Wednesday, December 22, 2010

Bringing Up the Average

Although I love the Humble Indie Bundle 2, I'm in just the right spot to get utterly hammered by news of it. For the past week, virtually all my feeds, friends' chat statuses (stati?) and so on have all been about the Humble Indie Bundle 2. So I was getting pretty damn sick of it.

But my interest is renewed! They've done something way more interesting than release a bunch of indie games. They may have found an interesting technique for price management.

The HIB2 is pay-what-you-want, which means that many people pay crappily. The average payment is indicated when you buy, and I would bet it strongly influences what other people are willing to pay. However, I would also bet this is a negative spiral: if the average is $10, cheap people will pay $8, and the price will go down. When the average is $9, cheap people will pay $7...

I think pay-what-you-want pricing is the next big thing for indies who want to make any money. But the prices always go too low. For example, at last glance, HIB2 had an average of around $7.30. Anyone who buys HIB2 for less than $10 is, frankly, a tremendous ass. But they don't realize it, because the only indicator of value they really have is the average payment so far. Since the average payment is so low, most people must be paying at least that low and, therefore, they are all being terrible jerks. Any one of those games should be worth $7.30.

The HIB2 folks aren't quite as aggressive as I am, but they came up with an incredibly clever idea:

If you pay noticeably more than the current average, you get extra stuff. In this case, the original HIB.

Oh! That's fucking brilliant.

From now on, every pay-what-you-want pricing scheme should have this same idea built into it. I bet the average price may be improved by as much as 50%. I think this may actually increase profits substantially. IE, to a point where you might actually be able to live off them as an average indie developer or musician.

I think it's an amazing idea. It's too bad the HIB2 crowd didn't think of it before they started, but even coming in late, it's a valuable technique.

Let's do that from now on.

EDIT: The point of the technique isn't to keep people from paying too little. It's to drag the average up so that they realize the value of what they're getting. If someone's gonna pay $5 for a bunch of games regardless, that's fine, it's part of the pay-what-you-want ideal. But everyone should hopefully understand that the thing they're buying has more than $5 of value, and they should realize that they're being a jerk by paying so low.

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