Reddit reviews Priceless: The Myth of Fair Value (and How to Take Advantage of It)

It's actually not that simple! People seem to prefer prices that end in 9 over prices that end in some of the smaller digits like 2 or 3, even when it results in paying more!

In other words, people will buy something priced at $4.99 at a higher rate than people will buy that same thing priced at $4.93. For an excellent read on this (and related topics), there's a great book called Priceless by William Poundstone.

Looks like someone read Priceless: The Myth of Fair Value.

This is where all of this post's ideas come from. If you want a more in-depth look, read the book.

Yeah, not making an argument here, but there's a lot of things to consider when looking at the monetization schemes of other games. I know the Smite model has been brought up a ton, so I'll give my 2 cents on that.

You have to remember, firstly, that when Smite and HON departed the price-per-hero model, they already had significant amounts of content (way more than Dawngate), and were struggling to monetize it. It was a change borne out of necessity. I think Dawngate could have gone that way, but certainly wasn't ready in beta. Moreover, it's really hard to go from a Smite to a LOL model, so even if you did plan on it, you'd want to launch with a LOL model first, gather some data, and then pull the trigger.

Also, DOTA is always brought up... now let's forget for a moment that Valve doesn't need to show profit. Both DOTA and HON (not as familiar with Smite) are designed such that you need more access to all champs, as there are some hard counters that are disadvantageous to compete without. Limiting champion choice actually helps new players by putting them against less meta variety, and without a robust guides system like HON (or even with), that hurts early experience, esp. in game as different as Dawngate. LOL had a different champion design philosophy that was less champion-specific in meta, and Dawngate was even less so with the brilliant role system.

The pricing is a long ass subject... suffice to say, a lot of it was designed to help us learn what players valued, and that shapes future content. There was also lots of guesswork. And maths. Pricing is a fascinating, endless subject, more psychology than science, if you're interested I recommend this book to start: Priceless: The Myth of Fair Value

I absolutely did want some kind of starter pack system, but that never took off... there were just too many other priorities. No matter how I sliced the data, I couldn't prove that player were in fact dying to try every shaper. Again, what people say and what they do doesn't always match.

I had a crazy idea at one point to do an Amazon prime like system of a small flat fee for recurring bonuses, deep shaper discounts, and exclusive special access. Proved the profit potential in my modeling, but alas... priorities yo. Haha!

Yeah, if I had to pick 2 things that would have been game changers for Dawngate, first-time user experience (FTUE) and progression were always by far the most important to me. Teaching people to love your game is the most important step to getting them to spend, period.

I'm not aware of a whole lot of books specifically about accounting, but here are a few recommendations of books about finance, economics, business or that I just think might appeal to /r/accounting.

Anything by Michael Lewis. Liar's Poker has been mentioned elsewhere, but The Big Short is excellent as well.

Ben Mezrich has written some good books about business, but not really accounting specifically. He's most famous for The Accidental Billionaires which is about Facebook (I believe it, along with The Facebook Effect were the main sources for the movie The Social Network) and Bringing Down the House which was about the MIT card counting team and inspiration for the movie 21. You might be interested in Ugly Americans or Rigged though.

Here's a few more that are a little less fiction-y:

Too Big to Fail by Andrew Ross Sorkin

Traders, Guns and Money by Satyajit Das

Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay

Priceless: The Myth of Fair Value (and How to Take Advantage of It) by William Poundstone

EDIT: Now with links!

Priceless: The Myth of Fair Value (and How to Take Advantage of It)
William Poundstone
http://www.amazon.com/Priceless-Myth-Fair-Value-Advantage/dp/0809078813

I'm not sure what the nature is of your service precisely, but I can throw out a few thoughts.


The pricing you offer could be affecting your customers' decision about signing up for the trial in a couple of ways. Here are two examples that came to mind:

1. Even if there's a free month or so of trial, they might not be able to commit for their company to a certain amount of money, so there's no point in trying out the product.
   
2. If they need to use the company credit card for signing up - even if the first month is free - a significant portion of the purchase churn and effort is essentially happening at this point since this is when they'll to fill in company credit card information and perform whatever bureaucracy they need to do.
   
   
   To pick up some more customers falling into category 2, and depending on the nature of your service, it might be interesting to offer a truly free trial month where all they need to do is sign up with their email instead of already signing up for billing. (It would be important to make sure the prices aren't found anywhere near the "free trial" signup.) This could potentially allow many more customers to understand the benefits of your offer who might be willing to commit to a higher price at the end of it.
   
   
   Something else to think about - people like comparing prices. An additional benefit of offering alternate pricing schemes is that the prices you choose there will make certain offers look more or less attractive depending on your pricing.
   Example: Offer two plans. Plan 2 offers major benefits over Plan 1, but only costs 10% more. Plan 2 looks more attractive, and Plan 2 might have been your initial offer. It's the same idea as McDonald's "super size me" offers.
   
