If there are multiple groups of potential purchasers who have different levels of willingness to pay, if you can identify some characteristic of people willing to pay more, then you can create a version of the product that targets that characteristic and thus the group.
Price discrimination (“differential pricing”,[1][2] “equity pricing”, “preferential pricing”,[3] “dual pricing”,[4] “tiered pricing”,[5] and “surveillance pricing”[6]) is a microeconomic pricing strategy where identical or largely similar goods or services are sold at different prices by the same provider to different buyers based on which market segment they are perceived to be part of.[7][8][2] Price discrimination is distinguished from product differentiation by the difference in production cost for the differently priced products involved in the latter strategy.[2] Price discrimination essentially relies on the variation in customers’ willingness to pay[8][2][4] and in the elasticity of their demand. For price discrimination to succeed, a seller must have market power, such as a dominant market share, product uniqueness, sole pricing power, etc.[9]
“Product versioning”[8][16] or simply “versioning” (or “second-degree” price differentiation) — offering a product line[13] by creating slightly differentiated products for the purpose of price differentiation,[8][16] i.e. a vertical product line.[17] Another name given to versioning is “menu pricing”.[14][18]
In this case, you’re going to have something like a group of “value customers” who care a lot about how much they need to spend on the game. And then you’re going to have “premium customers” who aren’t too fussed about what they pay, but want the very fanciest experience.
If you had just one version, sold the game at the “value customer” price, then you’d lose out on what the “premium customer” would pay. If you sold it at the “premium customer” price, then you’d have a bunch of “value customers” for whom the game would no longer be a worthwhile purchase, who wouldn’t buy the game, and you’d lose the sales to them. But by selling it at multiple prices, you can optimize for both groups.
EDIT: l’d also add, on the technical rather than economic side, that I’ve messed around with having a custom HRTF model myself, as Linux (and maybe elsewhere, dunno) games that use OpenAL let you specify a custom HRTF model in the config file. My own impression was that any impact on audio experience was pretty minimal. Might be different if someone had really weirdly-shaped ears or something, dunno.
It pleases me when I use a service at a low price tier with the knowledge my usage is being subsidized by those willing to pay more for features I deem unnecessary.
It stinks when the basic tier just doesn’t cut it. But overall I’d probably rather have power users subsidize things.
It starts with increasing price for specific customer > next decrease the normal features for regular customer > add the same feature for extra paying customers > brain wash people into believing its normal and who are protesting against it are cheap > rinse and repeat
It’s called price discrimination.
If there are multiple groups of potential purchasers who have different levels of willingness to pay, if you can identify some characteristic of people willing to pay more, then you can create a version of the product that targets that characteristic and thus the group.
In this case, you’re going to have something like a group of “value customers” who care a lot about how much they need to spend on the game. And then you’re going to have “premium customers” who aren’t too fussed about what they pay, but want the very fanciest experience.
If you had just one version, sold the game at the “value customer” price, then you’d lose out on what the “premium customer” would pay. If you sold it at the “premium customer” price, then you’d have a bunch of “value customers” for whom the game would no longer be a worthwhile purchase, who wouldn’t buy the game, and you’d lose the sales to them. But by selling it at multiple prices, you can optimize for both groups.
EDIT: l’d also add, on the technical rather than economic side, that I’ve messed around with having a custom HRTF model myself, as Linux (and maybe elsewhere, dunno) games that use OpenAL let you specify a custom HRTF model in the config file. My own impression was that any impact on audio experience was pretty minimal. Might be different if someone had really weirdly-shaped ears or something, dunno.
It pleases me when I use a service at a low price tier with the knowledge my usage is being subsidized by those willing to pay more for features I deem unnecessary.
It stinks when the basic tier just doesn’t cut it. But overall I’d probably rather have power users subsidize things.
It starts with increasing price for specific customer > next decrease the normal features for regular customer > add the same feature for extra paying customers > brain wash people into believing its normal and who are protesting against it are cheap > rinse and repeat
In before: “Dude, you don’t need high res textures or better audio. I play on lowest setting anyways.”
I think most people playing video games are familiar with the phenomenon.
As a recent example Dragon Ball Sparking Zero has versions for: au$115, au$160, au$180, or au$390.
Au $115 is around $76 usd
FYI