What should you charge for your indie game?
At Develop:Brighton, Game If You Are founder Lewis Denby discussed pricing, vetting competitors, and estimating revenue potential
In a market where the rising price of games is often scrutinised, it’s easy to undervalue yourself as an independent developer, especially if you don’t have the resources of a bigger, respected publisher.
At Develop:Brighton 2022, Game If You Are founder Lewis Denby hosted a talk for developers that are unsure about how to price their games, and how to figure it out, as well as advice on researching competitors and estimating how much revenue a game will make.
In the AAA space, there’s somewhat of a status quo, Denby explained. He said that those larger publishers will mostly adhere to an established process, in which the price of a game is decided.
This differs wildly in the indie space, and Denby is often asked by smaller developers if the price matters, or if they’re overthinking it. He says it does matter, for two main reasons:
1. Pricing affects consumer psychology
The price of a title alone can influence a purchasing decision positively or negatively before a potential buyer has even looked at anything else, so it’s important to find the perfect number.
"Before someone's even played your game, or even really knows much about your game, the price that you're asking communicates something to your audience," Denby said. "If you charge too much, people might think, ‘wow, that's not good value for money, there's thousands of games out there that I could buy.'"
"On the flip side, the risk is you price it too low and people go 'well, that's suspicious' – why are they only charging a fiver for this game that looks really good? Maybe the screenshots are mocked, maybe it's not that great, maybe I'll put my money elsewhere.
"If you can get it just right and feel like you're offering that value for money at the right price point, people are more inclined to say sure, I’ll give that a go."
2. You need to recoup your investment
When making and releasing any game, developers are effectively taking a risk with their time and money, and while profit may not be their priority, it’s certainly a factor that contributes to a business.
"You want to know, or at least be fairly confident, there is a good likelihood you will recoup that investment, both of actual cash but also your timings – you can't work for free forever," Denby said.
It's not just about whether the game will make any kind of profit either – developers need to factor in the costs of simply releasing the game, whether that be a cut taken by a storefront such as Steam, or things like taxes.
"The difference between £10 and £20 – this price point could well be the difference between making a profit and going onto make more games, or that risk turning into failure and making a loss."
One of the ways to figure out the ideal price point for your game is to take a look at what other studios are charging for theirs. This will take time and patience, but will give a strong indicator of where your own game should lie.
Denby pointed out that this method isn’t perfect – it doesn’t work for free-to-play games as their revenue is generated in-game, and it only really works on Steam where the data is freely available. Nonetheless, he described it as a good starting point for making a decision.
The requirements for this task are fairly simple, developers will need some sort of spreadsheet application, a Steam account to browse the store, and approximately two hours. From there, he advised developers to take the following steps:
- Collect competitor data from Steam, using user tags. This filters games by genre, theme, or any identifying attributes.
- Once filtered, estimate competitor’s revenue based on price and the number/quality of user reviews.
- Filter the data by perceived game quality, single out games that are similar to your own in scope.
- Use the filtered data to estimate your own revenue at different price points based on competitor estimates.
When filtering through Steam tags, Denby explained that just choosing tags like "indie" will leave too broad of a result, so be sure to select at least two keywords that really narrow down what your game is.
"I wouldn't pick the keywords of 'action' and 'adventure', for example, because that's not going to narrow your dataset that much," he said. "And you might have games in there that are really far apart from the one that you're releasing. At the same time, I probably wouldn't just pick 'pixel art' and 'retro' as well, because your audience is likely to have wider interests than just that."
Ideally, this should leave anywhere between 50 and 200 games to analyse, but there’s no set amount of titles to look at.
"The difference between £10 and £20 could well be the difference between making a profit, or that risk turning into failure and making a loss"
"If you don't find at least 50 games, there's a couple of things that might be going on. Number one, it might be that the market you're going into is really, really quiet, and that could be a good thing or it could be a bad thing," Denby said. "If it turns out, there's loads of demand for these sorts of games, but no one's releasing them, make that game, go for it, that's a great position to be in. It might, however, be that there isn't a market, and that's why no one's developing it. So we want to think about that, and sense check it."
Games outside of a certain age should also be filtered out of this set of data. As an example, Denby filtered out indie titles that are over three years old, because the indie market moves at a fast pace, and what was popular during that time may not resonate the same way now. He also filtered out similar games younger than six months old, as they’re likely to still be early in their lifecycle and may not give an accurate representation of lifetime sales.
Once the data is into a spreadsheet, there are formulas you can use to estimate your own revenue based on the price points and user reviews of the games you’ve researched. Denby shared that in general, somewhere between one in 20 and one in 50 buyers will leave a review on Steam. So for example, if a game has 100 user reviews, you can multiply that by 20 or 50 to get an estimate of copies sold, and then multiply that by the price of the game.
Denby reiterates that this is just a guesstimate, and other costs will factor into the final total, as well as copies that may have sold during a sale, and so on. But with this method, you’ll get two ballpark figures of where your own revenue may end up between.
Estimating your own price point
From here, developers will need to apply some guesswork to how well their game will perform, not just in terms of sales, but in terms of quality and reviews.
"We need to filter it even more from here, based on how good you think your game is," Denby added. "You can run the best marketing campaigns in the world, get the perfect price point, you can do all of this right, but if the product is not in line with the expectations of the market at a particular price point, then that can lead to problems."
Once you’ve estimated how many copies your game might shift based on the estimates of competitors, ask yourself the following questions:
- What are the median low and high revenue estimates at each price point?
- How do they compare to the hopes of the game?
- Are they any patterns or trends that make a particular price point seem optimal?
Denby added that it’s better to use the median rather than the average, as that will rule out any anomalies in the collected data created by viral or unexpected hits. From there, the ballpark figures can be calculated by multiplying the estimate of copies sold by various price points, be it £10, £20 and so on.
"If you think about the amount of money that you're spending on your game, on production, on marketing, the number of hours that you've invested into making it over how long, how much money do you need to make?" Denby said. "Does this tally with the numbers that you're seeing at different price points?"
"If it's wildly off, that's a big red flag for you to start thinking about as well, before we even start thinking about setting the price. Is there a good return on investment potential, is this a viable project? Start asking these questions as well."
Data isn’t perfect
While collecting this sort of data and making informed estimates can be a good way to figure out a price point for your game Denby reiterated that these numbers are not set in stone, and are by no means a definite representation of potential revenue.
"It's a very common buzz phrase, data driven, but the reality is data isn't infallible," he said "Data doesn't understand the context of what you're working on, data doesn't understand the rhyme and reason of why you might want to do something slightly different, a unique opportunity or something like that."
The data also doesn’t give a sense of what a competitor or similar game did to achieve its sales numbers, or give a sense of numbers should things go badly. With this in mind, Denby said that it’s important to do due diligence and not over-interpret the result or take them too literally.
"We need to think about the potential versus the reality," Denby said. "This method allows us to see what the potential ceilings are; we can get a sense of games at this sort of price point making up to these sorts of numbers, but it's not telling us what their marketing spend was, what their marketing activities were, it's not telling us about the publishing that they did to actually drive that revenue or any partnerships they had.
"We just need to be careful that we don't over interpret those results, and come to unhelpful conclusions."
But the data collected can be instrumental in other ways, like finding a price point for a game, as well as other business decisions that’ll inevitably crop up on a development journey.
"Data analysis like this can be really helpful in identifying trends, tendencies, drawing out patterns, and it can highlight opportunities and risks," he added.
"When you're putting together your business plan, when you're thinking about your release strategy, when you're thinking about what price point to set, when you're pitching to a publisher, this data can help you plan and sense check that route."