buy the game now would instead wait until the price is lowered. Knowing that the price is not going to be lowered means you do not have any reason to not buy the game now.

Indeed. Which is why it can make sense for a company that's somewhat insulated from direct competition, as Shrapnel as an exclusive publisher of distinct titles in a small niche is, to have a stated policy of not downpricing old games. While it might lose some of the fence sitters, others of them will buy the game at a higher price than they otherwise would and, just as importantly, they'll buy the game earlier after launch, at the point where there are bills to be paid. (Cash-flow is often just as important as net income.)

[Warhammer]

Talleyrand said:
I know, Leif, and I enjoyed reading your replies. I don't think it is unreasonable however to expect Shrapnel to lower the price of a game that has been out for a couple of years, even if there is no direct incentive for them to do that. People expect it to happen, and you in turn garner the sales of those customers who were on the fence and were not willing to pay full price for a game upon initial release. And as I said, I don't believe this game to be that much more a niche than many other notable strategy titles, whose prices have steadily fallen over the years.

It depends upon the situation. Dealing with a publisher is not the same as dealing with a distributor or a reseller. When dealing with the publisher, their cost of making the game is not going to diminish over time. As a result, the price is going to stay constant.

A distributor or retailer is a completely different animal and they are looking for turns on their inventory dollars. Therefore, after a game has been on the market for so long, they lower the price to recoup some of their initial investment.

Now, sometimes the original publisher will reduce the cost of their game due to inventory issues, but that depends upon the size of the publisher and other factors. Not knowing how much it cost to make Dom 2, I have no basis for why the cost of the game has remained high. I do know that for the past few weeks, it has been backordered, which means they don't have any copies available. Since the release of Dom 3 was imminent, I am not surprised the cost shown remained high.

Talleyrand said:Johan, I would pay 40 dollars for Dominions 3 at most plus shipping and probably 30 for Dominions 2, although I think 20 would be more reasonable for such an old game.

As a side note, please quit bringing up the manual when toting the price of this game. The manual is nothing more than a manual. Unless it has a strong piece of fiction inside that lays out the history of the world and its main characters that brings me a keen sense of entertainment, it does not impress me one bit how big it is. I do although appreciate the effort involved in its creation. But I don't pay extra for strategy guides (even for a game like Disgaea 2 lol) and I will not pay extra for a bigger manual, which is basically one way a lot of you are justifying the higher price.

I'm going to give you an example here:

A supermarket buys cans of Super Deluxe Root Beer for $.20 per can. They sell it for $.40 per can. They sell about 100 cans per week. Most Root Beer sells for $.30 per can. A customer comes up and tells the manager of the store that he won't buy the Super Deluxe Root Beer for $.40 per can, but he would at $.35 per can.

At 100 cans of sales per week, the supermarket makes $20 per week off of the Super Deluxe Root Beer. If they sell 101 cans per week at $.35 per can, they will only make $15.15 per week. To gain the one extra customer, they sacrificed $4.85 to the bottom line, not good business.

The reason why many people have brought up the manual is threefold. There were legitimate gripes about the manual for Dom 2, and there were plenty of people (i.e. more than one or two people) that claimed they stayed away from the game because of the manual. Second, the quality of a manual is one of production values that you said the game did not have a lot of (a 300 page reference book/manual for a game of this type is a must have to plan what you are going to do, much easier than searching for everything in game). Third, the cost of the manual has a direct impact on the cost of the final product. If a 300 page manual costs $20 per game (which would not surprise me, depending upon the quality of the graphics, etc.) then the price of the game is going to change accordingly.

I don't know exactly what you want to hear in answer to your post. You have bypassed several direct answers to your concerns or questions, yet you still say the same thing. If you are trying to get the price of the game reduced, it isn't going to happen at this point, and I highly doubt one person is going to make a difference to a price policy for a company (not a well run company at any rate).

I am not trying to be a fanboy or anything else, this is the first game from Shrapnel that I have bought. However, I completely understand how pricing is determined for products as I am the Sales and Marketing Manager for the company I work for, so I understand why many of these decisions are made.

[Saxon]

Thank you to the kind poster who stated that Talley is not a troll. I thought twice about posting, as the bulk of readers are very much against him. However, I support Talley.

The discussion has focused on Dominions and could have included SEIV, which was another excellent game. The majority of buyers will agree they are excellent products and probably worth the price. With that said, despite owning Dom 1 and 2, I have yet to order Dom 3 and certainly refused to pre-order it. Why?

Shrapnel’s pricing policy applies to all their games; they keep prices high and rarely relent. I put my faith in Shrapnel and pre ordered Coliseum and bought the War Engine blind. The prices were high, but I figured Shrapnel only backed good games. I was wrong.

