The Pay-What-You-Want model is not a valid way to build a substantial PDF publishing business.
It is a publicity stunt, a novelty that will wear thin very quickly and sales will drop. Imagine if 6d6 had a back-catalog of 10 titles, all of which were Pay-What-You-Want. I suspect people would pay about the same as they did in the experiment but spread that money over an entire shopping basket-full of PDFs rather than a single title.
The other down side is reputation and branding. If 6d6 kept releasing our products using Pay-What-You-Want we would end up being known as the company that does Pay-What-You-Want. What 6d6 wants to be known as is as a company that produces innovative, high quality RPG products.
Why App Pricing Is A Bad Idea
The logic seems to be that by reducing price, sales will not only increase but increase significantly because when the price is so cheap it becomes a disposable item. At this price point, people will buy it without a second thought just like a can of pop or cup of coffee. After all, its only $1.99, if the PDF turns out to be rubbish, who cares?
However, for most people, most of the time, this is a bad idea.
Price is Elastic
The principal is known by economists as Price Elasticity of Demand.
In English it means that if you drop your price by 10%, you won’t see a 10% increase in sales. The reverse is also true. A 10% increase in price will not cause a 10% decrease in sales. Each product in each market place has its own elasticity and it is impossible to predict how any product will behave.
This is a critical point of sellers of all goods because if you can raise your price by 10% but only lose 1% of the sales, you generate a lot more revenue.
Why You Cannot Make Money with App-Priced PDFs
According to Google Analytics, the 6d6 RPG page received 507 Absolute Unique Visitors during the experiment which converted into 10 sales. A conversion rate of visitors to sales of 2%. This small figure is very high. Much higher than most web retailers see, much higher than we see with our range of 28mm miniatures and higher than we saw on RPGNow (currently 0.2%).
To sell 100 copies 6d6 would of needed ten times more traffic, or about 5000 unique visitors. As any blogger or small publisher will tell you, this is not easy but it is possible. With an average sales price of £4.46 per copy that would of earned me £446 before costs. Assuming I was paid Minimum Wage (£5.93) that works out at the equivalent of 75 hours work. Which is around about how much time I put directly into that PDF.
To make the same amount with App-Priced PDFs for £1 we would need to sell 446 copies which requires 22300 visitors. Getting that number of unique people onto a single page is really difficult for anyone other than a large company with an established brand.
But this assumes a sales rate of 2%. What if it was the same rate as we saw on RPG Now (0.2%)?
At the average price of £4.46 I would need 50000 visitors to earn myself the bare minimum of livings. At £1 we would need 223000 visitors. Not far off a quarter of a million visitors!
Even if Wizards put the Players Handbook for sale for £1 they could not get that level of traffic.
When To Use App-Pricing or Pay-What-You-Want
There are times when dirt cheap or novelty charging schemes may be effective.
- For small, cheap to make products – e.g. single encounters – products that only take a few hours to create and cannot command a larger price.
- Special Editions – If you have an old product then wrap it up in new packaging and ship it at a lower price. This is what Postmortem Studio has done with their Invaderz product and I suspect this will be cost effective.
- Charity and other special events – When the normal rules don’t or you need the extra publicity.
The Price Is Not Important
What matters is the price in context to how you market and sell a product.
What isn’t obvious is that it is no harder to sell expensive goods than it is to sell cheap goods. Both approaches to pricing need to fit into the broader marketing, branding and product development strategies.
Getting this mix of price, brand and product quality right is difficult which is why so many businesses fail.