virtual goods pricing strategies, presented at casual connect 2010

Pricing Strategies Pricing Strategies for Virtual Goodsfor Virtual GoodsEric GonzalezEric GonzalezCEO, DoubloonCEO, DoubloonCasual Connect 2010 Casual Connect 2010

Copyright Doubloon Inc. 2010Copyright Doubloon Inc. 2010

Virtual Goods Virtual Goods Priced RightPriced Right

BackgroundBackground

• 800.522.1948 | virtualdoubloon.com | @virtualdoubloon800.522.1948 | virtualdoubloon.com | @virtualdoubloon

• Eric Gonzalez, CEO,Doubloon Eric Gonzalez, CEO,Doubloon

(virtualdoubloon.com)(virtualdoubloon.com)

• Everything You Need Run an In-Game Virtual Everything You Need Run an In-Game Virtual

GoodsGoods

Economy: Currency, Catalog, Pay Methods, Economy: Currency, Catalog, Pay Methods,

Gifting.Gifting.

• Focused on Market Intelligence, Focused on Market Intelligence,

benchmarking to benchmarking to

help you make smarter pricing decisionshelp you make smarter pricing decisions

• Talking about Talking about Pricing StrategiesPricing Strategies Today Today

Why Optimal Pricing?Why Optimal Pricing?


You Can Make Lots of Money You Can Make Lots of Money but it Requires Informed but it Requires Informed Decision MakingDecision Making

1. More Customers 1. More Customers

2. More Retention 2. More Retention

3. More Revenue 3. More Revenue from Each Userfrom Each User

Context: The Big May Context: The Big May SqueezeSqueeze


http://mthink.com/revenue/blog/chris-trayhorn/facebook-takes-profit-out-cpm-buys (May 2010) (May 2010)

CPM to CPCCPM to CPC

http://www.bbc.co.uk/news/10472844http://www.bbc.co.uk/news/10472844 http://techcrunch.com/2010/05/11/facebook-darth-vader-http://techcrunch.com/2010/05/11/facebook-darth-vader-zynga/zynga/(May 2010)(May 2010)

40% New Referrals 40% New Referrals GoneGone

http://mthink.com/revenue/blog/chris-trayhorn/facebook-takes-profit-out-cpm-buys

http://mthink.com/revenue/blog/chris-trayhorn/facebook-takes-profit-out-cpm-buys

Key ConceptsKey Concepts


• 3rd Degree Price Discrimination3rd Degree Price Discrimination

• Price ElasticityPrice Elasticity

• Player Lifecycle and the “Long Tail” Player Lifecycle and the “Long Tail”

• Arbitrage (for Segmentation and Profit)Arbitrage (for Segmentation and Profit)

• Dynamic PricingDynamic Pricing

Top 5 Tips for Top 5 Tips for Virtual Goods Virtual Goods

PricingPricing


(Simple Strategies You Can Use Right Away)(Simple Strategies You Can Use Right Away)

#5 Relative Pricing#5 Relative Pricing


http://wordpress.tv/2010/06/07/dan-ariely-http://wordpress.tv/2010/06/07/dan-ariely-predictably-irrational-behavior/predictably-irrational-behavior/

• Behavioral Economics Behavioral Economics • We’re We’re GoodGood at at

AssessingAssessing

RelativeRelative Value Value• But We But We SuckSuck at at

AssessingAssessing

Absolute ValueAbsolute Value• Introduce Subpar Items Introduce Subpar Items

at at • Par Prices to Boost Par Prices to Boost

Sales ?Sales ?• A/B TestingA/B Testing

#4 “Stealthy” Price #4 “Stealthy” Price ChangesChanges


http://www.usatoday.com/money/industries/food/2008-06-11-shrinking-sizes_N.htmhttp://www.usatoday.com/money/industries/food/2008-06-11-shrinking-sizes_N.htm

• Real WorldReal World - Smaller Tub of Ice cream - Smaller Tub of Ice cream • Virtual WorldVirtual World - Subtle Sinks, like better - Subtle Sinks, like better arrowsarrows contain less in the quivercontain less in the quiver• Currency buys = currency sinksCurrency buys = currency sinks

#3 Be A Good #3 Be A Good SamaritanSamaritan


• Get First Time Get First Time Buyers Buyers Comfortable Comfortable With BuyingWith Buying

• Establish Establish Relative Relative Baselines, Hold Baselines, Hold the the Line on PricesLine on Prices

• 7 to 12 USD7 to 12 USD


• Use the Crafter Use the Crafter

LifecycleLifecycle• Profitable at FirstProfitable at First• Then Dip Into the Then Dip Into the

Red Just Before Max Red Just Before Max

LevelLevel• Price in vCurrencyPrice in vCurrency

(Casino Psychology)(Casino Psychology)

#2 Arbitrage #2 Arbitrage SegmentationSegmentation

#1 Dynamic (Airline) #1 Dynamic (Airline) PricingPricing


• Visible to UsersVisible to Users• Price May Rise asPrice May Rise as

Quantity Nears Quantity Nears

ZeroZero• Demand basedDemand based

Auto-price (withinAuto-price (within

limits you set) limits you set)

Final ThoughtsFinal Thoughts


• Measure ObsessivelyMeasure Obsessively• Use a Few Simple Strategies Use a Few Simple Strategies SellSell• Use Market Data Use Market Data

Thanks!Thanks!Slides will be posted at Slides will be posted at www.virtualdoubloon.comwww.virtualdoubloon.com

Copyright Doubloon Inc. 2010Copyright Doubloon Inc. 2010

Virtual Goods Virtual Goods Priced RightPriced Right

virtual goods pricing strategies, presented at casual connect 2010

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