Mostly Tigerproof

Sophie Houlden ran an interesting experiment with the pricing of her game, Swift*Stitch. Each day for a week she picked a new price for the game. Sometimes her prices were higher, sometimes they were lower, and she would ostensibly decide the new price based on a whim.

Demand Curve

There’s probably a more scientifically rigorous way to map out a demand curve. Sophie’s graphs are in chronological order, and they show an upward trend over time, so I don’t want to draw too much of a conclusion without being able to control for publicity. I’d love to see the graph for conversion rate over price. But it’s still really interesting data. The results from the pay-what-you-want sales tell you what people want to pay, but this tells you what they will pay.

The values are marked with blue markers. The red line is the number of sales you’d need to make a constant amount of revenue (the mean daily revenue for the week). In other words, the red line is what we’d predict if pricing had no effect on your profitability whatsoever.

Here’s a graph of total revenue for each price point, with a log scale for price, because $77 is a huge outlier!

I also did the dweeby thing and tried to fit a price elasticity of demand coefficient to it. If it’s as low as -1.0, (which is total revenue staying the same despite price changes) then video game consumers are as price sensitive as people buying soft drinks. If it’s as low as -1.5, then video game consumers are as price sensitive as people buying air tickets for overseas holidays.