In our line of business, we are always talking with game developers and designers. Some of them ask us for advice on pricing purchases for virtual goods in their in-App Stores and in-Game economies. This is an important question. On one hand, if goods are priced too high, people will buy them less often, but if they are priced too low, your mobile game may not be earning as much revenue as it can.
How to Set a your Goal ARPU
Your APRU (Average Revenue Per User) is a key metric in free 2 play games and managing your game towards an ARPU goal is as important as navigating your ship towards its destination. Ask yourself what is a good target APRU? What amount of revenue per user would make your game economy a big success? There are several ways you can approach this question to figure all this out.
- First, figure out how valuable your game is to the average user? What’s it worth to them? Is it worth 25 cents? How about 50? or $1 or even $5? Whatever you think it is worth, just say it. This number is a good indication of where your target ARPU lies.
- What amount of ARPU will provide you with enough money to promote your product into the future by giving you enough to spend on new user acquisition? The amount of money for getting a new user to play your game is often referred to as cost per install or CPI. After gathering data from over 20 ad networks I can tell you that the lowest CPI you can get is $0.5 and some companies even pay as high as $2 CPI. When your ARPU is higher than your CPI, you can be confident that the money is there, letting you scale your product up the ladder quickly.
- Additionally, ask yourself, who else is cutting into my average revenue per user? Perhaps you, like everyone else give 30% off the top to Google and Apple? If anyone knows a way around these guys, please let us know :-). What about other service providers or game publishers? If you have any of these, you will need to find more ways to increase your game’s ARPU so you can stay profitable.
How to Find Your Purchase Ratio
The target ARPU, the ARPPU & your Purchase Ratio – A Benchmark Formula for Pricing for In-App Purchases
ARPPU (avg. rev. per user) x Purchase Ratio (%) = ARPU ($$$$)
Pricing Strategies for Developing a Robust ARPPU (Avg. Rev. Per Paying User)
- Selling single-use virtual items or consumable resources in your store results in higher player engagement, more addictive game play, longer player retention and ultimately a consistent stream of revenue from your paying users.
- Developing an Energy Mechanics in your store. Something as simple as selling lives in your games can have a similar impact to that described in #1. This trick alone is known to boost your revenue by 10% to 30%.
- Sell upgrades for items in order to give players a sense of accomplishment and a feeling of progress. For as long as they feel like they are getting somewhere in your game, they will continue playing, which in turn, might lead to them making more purchases in the future.
- Remember to balance the power metrics of the virtual items you sell in your store with the difficulty curve you’ve developed in your game.
- Give players lots of options to choose from when shopping, but limit it in a way that makes them think wisely about spending upgrades for the purchases they make, and remember to never allow any player to accumulate enough gold coins to purchase everything in your store.
- Repeat point #5 above for paying users as well. As odd as this might sound, even paying users are at risk of getting bored, never let them be able to buy everything and anything they want in your store.
This article was originally featured and published on Gamasutra.