   
   In case you want to do some further reading on pricing:
   
   

• Priceless, by William Poundstone (Amazon link to the book)
  
• Price anchoring (Wikipedia article for "Anchoring", there's much more to read about price anchoring online.)

So there are two things I would like to bring up, not because I disagree with you wholly, but because I think it's worth shedding light on how this problem persists. (For what it's worth, I'm a lawyer, and while I mostly handle commercial work now, I used to focus on IP).


First, the most recurring and simple issue: Litigation is a very expensive and unpredictable meat grinder.

The longer I practice the more I am convinced that the civil court system in America today is used less as a way to administer justice as it is to threaten/fight wars of attrition. Parties in two-party (as opposed to class action) litigation do not go to court so that a judge can find the answer to their issue and grant some award or order - they do it because they are extremely mad and want to destroy the other party. It may start with a genuine legal claim, but things snowball, parties build grudges, and they become less interested in getting their money than in being proven right by a person in a robe. Or they have secondary goals, such as squashing their competition (which is quite effective if your competition is smaller than you - a $1,000,000 company is a great target because they have a lot to lose but they do not have much to fund their fight with). The vast majority, as in more than 95%, of claims are settled out of court because for the most part the law is clear and parties consult lawyers who listen to the facts and tell them "you almost certainly win/lose" so they choose to avoid the costs of the courts and just deal with it privately. When that does not happen, there are reasons for it. Either the case is very complicated and has interwoven claims such that a win is less predictable, or in other cases they just want to cost the other party a large amount of money and send a message (see SLAPP suits, for example). On top of that, jury verdicts are super unpredictable, and the awards they grant even moreso. In cases where parties might experience real economic harms of $1500 you see awards of $15,000,000 (there are whole schools of thought about how to make this happen but it just turns out that no matter how much you ask a jury for, they tend to just give you a little less than that, and there is no real limit or logic to this (this book has some great material on this subject) and judges rarely overrule an award for being too high).


In trademark cases, you often have multiple claims coming at once. For example, they might claim that you are interfering with their mark, and also their trade dress, and also a design patent, and maybe throw in some trumped up copyright claim for good measure, along with a bunch of state law unfair competition claims. So where you propose that the case should be simple, "the only lawsuit that should come up..." etc., it is rarely the case. The extra claims only need to have a glimmer of promise (be "colorable") and they are added so that the other party has to spend more. Trademark cases also require answering whether there is a "likelihood of confusion," and that is an expensive fact to prove/disprove.


Second (and this is particularly prominent in patent and copyright and not well recognized - I hope to publish something about it some day), there is a huge degree of passive collusion (I'll describe later) in litigation, which shapes the precedent, i.e., the law, such that IP laws end up, through court precedent, way stronger than they were when the legislature wrote them. To your point about claiming that the trademark should not have been granted in the first place, there is far less precedent where parties argue that the mark/copyright/patent is invalid than there should be, and this, I believe, is because parties suing each other usually come from the same industry, and it is not in their broader interest to create precedent invalidating the types of IP that those industry participants rely upon. For example, many IP scholars and public critics of IP laws hold the view that there should not be any software patents (and that is arguably the state of the law currently) but who sues each other in software patent cases? Software companies. Do you think software companies want to put law on the books that says software is not patentable? Of course not. In music copyright cases, parties always have to pretend that the industry is not absolutely rife with borrowing of material, and music industry actors almost never use the fair use defense. It's odd, because it is a pretty robust and flexible doctrine. It probably would have saved Robin Thicke a few million in his Blurred Lines lawsuit, but they did not try. Weird. This is, I believe, because the content industry hates fair use, so they don't want more precedent on the books. As a result they end up tiptoeing around the issue and making weird arguments about very specific legal issues that don't make full use of the law. You only see significant changes in the law, like cases going to the Supreme Court, where the parties are not similarly situated, like a pharma company suing a university, or the MPAA suing Sony for making the Betamax player (Sony did not have its hand in movie production at the time), or the RIAA vs. Napster, Viacom vs. (a young, and not making its own shows) YouTube.


TL;DR - The court system really is that expensive, and the "adversarial" system which generates our law is actually filled with collusion.

It's called price anchoring, and it's the same idea that retail stores use to drive sales. I first read about it in this book, but Mint's blog has a good write-up.

I think that with the integration of increasing perceived value techniques, Jeff Walker style Launch marketing, some persuasion supplementation, using stories in marketing, Neuromarketing, Web Copy techniques, and many others, all put together in combination - anything's possible. How possible something is I think depends on your perception, and how and if you are familiar with persuasion and how businesses persuade and make something sound 'fair'.

Second, I don't actually mind getting pirated. If those people want it and can't afford it, they should have it. I don't want to stop them. I don't view it as a loss.

I'd rather not go the route of donations... it's honestly too much work.