Some of the games are of very low quality and one of the recent releases is far outclassed by a freeware game in exactly the same niche. Yet the prices remain high. Essentially, Shrapnel uses the same strategy for all their games, regardless of the quality. I deeply honour their right to make money and wish them luck (due to their support of good games) but I do not trust them any more. I will wait until I am sure the game is good (as seen in the forums) and I have a chance to play the demo.

My second point has been touched on by others. Old games do go down in price on the market. Victoria, EUII, and Hearts of Iron are all games in a similar niche and all have their prices decline over time. I get similar replay value from them as I do from Dom II, yet got them at much lower prices. Paradox provides excellent patches and support, equal to or better than anything else on the market. Again, while I honour Shrapnel’s right to make money, my experience with the rest of the games market is that prices decline, no matter the quality of the product.

If Shrapnel can buck the market and make a living, well, good for them. That doesn’t make me approve of their pricing system or want to take part in it. From the good reviews of Dom 3, I will have a look at the demo and I might get the game. But the pricing model they use on all of their games ensures that I will think a lot harder about it than otherwise. Maybe I am that person right at the intersections of the pricing curve, the marginal one who will go either way. Or maybe my past experience of their pricing model has made me a much pickier buyer of their products.

[Nerfix]

Talleyrand said:As a side note, please quit bringing up the manual when toting the price of this game.

We can't, since the manual rather directly affects the manufacturing costs of the game.

[PhilD]

Talleyrand said:
Niche is no excuse, people expect game prices to fall.

So because people expect the price to fall, the price should fall?

Shrapnel aren't trying to conquer the PC gaming world and make every PC gamer buy their products, you see. Most potential PC game buyers certainly do expect the price of a game to drop after a few months - but those same "most" would not buy a game like Dom2 anyway, because the graphics are so primitive, and the box isn't shiny enough (I mean, there is NO box), and there are no voices lines, and so on.

The target audience is different, and it seems that Shrapnel decided that their targeted audience is mostly composed of players who are willing to pay a premium price for what they consider to be a good game - even though most other players would not consider it so, and would not even buy it at maybe $10. Apparently, their sales figure show they were not too deeply wrong. At least from here, I'm happy with the price.

Basically, the price tag has little influence on sales of games like Dominions, so there is little reason for the price to drop after a few weeks or months.

[Gandalf Parker]

Talleyrand said:
As much as I want to support Illwinter and Shrapnel, I can't bring myself to pay a premium for their products, and in that I think we both lose. Am I in the minority? Well that is the million dollar question, isn't it?

You do understand that asking that in the Dominions forum makes it likely that most people will not agree with you?

But even in the usenet strategy forums I had the same conversation. The person there also was not able to swing a majority.

I really do understand your viewpoint. As a player viewpoint I think its valid. But trying to sound like a nice guy talking to the publisher on a peer level, I dont really think so. It has a chance for some gains but I still feel it would be a risky thing for Shrapnel to try with this version of Dominions. This is a major release both for Illwinter and for Shrapnel. Gambling with pricing might not be a very responsible thing for them to do right now.

I wish I was better at math to put this in a formula but I now that you are talking about cutting their profits probably more than half (at least). And I know that it would take twice as many new buyers to make up that difference, much less make a gain above that to make it worthwhile.

[Neophyte]

Talleyrand - You said that the manual is just a manual. Based on a small sampling (one scanned image, my preorder shipped today and obviously is not in my twitching hands) it seems to me that the manual is less of a "push these buttons, make game work" manual typical of games these days, but more of reference guide to the features (features = units, spells etc in this context) more similar to a programming language reference guide or an extremely well written after market strategy game guide.

You have discussed production value. I am in the initial planning stages of a small business. One of the most important things I am trying to determine is what my minimum sales volume needs to be to not lose money (I want to start very small and continue to remain employed full-time). This very planning makes me poignantly aware that Shrapnel, having much smaller sales volumes than someone like Atari, or even Atari games sold just at Wal-Mart, must do a similar analysis, only they need to make money beyond their cost of production in order to pay their employees.

Based on my perception of the tone of the forum posts of Shrapnel staff, it seems that they are surprised at the level of success that Dom3 is garnering for them. I agree with the poster who mentioned that from an economic stand point this means that the game is perhaps underpriced.

Lastly, just from playing Dom2 (which I caught on sale at $32.95 - Shrapnel does periodically reduce prices) I would say that the replay value is definately in the top 5 games that I own. In making this assessment I am combining price per unit time spent playing the game as well as the intangible of personal sense of enjoyment per unit time spent playing the game.

Thank's for letting me share my thoughts regarding this thread.