Today, when games become almost a scarce product in the Russian market, more and more guides appear “How to save on the purchase of games in Turkey/Kazakhstan/some Lokhov service to buy games with a fierce margin”. And if you do not take into account the last option (which is a real divorce according to the type of payment system QIWI, but more on that another time), then the use of VPN for the purpose of virtual move or real move allows not only to return the possibility of buying games, but even save on them. In this blog, I will try to explain why manufacturers and publishers can afford to lower prices for their products in entire countries and regions and how they manage to earn on this.
This is my first serious article on SG, so be more kinder. The opinion of economists is especially welcomed because even my teachers at the university could not help with this topic: D
Chapter 1. And how is the price formed in general?
To understand how the pricing of companies takes place, it is necessary to conduct a small accounting analytics, which will give us some clarification of how the basic price is formed.
Now there will be a lot of terminological water, but without it it is not possible to understand pricing in principle. So sorry!
This issue was raised back in the XVIII – XIX centuries. Since that time, a huge number of explanations have appeared that have a huge resemblance to each other, so explaining to your fingers it will be very simple. The price is formed from two components: cost and margins. At the same time, the cost also contains two more components that play an important role in our comparison of prices in the regions: Direct and indirect.
To direct costs The direct costs of production include: raw materials of various kinds, as well as wages of workers. Indirect costs – Those that do not relate to production (The work of cleaners and managers, depreciation of production, costs for renting premises, marketing, buying the next yacht, etc. D.).
Margin, Like the cost contains two components: Basic margin – This is the very gold for which the company works (T.e. The same profit) And Additional – It contains additional costs on logistics, in t. h. duties, as well as tax deductions for the type of VAT and T. D.
Based on the above theses, you can collect the following formula for determining the price:
Price = direct costs + indirect costs + taxes + profit
Price per unit = Price / batch release amount
This economic theory will always be relevant For material values. Games, Subscribes for services and other donated tremors are intangible, but pricing on them works in a similar way to other details on each aspects that will be explained below, but in short, there are two sections in the production of accounting, which are actively used in the formation of cost: fixed assets: fixed assets and working capital.
Fixed funds – These are long -term assets, the price of which for several years is transferred to the final product of the enterprise. Examples are buildings, structures, equipment, transport and other equipment with an estimated service life of more than a year).
Woodpits – These are short -term assets. They instantly go into production and their cost completely goes into the cost of products. An example is any raw materials used at the enterprise, also electricity, housing and communal services, etc.D.
Thus, we are already beginning to see some difference in the formation of the price of the game: the games do not need any raw materials, which means their price is formed on the basis of other indicators that I will tell you about now ..
Chapter 2. “So what is the peculiarity of this of this pricing?”
The regional pricing policy in https://mobileplaycasino.co.uk/withdrawal/ terms of material values is very trivial and it can be explained. For a product that can be in a certain excess in other countries, it will feel more expensive due to obvious shortage, logistics costs and tax legislation.
But modern games do not require logistics costs and is not a “scarce” product. Therefore, in determining their prices for the regions, other factors play. In this accounting, they best play the role of the indicator, the usual GDP economists and a number of other indicators demonstrating the economic situation of the country.
But these indicators alone will be not enough. The cost of games, mainly consists of the costs of the work of workers and some deductions from fixed assets. As I described above, the cost takes into account the work of workers, but there is one nuance: the work of the worker and his salary are two completely different values! In this case, the work of the worker is the money amounted to the cost of goods. Labor is very difficult to subject an objective monetary assessment, which is why conflicts may arise on the basis of robbery of workers and low wages. Wages are the amount of money that is paid for the implementation of this very labor. Forms of wages are different, but all of them often do not have an objective binding to the work performed in a particular profession.
To make you even clearer, I’ll take as an example a programmer who is beloved by everyone. In the Russian market, the amounts of wages can reach almost up to 200 thousand, although these are isolated cases and most often the average salary of the programmer is in the region of 80-100 thousand. At the same time, we can periodically see any scandals that programmers today work 12 hours a day, are forced to sleep at work after a working day, forced to fork out what the company should provide and generally should work without weekends, holidays and other buns.
I would like to ask some programmer from Mundfish or FNTastic “how much they earn”, but who am I to ask them? 🙁
Speaking about the value of labor in general and the developers of games, in particular, one interesting correlation should be noted. As we can guess, the profession of ITshniks is one of the promising. Promising in the countries of the first or second world. While these sorcerers come up with applications on menstrual cycles and another Grindilka with beautiful wifa, in the same Africa, children starve (that’s why I wrote it. ) And these same programmers are unlikely to be able to invent bread from zeros and units.
Talking about the income level in different countries, I try to draw one parallel, which is already known to everyone: The price of the game depends on the standard of living in the country. And the cost of the work of developers in one region, which has advanced technologies, in any third world country will be regarded almost 4-5 times cheaper, or may not find any demand at all.
You also can’t believe that Argentina manages to surpass Turkey at the prices of games and Russia in the level of citizens’ income (the data is clearly medium, but still amazing)?
The ideal comparison of the income level of citizens and prices for the game could give many answers and in the next chapter now I will explain why these formulas will be non -working.
Chapter 3. The perfect formula for earnings on homeless!
