Doubloon Pricing Strategies Virtual Goods Casual Connect2010

Pricing Strategies for Pricing Strategies for Virtual GoodsVirtual Goods

Eric 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 virtualdoubloon.comEric Gonzalez, CEO, Doubloon virtualdoubloon.com• Everything You Need to Run an In-Game Virtual Everything You Need to Run an In-Game Virtual

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

and Gifting.and Gifting.• Focused on Market Intelligence, benchmarking to Focused on Market Intelligence, 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 but it You Can Make Lots of Money but it Requires Informed Decision MakingRequires Informed Decision Making

1. More Customers 1. More Customers

2. More Retention 2. More Retention

3. More Revenue3. More Revenue from Each Userfrom Each User


Context: The Big May SqueezeContext: The Big May Squeeze

http://mthink.com/revenue/blog/chris-trayhorn/facebook-takes-profit-out-cpm-buyshttp://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/fhttp://techcrunch.com/2010/05/11/facebook-darth-vader-zynga/acebook-darth-vader-zynga/(May 2010)(May 2010)

40% New Referrals Gone40% New Referrals Gone


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

http://techcrunch.com/2010/05/11/facebook-darth-vader-zynga/

http://techcrunch.com/2010/05/11/facebook-darth-vader-zynga/

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 PricingVirtual Goods Pricing

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

• Behavioral Economics Behavioral Economics • We are We are GoodGood at Assessing at Assessing RelativeRelative Value Value• But We But We SuckSuck at Assessing at Assessing Absolute ValueAbsolute Value• Introduce Subpar Items at Introduce Subpar Items at • Par Prices to Boost Sales ?Par Prices to Boost Sales ?• A/B TestingA/B Testing


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


#4 “Stealthy” Price Changes#4 “Stealthy” Price Changes

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 Samaritan#3 Be A Good Samaritan• Get First Time Get First Time Buyers Comfortable Buyers Comfortable With BuyingWith Buying

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

• $7 to $12 USD$7 to $12 USD


• Use the Crafter LifecycleUse the Crafter Lifecycle• Profitable at FirstProfitable at First• Then Dip Into the RedThen Dip Into the Red Just Before Max LevelJust Before Max Level• Price in vCurrencyPrice in vCurrency (Casino Psychology)(Casino Psychology)

#2 Arbitrage Segmentation#2 Arbitrage Segmentation


#1 Dynamic (Airline) Pricing#1 Dynamic (Airline) Pricing

• Visible to UsersVisible to Users• Price May Rise asPrice May Rise as Quantity Nears ZeroQuantity Nears Zero• 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 SellUse a Few Simple Strategies Sell• 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

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Doubloon Pricing Strategies Virtual Goods Casual Connect2010

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