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You don't need price discrimination. You can make money without it. You want price discrimination to make even more money. Edit: a lot of people seem to be con

You don't need price discrimination. You can make money without it. You want price discrimination to make even more money. Edit: a lot of people seem to be confused about what I'm saying and are telling me how price discrimination is good. I'm not saying it's good or bad. I'm saying it's not a need. Existence proof: many companies that don't do it.

JeremyBanks 7y ago
You need the money if you want to make the product.
- mikeash 7y ago
  You need money. You don't need the maximum possible amount of money.
  - svrtknst 7y ago
    No, but you usually need more than the minimum possible retail value.
cylon13 7y ago
You say this like game developers are rolling in cash. In reality most indie game developers are making just enough to keep making games. Any optimization in the ability to make money can make the difference between the marginal game developer dropping out of the market or not. If you want a rich variety of indie games then you should be okay with allowing whatever non-coercive pricing strategies developers are using that works, and if you don't want indie games then don't buy any.
- mikeash 7y ago
  They're free to use whatever pricing strategies they wish, as long as people retain their inherent right to resell things they purchase.
  - dleslie 7y ago
    This is why large game studios are generally moving to a SaaS model.
lmm 7y ago
Most game developers are barely viable businesses as it is (frankly a lot of them ought to find a different industry if their aim is to make money). Without price discrimination we'd see more developer bankruptcies and ultimately fewer games being made. (Up to you whether you think that would be a good or bad thing).
saint_fiasco 7y ago
You also want price discrimination to let poor people use your product. Some people care about that sort of thing even if it costs them money. For example a bakery might choose to give away their leftover bread at the end of each day, so poor people can eat. This costs them money because some people might choose to get bread for free when they could have bought it at full price.
- mikeash 7y ago
  Nothing says you can't charge the poor people price for everyone. You want price discrimination to get wealthier people to pay more. To take your bakery example, they'd ideally like to charge more for their bread when the customer is rich, but that's not practical, so they're stuck charging the same price regardless. Many businesses work around this, imperfectly, by using coupons or sales.
  - saint_fiasco 7y ago
    But importantly, the bakery can't charge the poor people price for everyone or they'd bankrupt. I think many indy artists are like that, that's why they say they'd rather you pirate their games. They could have used more strict DRM instead, if they only cared about money.
    - cgriswald 7y ago
      > They could have used more strict DRM instead, if they only cared about money. Maybe, maybe not. DRM costs money and imperfect DRM can cost future customers, so in the case of an indy developer, it might be a net loss.
    - nybble41 7y ago
      > But importantly, the bakery can't charge the poor people price for everyone or they'd bankrupt. In this situation the bakery is basically running a charity funded by the extra money they're getting through price discrimination. That's separate from their role as a business. The minimum sustainable price in the absence of price discrimination would not be the "poor people price" or the price paid by the rich, but rather the cost of material, labor, and capital which lies somewhere in between. Price discrimination and the absence of arbitrage allow the bakery to charge rich customers more, but it's entirely their choice to use that extra income to provide goods at a loss to those of lesser means. They could instead just keep the extra revenue for themselves.
close04 7y ago
Not necessarily. Sometimes you use profits from the high priced copy in a country with high purchasing power to cover up the losses from the lower priced copy in the country with lower purchasing power. In the case of games it makes sense especially if you rely on a large community of players for its success. You need more people to play it but you can't sell it at a loss everywhere in the world just to access all markets and gain the numbers.
- mikeash 7y ago
  How can you possibly sell software at a loss?
  - saint_fiasco 7y ago
    Tech support and bandwidth, maybe? I'm pretty sure I costed Microsoft money when I was younger and poorer, because I knew how to download most security updates for my pirated Windows without getting caught, so I costed then bandwidth and payed nothing. Maybe they let that happen or did not work as hard as they could have to prevent it because they figured they'd recover their investment when I grew up and became a paying customer.
    - mikeash 7y ago
      Tech support is optional. Bandwidth is a possibility, but you'd have to work really hard to lose money that way, given how cheap it is. Sell your game for 10 cents a copy and you'll still make money.
      - close04 7y ago
        I may be missing something but what pays the developer salaries and rent? Or maintaining the infrastructure for your sprawling online game?
        mikeash 7y ago
        Developer salaries and rent are the same no matter how many copies you sell. Each ten-cent copy sold brings you closer to covering those costs. If you don’t make enough to cover costs, you’re not selling at a loss, you’re just not selling enough. The marginal cost on infrastructure is like the marginal cost on bandwidth: really small.
Notre1 7y ago
I'm curious, what are some good examples of companies/industries that are successful in not price discriminating across national/world-region borders? Most of markets segments I can think of (pharmaceutical, automotive, SAAS) do it in one way (direct price discrimination) or another (separate products for a region).
- mikeash 7y ago
  Apple comes to mind. Their products are usually even more expensive in poorer countries. Just about any commodity would qualify. Oil companies aren’t giving discounts to poorer countries or selling them a cheaper inferior product. Lots of indie software makers can’t be bothered to put in the effort to target individual countries, and just sell at one price worldwide. I believe both Apple’s and Google’s app stores work this way, with no ability to set a different price in different countries.
  - beefalo 7y ago
    You can't compare physical goods to software in relation to price parity. The cost to sell an iPhone in South America is higher for Apple then it is to sell one in the US so it makes sense that they cost more. For a game it costs the same, and costs virtually nothing for each sale. Google play supports setting different prices by country.
    - mikeash 7y ago
      You’re saying, they don’t price discriminate because they can’t. I’m saying, the fact that they don’t proves that it’s not necessary. These two statements are perfectly compatible with each other. Again: I’m not arguing for or against price discrimination. I’m just saying it’s not a need.
bdowling 7y ago
It's all about risk versus reward. Making an indie game for the saturated indie market is a risky endeavor. The potential for high reward has to be there for developers to spend the time and money to make a game with a low probability of success. So some games absolutely need the ability to maximize profitability, including price discrimination (market segmentation).

