The Degrees of Sales and the Consumer Impact

Recently we talked about the various timing windows for game releases and sales in the Game Industry and today's post is a follow up.

Knowing how much to put your game on sale can be as important as when and there are different degrees of sales that must be taken into account.

The Strength of the Sale:

With exception to F2P and 99 cent titles, every game released regardless of its initial price can have a sale based on one of three groups that affect the consumer perception of it.

Small:

A small sale is usually between 5 to 25 percent off the title's MSRP. This degree is normally used when you want to have the sale itself be an incentive as opposed to outside factors. This is usually for pre orders and sometimes for out of the blue sales. The plan is to use the limited duration of the sale to convince people to buy your game now, instead of paying full price afterwards. Preorder sales generally don't go any higher than this amount, unless there is a special promotion such as owning another game gets you a higher discount. 

It's important to note that a sale at this degree is normally not popular during the major sales seasons of summer and winter as at those points, gamers are expecting massive discounts. The advantage of small sales is that the perception of having the sale before release can convince people to buy the game at a price that is still close to what your original price is.

Medium:

Medium sales are from 30 to 50 percent off and are normally saved for special occasions and not for pre-orders. We are seeing these types of sales more and more for daily or weekend sales of games. Obviously the higher you go, the more notice you'll attract for your game.

At this price, the consumer sees your game as a bargain and depending on the title's MSRP can be hard to resist at this tier. Medium sales are very important for console or AAA titles whose normal price can be $40 and up as the discount can make them very attractive.

Midweek and daily sales are normally priced in the medium category as they are minor events.

Generally speaking, medium sales are going to be the main degree that most games go on sale outside of special occasions. One thing to keep in mind is that if you have a medium sale close to a holiday, people may wait to see if your game goes for a further sale and our next category.

Large:

Lastly we have large sales which are from 60 percent and up. At this tier it's safe to say that you are focusing on bulk sales as most video games are hard to make a profit at this level of a discount.

These sales are normally saved for special events: Seasonal sales, humble bundle purchases or unique theme sales such as "Games from company X."

For many video games, sales at this level enter the impulse buy range for a lot of consumers. Console games are a big deal as they normally don't drop down this low and can attract the attention of a lot of gamers.

And large sales occur during major sale periods such as summer or winter.

Interestingly, there are some companies who don't drop their games this far such as Blizzard, Nintendo and Activision who are trying to position themselves as makers of quality games and don't want to devalue their titles. Trying to find a Nintendo developed console game for less than $30, even for the Wii can be difficult.

In fact, most console games don't hit this pricing for at least 6 months to a year after its release and it's more common to see digital titles that a smaller development cost have these sales.

Knowing these types of sales is important but there is still one more area to discuss: When do you put your game on sale?

Time for a Sale:

Figuring out the correct time to put your game on sale can be tough as its dependent on two factors: What your game's shelf life is and when was the last sale?

Trying to figure out a game's shelf life is very difficult and has become the million dollar question for a lot of developers. Some games due to popularity and high reviews stay in the consumer eye for a very long time. Some stay popular based purely on the name of the developer such as the Nintendo example above. Others however may only last on the front page of a store for a few days and even console titles may only remain visible for one month after release.

Games like Call of Duty who have a long shelf life, take a lot longer to go on sale.

Games with short shelf life are the ones we normally see on sale first but there is an advantage to longer shelf life games going on sale. If a game has been popular for several months, a sale can give the game more awareness and get those who weren't sure about buying it to get it.

Moving on, the time between sales is very important as you can anger your previous customers by having sales too close to each other. Generally we've seen after two months has been a good duration to have a new sale. But there is one exception to this rule: Special Sales.

If you had a medium or small sale of your game and you're entering the time for one of the special sales periods we've talked about, it can be a good idea to break normal convention and have another sale. Most consumers understand that the special sales are unique events and are more forgiving compared to having sales out of the blue so close to each other.

We saw an example of this recently when the newest Wolfenstein game had a 50% sale after one month of being out due to it being the time of the Steam summer sale.

One final point regarding sales is that it's good to be consistent when deciding how much of a sale you'll have on your game at the low, middle and large tiers. While people don't mind if you have different sales for each tier, they may not like you having a 35 percent off sale, followed by a 50 percent off sale out of the blue.

In Conclusion:

Understanding the details of putting your game on sale is very important for any developer. And if you're selling your game from a game site, make sure that you are able to easily change your price to match the lowest price your game is being sold. Sales are an important business strategy for game developers and something that shouldn't be taken lightly.

(Reprinted from the Xsolla.com Blog)