4 ms·

One of the first thing you learn in microeconomics 101 is that demand forms a curve - there will always be people who are extracting more value (and thus willin

One of the first thing you learn in microeconomics 101 is that demand forms a curve - there will always be people who are extracting more value (and thus willing to pay more) for something, and people who don't (and thus don't buy it). Neither of those groups matter - the only ones that do are the people at the margin - if lose a less than proportional amount of customers by charging more, then you still come out on top. This is also what the quote is alluding to.

LoSboccacc 10y ago
If anything peolpe are afraid to explore the curve to find maximum profit. Starting high and giving out discoubts at various level trough the year can help building a model and set the best price if it's not overdone (as in, customer expecting continual discounts)
- orangecat 10y ago
  if it's not overdone (as in, customer expecting continual discounts) I'm still surprised that Steam has so many discounts; they've basically trained me to never pay full price. But I feel no need to play new games right when they're released; maybe there are enough people that do.
  - newjersey 10y ago
    I wouldn't see myself as a game buyer at all. So, for me the $5 I paid for skyrim or however much I didn't on other several games I bought is money I wouldn't have spent. Now the $10 I spent on limbo of different. I didn't wait for a sale. I just bought it. I think steam optimized the revenue from me pretty well. And it all started with them giving me portal (one) for free.
    - majewsky 10y ago
      > And it all started with them giving me portal (one) for free. Heh, same for me. I was quite surprised when my library recently hit the 100 games mark.
      - LoSboccacc 10y ago
        far from a hoarder here, and I'm at 300+ http://steamcommunity.com/profiles/76561197986674427 http://steamcommunity.com/profiles/76561197986674427 but I don't play more than 10 probably XD
        majewsky 10y ago
        Heh. The only game that I currently play in Steam is not even a Steam game, but PCSX2 (a PS2 emulator); I only need Steam for the Steam Controller.
        adwf 10y ago
        463 here, of which 238 are for Linux. I was actually quite happy when Linux made up half my library; it really put paid to the idea that Linux isn't for gaming. If a publisher doesn't release multi-platform, I just don't buy it anymore. But those deals sucker me in for just about any game that says it's on SteamOS.
  - crazy1van 10y ago
    They've also trained me to buy a whole bunch of games just because they are massively on sale even though I'll probably never play them. I guess Valve figures this works out better for them overall.
  - exolymph 10y ago
    Delivering games has minimal marginal cost to Steam. So they're not giving anything up by offering discounts.
    - fasteddie 10y ago
      They are -- the opportunity cost of more revenue. Just because you have low marginal costs doesn't mean you should train your userbase to expect discounts.
      - exolymph 10y ago
        My guess is that Steam sales prompt people to purchase when they wouldn't have otherwise. I assume (hopefully correctly) that they're A/B testing this stuff and have data on the results.
  - LoSboccacc 10y ago
    yeah steam was what I had in mind when I wrote that. but it has changed policy last year or so: before titles got cheaper by time and got discounts on top, so it was usual to find a year old aaa game for 5$ or 7$ in the summer sale, now titles take at least two years before even starting to cheapen in price, and publisher are using the trick of giving out big discount (75% is common) but starting from incredibly high prices (so it ends up never going below 20$)
- curun1r 10y ago
  You have to be very careful with discounts in some situations. The case that we ran into involved a product that required a fairly large amount of time investment on the part of the user to be valuable. Our customers that were willing to devote a fair amount of up-front time and 30-60 min per day to our tool were getting a pretty massive ROI, both on the time they spent and the monthly subscription cost. Those that weren't putting in the time got very little benefit. But we also found that when salespeople gave discounts for the first few months, our cancelation rate was significantly higher. We were much better off losing potential customers during the sales process because the customers we did end up signing had higher LTV and Net Promoter scores. The lesson learned was that high/full price increased the investment that customers felt in our product and triggered their impulse to get their money's worth. Discounts signaled customers to make a shallow evaluation of the product and ultimately sabotaged our value proposition.
  - matrix 10y ago
    I'm tackling a very similar issue right now and it's a maddeningly difficult problem to solve. It would be incredibly helpful to bounce some ideas off someone who has been there if its no imposition? My email address in in my profile.

