It's a never-ending debate: On one hand, temporary discounts on IAP prices will generate a quick spike on revenue. On the other, if badly managed they can harm the baseline revenue.
To discount or not to discount? And how to do it to avoid issues? In this article we propose an answer, and share some tips on how to limit long term negative effects derived from running offers on IAP prices and other game content.
Quick disclaimer: This is a short follow-up to my article on IAP packs balance and design. So you may want to check it out if you haven't already.
Note also that I won't speak here about how to build and present those offers. If you're interested on that, I suggest you to check this amazing article from Matthew Emery.
SHOULD I RUN OFFERS ON MY IAPS?
Short answer? Yes.
I believe that, in most games, running discounts on IAPs at it's a good idea because:
You will accelerate revenue that would've been generated eventually.
This is inherently good because it will secure that spending, even if some of those players then churn. And it also provides them extra incentive to keep on playing until they deplete their investment.
And given how competitive the current F2P market is, you need every single advantage you can to accelerate your player's return of investment. So that you can reinvest that money into buying users faster than your competition and escalate your business.You will generate revenue that wouldn't have been made in any other way.
Since players may be convinced to make a purchase they were not expecting to, due to the sense of opportunity of getting a better deal (or the fear of losing it).
In general, long term non-paying users that there's just no way to convince to pay are free game for presenting them with the insanely aggressive offers, since you were not going to make any money from them anyway.
Just make sure you don't follow an easy-to-stop pattern: On this post at the RAID: Shadow Legends reddit, engaged players have realized that shutting down their spending gets them the best deals in the game, and actively encourage others to limit their spending to get them. Yikes!
Just make sure you don't follow an easy-to-stop pattern: On this post at the RAID: Shadow Legends reddit, engaged players have realized that shutting down their spending gets them the best deals in the game, and actively encourage others to limit their spending to get them. Yikes!
Sometimes your players will expect offers and discounts on your game.
No matter what you do, on some situations players will organically expect offers to happen. Therefore generating to some degree the don't spend until an offer effect.
A clear example of this are seasonal celebrations such as New Year's Eve, 4th July, or Black Friday... These are great moments to held offers as well because your game is likely to have an extra flow of users since the players will have more leisure time.
Players will expect big discounts on Black Friday and therefore moderate their spending on the week prior, etc. This is going to happen no matter if you plan to run Black Friday offers or not. But if you don't run any offer on that day, they won't spend the money and might be mad.
Players will expect big discounts on Black Friday and therefore moderate their spending on the week prior, etc. This is going to happen no matter if you plan to run Black Friday offers or not.
But if you don't run any offer on that day, they won't spend the money and might be mad.
Potential negative effects
But before we all start running hyper-aggressive discounts of 90% off on all your currency packs, it's worth talking about the dangers it involved if you make mistakes.
The biggest risks of a badly managed discount strategy are:
It can teach players to avoid buying until the next good offer.
The players that generate most of the revenue are usually the ones that have been in the game for a long time already, and plan to remain for a long time too.
What this means is that paying users have more patience that what game developers running offers tend to think: So why would they buy something at the full price if they know that soon enough it is going to be a big discount on it?
Running aggressive discounts with high periodicity, in a predictable pattern and without no limitations is a common mistake that will provide great results short time.
But soon it will generate a situation where the game needs to run constant, aggressive offers to keep on generating any significant revenue at all.
What is even more problematic is that players will remember the history of the deals offered to them. And therefore ignore lower discounts as bad deals, and only have a feeling of opportunity when the offer is extremely aggressive, thus forcing you to lower prices even more.
Most games employ a wide range of strategies to avoid this issue. Among them the most popular and effective ones are justifying their exceptionality under some special celebration as well as adding a purchase limit, or simply setting them up properly to avoid predictable patterns.
Clash Royale runs offers every single day, but in a way that strongly gates their access: The pattern is unpredictable (the player doesn't know what stuff will appear on the Special Offers and Daily Deals, and they actively avoid offering wide-use currencies) and the offers have strict limits (can only be bought them once per day).
Clash Royale runs offers every single day, but in a way that strongly gates their access:
The pattern is unpredictable (the player doesn't know what stuff will appear on the Special Offers and Daily Deals, and they actively avoid offering wide-use currencies) and the offers have strict limits (can only be bought them once per day).
It can overflow the economy with valuables.
Remember that paying users are playing the long game here: If offered a valuable resource at a great discount, most of them won't hesitate on spending at a higher pace, knowing that it will save them money on the long term.
If the developer fails to deal properly with that increased flow of resources, this will a long term handicap on revenue generation because key groups of paying users will be sitting on piles of hard currency with not enough places to spend them.
And therefore, they will have no reason to buy IAP packs.
Not realizing this resource overflow can even be more dangerous: the developer may try to counter the low baseline revenues by running even more aggressive offers on a continuous cycle (because the offers will be less and less effective), thus injecting even more currency on the system and worsening the problem.
As a consequence, developers must monitor the balance of key resources on the inventory stocks, and offers should come together with mechanisms to drain the extra resources from the economy (like a demanding event, or maybe an attractive item offer where players can spend that extra currency...).
In Monster Legends we used to run heavy discounts on IAP with certain periodicity, but offers were synchronized with a range of gem-sink liveops, or the critical final hours of big time limited events, in order to make the players gem stocks return to the usual values.
In Monster Legends we used to run heavy discounts on IAP with certain periodicity, but offers were synchronized with a range of gem-sink liveops, or the critical final hours of big time limited events, in order to make the players gem stocks return to the usual values.
It can actually make you make less revenue.
Offers can generate what's called a hangover, which is a period where players limit their spending for whatever reason (having too much content, having went overboard on their spending so they need to save...).
This has to be carefully checked, because in some cases the loss generated by the hangover can exceed the profit. This is particularly dangerous on big offers.
