Are we paying more for less?

[Leif_-]

Talleyrand said:
I was torn by the desire to support an independent developer and publisher making good strategy games, but also not feeling the parties were justified in charging so much for their product: a product with such poor production values.

In the realm of information-based products (books, movies, music, computer games) as opposed to products that are primarily physical (cars, refrigerators, danish pastries), there is hardly ever any connection between production values and price. You don't pay less to see "The Blair Witch Project" than you do "Star Wars Episode III", even though the first movie had almost no budget or special effects. Production value in these fields are used to attract a greater number of customers, rather than to excuse a higher price.

So I would check in every couple of months or so just to see if Shrapnel had lowered the price, so I could finally purchase it. Did they ever lower it? No, and now Dominions 2 has disappeared from their online store, to be replaced by the even more expensive Dominions 3.

I genuinely want to understand this. Practical business says that you charge what the market will bear for your product. Demand is higher upon initial release so you are justified in charging a higher price, but after some time you try to cater to those customers who were on the fence and will only purchase the product when the price comes down.

There are two reasons why normal games are sold at a refund after a while. The first is that their perceived value in the market has gone down, because newer and, in theory, improved games have entered the market at their old games. Who'd buy a one year old copy of Generic FPS for $50 when they instead can by the recently released Quarter Life II for the same price?

Dominions, however, is a niche game and only competes with other games in the niche, so this effect is pretty much non-existant. The number of out-of-niche games that's been released since the first publishing of Dominions II doesn't affect its perceived value at all, and the number of in-nice-games that's been released over the last three years is quite small and not really significant.

The second reason why normal games are sold at a discount after a while is because they're sold primarily through brick-and-mortar shops who need to shift stock and maximise the use of their shelf space. After a while a store will sell a game for no gain, or even at a loss, just to free up stock space for newer, more profitable games.

Shrapnel, being an exclusive web-shop, doesn't have to worry about that. They don't need to get Dominions II out of the building to make room for Horse and Musket, so they have no reason to settle for a low or even negative profit per sale.

I as a perspective customer am stuck with the dilemna of wanting to play a strategy game with lots of depth and choices, but not feeling the production values warrant a $55 price tag. Am I alone?

No, of course not. A lot of people will feel that the game doesn't warrant its price tag. But that's always the case. The optimal price in a supply/demand graph will always leave some fraction of people feeling it's too expensive. For some products it will even leave the majority feeling it's too expensive.

The question isn't so much whether there are people who feel the price is excessive, as whether this is the price that maximises the total profit. It might not be; Shrapnel might have made a mistake with their pricing, but I don't think there's any reason to suspect that's the case.