Can you elaborate where your confusion lies? It’s a digital good, there is no marginal cost. So they can pretty much price a game however they want. So pricing is mostly about maximising revenue, i.e. get as many sales as you can at the highest possible price.
A sale is a relatively straightforward strategy where you first sell the game at a high price to all the people who are fine with paying a lot, then you lower the price to sell more copies to the people who weren’t willing to pay the higher price. The result is more total profit. There is a time limit too to create a sense of urgency (“I better buy now so I don’t miss the opportunity”).
Real goods have a limited lifespan, they usually go on sales when they are about to reach the end of their life or when you physically have to get rid of them. Software doesn’t expire.
A price is usually set to cover the initial costs and to make a reasonable profit not to squeeze how much money you can from people.
A price is usually set to cover the initial costs and to make a reasonable profit not to squeeze how much money you can from people.
There are exceptions, but usually that is absolutely not true. Making as much money as you can is 100% the goal for the vast majority of goods produced, physical or digital.
Games on Steam are not usually recurring purchases, one person won’t buy the same product over and over like they need to for food. This means the market of people willing to pay the full price gets saturated over time.
Sales are a way to increase the market size by lowering the “barrier to entry” (price). Sometimes a price will be permanently lowered, however usually not because a temporary sale encourages people to buy now instead of later.
Sounds like videogames sales are made to make money and the original price has not much to do with cover costs bur rather making as much profits as people are willing to pay
Of course they are made to cover costs and make money, but you can cover more costs for future games or ongoing development the game if more people are buying the game, even if it isn’t at full price
Basically nothing is sold to cover the cost. That’s the basic of how making a profit works.
So let’s start from there. Second, when you make a digital product, you invest X and you have no idea how many copies you will sell. It’s much harder to compute the marginal cost compared to a physical item.
Videogames are a luxury item, they are by no means necessary. So there is no harm in letting demand and offer regulate the price. If you feel that paying a certain amount is not worth for a game, you don’t pay it, or you wait until the price drops.
It’s a digital good, just a bunch of 1s and 0s in a particular order. The manufacturing cost of making a copy is near 0. There are license fees, but those are almost always pencentage based. Valve takes 30%, the publisher takes a percentage, and so on.
Then it’s a balance of volume vs price. If you can sell 10,000 copies at $10, vs 1,000 at $15, ($100,000 vs. $15,000), it is more profitable to sell the game at $10.
And human psychology is manipulable. Seeing the original price at $15 will influence them to value the game around $15, and so $10 would be a good deal. If they want it, they should buy it on sale. Where as seeing the original price at $10 would influence them to value the game at $10, which could mean it’s not as good as a $15 game they can get for $10 on sale.
The developers need to make enough profit to cover the development costs’ debt. Then after that, the rest of the profit goes to the next project and maybe bonuses… Probably to the executives. Part of that is also to cover the cost of past and future non-pofitable games. Not all games make a profit and developers and publishers need to offset the cost of past and future failures.
Software often loses its value compared with other newer better offerings that come out with time. I doubt very much anyone would pay $50 in 2025 for Heroes of Might and Magic 3, a very well regarded game released in 1999, that tons of people gladly paid the full $50 MSRP price for that year because it was cutting edge.
The game is still great even today. It hasn’t changed one bit but people aren’t going to be willing to pay the same price for it today that they were willing to back in 1999 because there are more competing options with newer tech/ideas that have released since then. However it is consistently one of the top sellers on Good Old Games at around a price point of $5 today
Companies often create incentives so that their customers will want to buy more of their products. Sales exist within every industry and happen for various reasons. Even with your example of grocery stores, there are other reasons for having sales. I believe it was Kmart that had the famous blue light special. Publix, a southeastern US chain has a weekly rotating sale. Costco has a similar rotating sale. Maybe items are deteriorating, maybe there is an excess of stock. Maybe an item goes on sale for the purpose of luring customers into a store in hopes that they will buy more things. Maybe the item of sale already had a huge markup and the sale brings the price down so there is only a moderate markup, which is often employed by department stores in malls. There are many more reasons for a company to put items of sale i won’t get into here.