With the conclusion from the last chapter, the question immediately arises: “And there are any formulas by which it is possible to predict the possible price in my country?” Answer: No. Today there is no logical formula. There are two reasons for that:
In economic theory, such a negative margin is a very young practice and No economist has yet developed, at least an approximate theory correlations of living standards and regional prices for intangible assets. (Personally, I did not find a single scientific literature/articles on this issue)
Regional pricing policy – absolutely voluntary event. As you can see, most often, the policy begins to turn at least a year after the release of its product and only a number of publishers are ready to reduce the price for certain regions, from which they know that they will definitely not collect money if they sell at full cost. (Personally, such a policy seems to me an example of the inclusiveness of a healthy person)
Most likely, each company owns its internal formulas for calculating the price of the release. But as I wrote, regional policy can work not only on the release, but also years. Such a technique of pricing is actually explained by a very simple factor, which I, oh, imperceptibly mentioned in the first chapter – depreciation. Games are aging, they lose their peak of popularity and therefore the developers boldly lower prices on them, (their goods are endless). At these moments, as statistics shows, the price in the poor regions falls much more than in the rich. But all the same, such a move looks like the sale of used property on Avito, and not a regional policy.
Results. What I took out of this?
Everyone draws conclusions for himself. Personally, I realized that the policy of regional pricing is wild jungle, in which few people go.To. This topic is relevant only for our games, donates in them and subscriptions to various services. I am sure that my thoughts with the coffee statistics are unlikely to live up to your expectations, and in the process of study I myself understood how little information and laws exists in this segment. I will try to continue to develop this topic, perhaps I will even write a diploma on this topic, but everything that I could tell you today. Happy New Year: 3
If I live until 2025, I will definitely pour a more detailed version of this reflection with all possible and impossible methods for calculating the formulas for which studios can work, more objective statistics and intelligible clarification to it. Once again, sorry for “pseudo -scientific” and “hack”. I will work on it.
The best comments
The price is in the range between the maximum price that the potential consumer is ready to pay (that is, not a single, and the market segment to which the product is focused) and the minimum for which the manufacturer is ready to give its product (usually in the area of break -in). Given the variety of consumers and their capabilities, as well as the features of the pricing policy within the company (that there are their analytical departments based on research and forecasts will propose?) – may get the impression of the jungle. In my opinion, now the prices of games are more or less distributed in their niches: how much will the new game be approximately in a certain category in such and such a region can be correctly assumed in advance.
Well, the minimum price of games is clearly strange, the whole article is about this. Personally it seemed to me that potential production costs in different countries of the same product would be very different. No wonder the production of smartphones is deployed in China/India/Africa. Although the studios are located in developed countries, it seemed to me reasonable that the work of potential programmers in different countries could be an important indicator in the formation of the price of a particular region.
I had a couple of assumptions that the sales departments have their own coefficients that underestimate prices in the regions, but after conducting small calculations, I realized that for each game there is some separate coefficient that the bosses clearly calculate at the meetings, just as meetings of the Central Bank on a key rate, where they reason to increase/lower it today?”. In general, I did not add such assumptions not supported by any calculations and theorems.
Perhaps I misunderstood:
… it seemed to me reasonable that the work of potential programmers in different countries could be an important indicator in the formation of the price of a particular region.
But, in my opinion, the cost of the work of programmers in a certain region can be applicable only as a kind of indicator of the general payment of the consumer of the corresponding market and will not affect the price of the game directly, but only indirectly, taking into account the cost of the work of programmers, it is appropriate to use as such an indicator. If you hypothetically imagine that to some region with high paymentness and demand for games, the work of programmers is paid very low, but the quality of their product meets the requirements of the customer, then the price of the final product will still strive for the maximum possible that the consumer is ready to pay.
This economic theory will always be relevant for material values. Games, software, subscriptions to services and other donated tremors are intangible, but pricing on them works in a similar way
How is it in a similar way? If, regardless of costs, the price will be 60 bucks (well, now 70)? There is a game of a biomutant that made three cripples, and there is a cyberpunk. Stand +- the same one 50 bucks, the other 60. But the costs are incommensurable. And in general, in terms of the economy, everything you described is very superficial. Now there are many aspects in pricing. And to games, these all the foundations of the economy of the enterprise are very mediocre. In other words, well done, that he retold the first paragraph of the economy for freshmen, but this information has extremely mediocre for games. It was interesting to see statistical signs, no more. And the policy of regional pricing is the most common discount. Someone applies this discount, someone is not. Now, if I painted how Steam considers which country what kind of discount is given, then it would be interesting. I would paint why the games cost 60 bucks, from where these 60 bucks generally came? And so ..
The topic is interesting, but as commentators from above I would like a more detailed analysis. I hope that I will also live until 2025 and see the improved version of this blog 🙂
If very briefly, then at the dawn of games in the 80s they cost an average of $ 10-20, t.e. A sort of average price for the game session in the machine (very popular at that time) multiplied by the average time of the game. At the beginning of the 90s, global average prices rose to 30 bucks due to inflation, complication and rise in production of production (transition to catrics and t.D.). At the end of the 90s, the global price increased to 40 bucks with the usual excuses of inflation, switching to CDs, etc.D. And this price lasted the longest, somewhere until the middle of 00. In zero with the release of a new generation of consoles, the price increased once again, to 50 bucks as a standard. The justification is the same. The next round of growth occurred relatively quickly with the release of PS4 and Xbox One – Hello Skyrim for 60 bucks like all new items. 60 bucks lasted relatively long until 2020-21, well, plus even now it sometimes appears as a price standard. Well, from the year 20-21, due to the new generation, inflation, Covid, an increase in the size of the games (but not its quality), etc.D. The price has already become 70 bucks.
As can be seen from this, on average every 7-10 years (t.e. usually 1-1.5 generation of consoles) there is an increase in games for games. So we are waiting for 2030 (if it comes) in the amount of 80 bucks.
Well, in general, you came to the same conclusion in the article to which I came 6-7 years ago when I started to study the prices of other regions.
For work – my five points.
If you could find something really new on this issue, it would be very cool