Are indie games too cheap? Should game developers charge more for their games? Will higher prices lead to lower sales? Indie game pricing has long been a topic of discussion.
In this article I will look at some Steam data to see if there is any evidence that indie game devs should charge more.
Indie game pricing strategies
There are 2 general schools of thought when talking about pricing.
- Maximising player base – According to this, indie games should be priced very low. It helps maximise the user base who would then become loyal fans of follow-up games. It’s especially true if it’s the first game for devs.
- Maximising revenue – This assumes low price elasticity. Your fans will buy the game whether it’s priced at $4.99 or $14.99. Indie game devs are charging too little for their games.
Both are valid in certain situations. That being said, the first method is highly overused for indie games. This only works if there’s a finite amount of competitors and price helps you to stand out. It doesn’t work if devs release literally tens of other indie games every day at the same low price point.
Indie game sales based on pricing
How to price an indie game? Is it better to set higher prices for a game to maximise revenue potential or does lower pricing attract higher audieances and help you build a community that will follow you to the next game?
I’ve looked at 22,000 self-published indie Steam games and summarised how many there are in each of the price ranges on Steam. Please see our methodology page for more information on revenue estimating.
It’s immediately clear that majority of the indie games price themselves under $10 and often under $5. By pricing your game $4.99, you are immediately competing with most other indie games. That’s signalling that your game is just another one of the thousands of games with questionable quality.
Higher prices lead to more sales, however, indie games priced at over $50 are actually earning less, showing that there is a peak price point. It seems that the benefit of increasing your price outweighs the decrease in the number of people purchasing the game, up to around the $50 mark. A boring economics nerd like me might call this an indication for low-price elasticity.
You can learn more about the pricing of different games on our Steam Analytics platform
Looking at median sales at each price point is a good start, but there is likely some self-selection bias here. Higher priced games are more complex, refined, have bigger development teams and likely have higher marketing budgets.
Does the complexity of the game play a role in pricing?
To tackle this bias, I’ve created a metric for how complex a game on Steam is. It’s a proxy for how much time was put into making it. Using minimum system requirements, I’ve assigned a complexity metric to each game from 0-100%.
I’ve sense checked this on individual games and even though there are outliers, it seems to be fairly accurate. NBA2K20 or Assassins Creed Odyssey have complexity ratings in the 90% range, Age of Empires 2 is at 30% and Elder Scrolls: Legends (a card game) is at 15%. As we’re looking at big datasets, the outliers are less of a worry when it comes to directional results.
I’ve used this to compare pricing of big studios and indie games across different complexity games and summarised the results in the graph below.
The most complex indie games, on average, cost as much as relatively simple AA or AAA card games. Now, that’s a pretty strong indication that there are very different approaches to pricing similar games for big developers and indies. Sure, big developers still have the marketing power and brand strength, but does this justify doubling or tripling the price?
The other takeaway from the graph is around price increases as the complexity increases. Simply put, indie games that take a few months to make are priced similarly to those that take a year to make. It’s only high complexity games that start to be priced higher. For AAA games, on the other hand, the price increases start very quickly with relatively simple games.
A different way of looking at game pricing
When looking at 2 of the most popular price tags for indie games – $4.99 and $9.99, a developer should at least consider the possibility of pricing the game at $14.99 or $19.99.
You can sell half the copies and still make more money when you price them at $19.99 rather than $9.99. To believe that a lower price is the right way to go, one has to think that more than half of the people who would otherwise buy the game at $9.99, would not buy it at $19.99 as the extra $10 pushes it over the limit.
The key question when making this decision is: If I price it higher, how many less people will buy the game?
4 key takeaways when thinking about indie game pricing
- Indie games have loyal fan bases who are willing to pay a bit more.
- The people that loved the game enough to buy it at $9.99 will most likely not be put off by $19.99. The hard part is to get people to find and buy your game in the first place, even for $0.99.
- A low price point may be signalling low quality. Depending on the game type, this might put potential buyers off.
- There are c. 500 new indie games released on Steam every month – almost all of them priced at under $9.99. This pricing sends a clear message: It’s just another indie game.
- Price is directly correlated to game complexity. It’s a rough indication of quality, polish and effort put into the game. We showed it in the graph above and we subconsciously use it as an indicator when we look for new games to play. A low price might be off-putting. If there was a used car for sale for $100, would you think it’s an awesome deal or would you ask what’s wrong with it?
- Indie games are about experimentation. You can always discount the game more if the sales don’t work out.
- You have to be ready to try out different pricing models and see what works. If you’re a corner shop and are up against Walmart, you can’t expect to win on price alone. Same applies for indie games.
- If the game ends up exceeding the expectations, you can’t price it up to benefit from it. However, if the game ends up underdelivering, you can always offer steeper discounts to attract more attention.
- Higher price gives you more money per game to spend on marketing.
- If you price your game $19.99 rather than $9.99, you can spend $10 per sold game1 on additional marketing, hiring a community manager or anything else you think can get your name out there. The ultimate challenge for an indie developer is not convincing people your game is worth a bit more; it’s getting people to see your game in the first place. I’ve written a guide for indie game marketing on the topic.
Find out what indie games are currently typically priced at on our Steam Analytics page!
I am Karl Kontus, one of the creators of Video Game Insights, a free game industry market research platform. If you have any questions or just want to talk about indie game business, get in touch on our Twitter page or join our Discord group!
- It’s not actually full $10 as you have to, at minimum, take off Steam cut from this, but it is significantly more than you’d have otherwise.