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How to Set Prices in Social Games – Guestpost by Matthew Warneford (CTO of Dubit)

By Sebastian Sujka

Selling virtual goods is the main revenue stream for every successful social game developer. People talk a lot about the quality and functionality of those virtual goods but usually ignore the central element for a virtual economy: the pricing of virtual goods. Here are some experiences that we at Dubit have made. Generally speaking, we have been most successful pricing the virtual items in proportion to progression through the game. We usually structure the game so that new items are unlocked each time the player levels up. For example, when the player reaches level 2 they unlock three new items in the store. In our model the price of those three new items are more expensive than the level one items. In other words, the price of items are loosely linked to the experience level they first become available at.

With this approach we can build a mathematical model for pricing the items. But first we need to model the progression curve through the game – we need to decide how many experience points are needed for each level. Typically the number of experience points increases between levels. Once we have our level curve we’re getting close to pricing our goods. In our games we link the awarding of experience points to awarding virtual currency. In other words, whenever a player earns experience points they also earn virtual currency in the same ratio. For example, for every experience point the player earns they get 5 virtual currency coins.

If the player needs to get 100 experience points from level 10 to level 11 we know they will end up earning 100 x 5 = 500 coins. We might decide that each time players levels up they unlock 5 new items in the shop. But usually we don’t want the player to be able to buy everything they unlock – we want them to have to think about which items to buy. If we decide they should only be able to buy 3 of the 5 items then we can say that the average price of a virtual item *at level 11* is 500 / 3 = 166 coins. Of course, we would not set each item at that price. But that approach allows us to model roughly the price of items at each level – we then manually tweak those prices.

This process is simple enough providing that you can calculate the level curve. That level curve is defined by four variables:

  • Time before a player is primed to spend
  • Time saved by spending money
  • Experience levels progressed by spending money
  • Experience level after one hour of play time

We have also created a free ‘economy modeling tool’ – simple sliders to control all the input variables and spits out the level curve, and the average price of items at each stage of the game. For more details just visit the blog post about our tool.

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