Volume vs Price: App Store Pricing Strategy

Before I delve into the numbers, I first want to introduce our latest game to the GarageGames community: Cavorite. Cavorite was our biggest project in terms of team hours (~1,000 combined) and contract dollars (~$2,250 upfront, excluding royalties). It was our fastest selling app out of the gate and, despite some recent slowdown, has garnered our highest app revenue to date.


What made Cavorite unique was the bigger investment up-front, very low royalties, higher launch price ($1.99), and zero advertising budget. None of those choices, however, were arbitrary. I used my past experience to guide the app's launch. So what I'm about to share I think is interesting but probably controversial -- especially since none of us working on Cascadia's games are getting rich!

Traditionally, I hear the strategy in the App Store is volume. That is, you drop the price to its lowest point (either $0.99 or freemium), try to climb up the ranks to gain visibility, and presumably some sort of positive feedback will occur where rank will translate into greater volume that in turn pushes up the rank. Here's the breakdown in terms of copies purchased of our apps.

I think Zombie Karts is the perfect example of volume pricing. Not only did it launch at $0.99, I also opted to bundle it as part of the All-in-1 ZombieBox, which had 10 zombie-themed apps together for a dollar. It was the opposite strategy of Mini Shogi, which has always been $1.99 and never on sale, and Xeno Sola (aka Starcassonne), which launched at $2.99. So the question is, how has volume (for us) translated into revenue?

As you can see, a higher volume of sales has most definitely not translated into better income. In fact, the higher priced apps all have larger slices of the revenue pie despite having sold fewer copies. Here's another way to look at it: revenue (post royalties) per copy sold.


I think that sums it up pretty well. In short, it's hard to make money when you're getting 27 cents per copy sold. Hence our logic in pricing Cavorite at $1.99 out of the gate. Much like Xeno Sola, it earned the bulk of its revenue in the first 8 weeks after launch. Secondarily, I think it shows that the occasional price drop helps maintain visiblity and is not an option at $0.99 -- unless you have a freemium strategy also readied.

Finally, however, I thought it best to comment on profit. That is, how does the revenue pie change if I deduct project costs from each app?

The first thing that you've probably noticed is Pinball Hockey falls off the chart completely. To date it has been a money loser. Its advertising budget exceeded its revenue alone. It's on track to break even sometime in early October if its sales stay steady. The second thing to notice is that Zombie Karts was easily our most profitable app. While this may sound like a plug, this doesn't totally surprise me. I designed the TGB Kart Kit with the intention that folks could create appealing apps on a slim budget. Finally, despite the "big" budget, Cavorite has been our second most profitable app. I think that shows if you take the time and money to make a quality app, you'll be rewarded.

So what's next for Cascadia, given our experiences? For starters, even though I don't count my personal hours as a cost (since I don't live off games), I do keep in mind how to best utilize my time. That means there will be new focus on Cavorite in the form of ports (Mac App Store soon, possibly AppUp after that) and content expansions. We want to see if the big content update strategy works and it's time to try out new markets. We also plan on an experimental freemium app. After that, expect some fresh focus on kits.