LoSboccacc 10y ago

If anything peolpe are afraid to explore the curve to find maximum profit. Starting high and giving out discoubts at various level trough the year can help building a model and set the best price if it's not overdone (as in, customer expecting continual discounts)

orangecat 10y ago
if it's not overdone (as in, customer expecting continual discounts) I'm still surprised that Steam has so many discounts; they've basically trained me to never pay full price. But I feel no need to play new games right when they're released; maybe there are enough people that do.
- newjersey 10y ago
  I wouldn't see myself as a game buyer at all. So, for me the $5 I paid for skyrim or however much I didn't on other several games I bought is money I wouldn't have spent. Now the $10 I spent on limbo of different. I didn't wait for a sale. I just bought it. I think steam optimized the revenue from me pretty well. And it all started with them giving me portal (one) for free.
  - majewsky 10y ago
    > And it all started with them giving me portal (one) for free. Heh, same for me. I was quite surprised when my library recently hit the 100 games mark.
    - LoSboccacc 10y ago
      far from a hoarder here, and I'm at 300+ http://steamcommunity.com/profiles/76561197986674427 http://steamcommunity.com/profiles/76561197986674427 but I don't play more than 10 probably XD
      - majewsky 10y ago
        Heh. The only game that I currently play in Steam is not even a Steam game, but PCSX2 (a PS2 emulator); I only need Steam for the Steam Controller.
      - adwf 10y ago
        463 here, of which 238 are for Linux. I was actually quite happy when Linux made up half my library; it really put paid to the idea that Linux isn't for gaming. If a publisher doesn't release multi-platform, I just don't buy it anymore. But those deals sucker me in for just about any game that says it's on SteamOS.
- crazy1van 10y ago
  They've also trained me to buy a whole bunch of games just because they are massively on sale even though I'll probably never play them. I guess Valve figures this works out better for them overall.
- exolymph 10y ago
  Delivering games has minimal marginal cost to Steam. So they're not giving anything up by offering discounts.
  - fasteddie 10y ago
    They are -- the opportunity cost of more revenue. Just because you have low marginal costs doesn't mean you should train your userbase to expect discounts.
    - exolymph 10y ago
      My guess is that Steam sales prompt people to purchase when they wouldn't have otherwise. I assume (hopefully correctly) that they're A/B testing this stuff and have data on the results.
- LoSboccacc 10y ago
  yeah steam was what I had in mind when I wrote that. but it has changed policy last year or so: before titles got cheaper by time and got discounts on top, so it was usual to find a year old aaa game for 5$ or 7$ in the summer sale, now titles take at least two years before even starting to cheapen in price, and publisher are using the trick of giving out big discount (75% is common) but starting from incredibly high prices (so it ends up never going below 20$)
curun1r 10y ago
You have to be very careful with discounts in some situations. The case that we ran into involved a product that required a fairly large amount of time investment on the part of the user to be valuable. Our customers that were willing to devote a fair amount of up-front time and 30-60 min per day to our tool were getting a pretty massive ROI, both on the time they spent and the monthly subscription cost. Those that weren't putting in the time got very little benefit. But we also found that when salespeople gave discounts for the first few months, our cancelation rate was significantly higher. We were much better off losing potential customers during the sales process because the customers we did end up signing had higher LTV and Net Promoter scores. The lesson learned was that high/full price increased the investment that customers felt in our product and triggered their impulse to get their money's worth. Discounts signaled customers to make a shallow evaluation of the product and ultimately sabotaged our value proposition.
- matrix 10y ago
  I'm tackling a very similar issue right now and it's a maddeningly difficult problem to solve. It would be incredibly helpful to bounce some ideas off someone who has been there if its no imposition? My email address in in my profile.