Yes, there are videogames sales no wonder there are sales for every other product. Originally sales are made because grocery expire, you can have sales for any reason you want such as tricking people into buy more of your products but then that’s what you are doing: tricking people.
Yes my department store example was kind of alluding to that. As far as video games go, either sales are poor, or the game was never worth the original price. Also sales such as the ones Steam has are often great for advertising. I always see games I’ve never heard of. Those developers take a hit on their per unit price so that they can potentially sell more units. The fact that these are digital items means they aren’t losing money on manufacturing costs. Patient gamer communities exist for customers that smell the bullshit.
Its for the people that only buy when its a “good deal”. Its usually for old games that are well liked or for newer games that are maybe a year old now. The non sale price is for people who can’t wait for the discount. Sorta like waiting for a movie to go to video/streaming rather than go to the theater.
I’m not rich but I’m definitely not poor. I only buy video games when they’re like $30 CAD or less. Only time I went against this rule was for Baldurs Gate.
141 hours of gameplay from start to finish and local split screen coop campaign. Probably the best gaming experience I’ve had together with my wife. Absolutely worth it at full price.
Can someone explain videogames sales to me? How can a game be 12$ and 8.99$ the day after?
Can you elaborate where your confusion lies? It’s a digital good, there is no marginal cost. So they can pretty much price a game however they want. So pricing is mostly about maximising revenue, i.e. get as many sales as you can at the highest possible price.
A sale is a relatively straightforward strategy where you first sell the game at a high price to all the people who are fine with paying a lot, then you lower the price to sell more copies to the people who weren’t willing to pay the higher price. The result is more total profit. There is a time limit too to create a sense of urgency (“I better buy now so I don’t miss the opportunity”).
Real goods have a limited lifespan, they usually go on sales when they are about to reach the end of their life or when you physically have to get rid of them. Software doesn’t expire.
A price is usually set to cover the initial costs and to make a reasonable profit not to squeeze how much money you can from people.
There are exceptions, but usually that is absolutely not true. Making as much money as you can is 100% the goal for the vast majority of goods produced, physical or digital.
We are talking in a platform that has not such greedy goals
Games on Steam are not usually recurring purchases, one person won’t buy the same product over and over like they need to for food. This means the market of people willing to pay the full price gets saturated over time.
Sales are a way to increase the market size by lowering the “barrier to entry” (price). Sometimes a price will be permanently lowered, however usually not because a temporary sale encourages people to buy now instead of later.
Sounds like videogames sales are made to make money and the original price has not much to do with cover costs bur rather making as much profits as people are willing to pay
Of course they are made to cover costs and make money, but you can cover more costs for future games or ongoing development the game if more people are buying the game, even if it isn’t at full price
yes you can also buy a billionare fleet of mega yachts
Yes famously all video game developers are billionaires
https://luxurylaunches.com/transport/gabe-newell-luxury-yachts.php
That’s how sales of anything works. Everything is sold at the highest possible price that people are willing to pay.
That’s not true, especially for software that has infinite supply
Basically nothing is sold to cover the cost. That’s the basic of how making a profit works. So let’s start from there. Second, when you make a digital product, you invest X and you have no idea how many copies you will sell. It’s much harder to compute the marginal cost compared to a physical item. Videogames are a luxury item, they are by no means necessary. So there is no harm in letting demand and offer regulate the price. If you feel that paying a certain amount is not worth for a game, you don’t pay it, or you wait until the price drops.
Not everything is made for infinite profits
It’s a digital good, just a bunch of 1s and 0s in a particular order. The manufacturing cost of making a copy is near 0. There are license fees, but those are almost always pencentage based. Valve takes 30%, the publisher takes a percentage, and so on.
Then it’s a balance of volume vs price. If you can sell 10,000 copies at $10, vs 1,000 at $15, ($100,000 vs. $15,000), it is more profitable to sell the game at $10.
And human psychology is manipulable. Seeing the original price at $15 will influence them to value the game around $15, and so $10 would be a good deal. If they want it, they should buy it on sale. Where as seeing the original price at $10 would influence them to value the game at $10, which could mean it’s not as good as a $15 game they can get for $10 on sale.
The developers need to make enough profit to cover the development costs’ debt. Then after that, the rest of the profit goes to the next project and maybe bonuses… Probably to the executives. Part of that is also to cover the cost of past and future non-pofitable games. Not all games make a profit and developers and publishers need to offset the cost of past and future failures.
Valve ceo is thinking about the next project from his mega yachts
The same way your grocery can be selling something for $10 one day and put it on sale for $6 the day after.
Grocery deteriorates, when it’s about to expire it goes on sales and if nobody buys they throw it away. Software doesn’t rotten.
Ah, I see you’re one of those basement dwellers who’ve never done your own grocery shopping in your life.
Software often loses its value compared with other newer better offerings that come out with time. I doubt very much anyone would pay $50 in 2025 for Heroes of Might and Magic 3, a very well regarded game released in 1999, that tons of people gladly paid the full $50 MSRP price for that year because it was cutting edge.
The game is still great even today. It hasn’t changed one bit but people aren’t going to be willing to pay the same price for it today that they were willing to back in 1999 because there are more competing options with newer tech/ideas that have released since then. However it is consistently one of the top sellers on Good Old Games at around a price point of $5 today
Nobody would be willing to pay 50$ for a game released in 1999 because they know the costs to make the game are already covered
Companies often create incentives so that their customers will want to buy more of their products. Sales exist within every industry and happen for various reasons. Even with your example of grocery stores, there are other reasons for having sales. I believe it was Kmart that had the famous blue light special. Publix, a southeastern US chain has a weekly rotating sale. Costco has a similar rotating sale. Maybe items are deteriorating, maybe there is an excess of stock. Maybe an item goes on sale for the purpose of luring customers into a store in hopes that they will buy more things. Maybe the item of sale already had a huge markup and the sale brings the price down so there is only a moderate markup, which is often employed by department stores in malls. There are many more reasons for a company to put items of sale i won’t get into here.
Yes, there are videogames sales no wonder there are sales for every other product. Originally sales are made because grocery expire, you can have sales for any reason you want such as tricking people into buy more of your products but then that’s what you are doing: tricking people.
Yes my department store example was kind of alluding to that. As far as video games go, either sales are poor, or the game was never worth the original price. Also sales such as the ones Steam has are often great for advertising. I always see games I’ve never heard of. Those developers take a hit on their per unit price so that they can potentially sell more units. The fact that these are digital items means they aren’t losing money on manufacturing costs. Patient gamer communities exist for customers that smell the bullshit.
Its for the people that only buy when its a “good deal”. Its usually for old games that are well liked or for newer games that are maybe a year old now. The non sale price is for people who can’t wait for the discount. Sorta like waiting for a movie to go to video/streaming rather than go to the theater.
So what you are saying is that it is only a marketing move to appeal to poorer people?
I’m not rich but I’m definitely not poor. I only buy video games when they’re like $30 CAD or less. Only time I went against this rule was for Baldurs Gate.
Hard agree. Too risky these days but bg3 was a sure bet.
141 hours of gameplay from start to finish and local split screen coop campaign. Probably the best gaming experience I’ve had together with my wife. Absolutely worth it at full price.
You can also view it as a strategy to extract more money from richer people, without sacrificing all the poorer customers.
Frugality does not imply a lack of wealth.
I would think it usually implies the opposite
We cannot get it because we are not rich but rich people aren’t frugal they don’t wait a videogame to drop 5$ in price to buy it
They don’t have to, but still can purchase the lower priced game, to get the same sale as you or me. Hence, frugality.
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