JeremyBanks 7y ago

You need the money if you want to make the product.

mikeash 7y ago
You need money. You don't need the maximum possible amount of money.
- svrtknst 7y ago
  No, but you usually need more than the minimum possible retail value.

cylon13 7y ago

You say this like game developers are rolling in cash. In reality most indie game developers are making just enough to keep making games. Any optimization in the ability to make money can make the difference between the marginal game developer dropping out of the market or not. If you want a rich variety of indie games then you should be okay with allowing whatever non-coercive pricing strategies developers are using that works, and if you don't want indie games then don't buy any.

mikeash 7y ago
They're free to use whatever pricing strategies they wish, as long as people retain their inherent right to resell things they purchase.
- dleslie 7y ago
  This is why large game studios are generally moving to a SaaS model.

lmm 7y ago

Most game developers are barely viable businesses as it is (frankly a lot of them ought to find a different industry if their aim is to make money). Without price discrimination we'd see more developer bankruptcies and ultimately fewer games being made. (Up to you whether you think that would be a good or bad thing).

saint_fiasco 7y ago

You also want price discrimination to let poor people use your product. Some people care about that sort of thing even if it costs them money. For example a bakery might choose to give away their leftover bread at the end of each day, so poor people can eat. This costs them money because some people might choose to get bread for free when they could have bought it at full price.

mikeash 7y ago
Nothing says you can't charge the poor people price for everyone. You want price discrimination to get wealthier people to pay more. To take your bakery example, they'd ideally like to charge more for their bread when the customer is rich, but that's not practical, so they're stuck charging the same price regardless. Many businesses work around this, imperfectly, by using coupons or sales.
- saint_fiasco 7y ago
  But importantly, the bakery can't charge the poor people price for everyone or they'd bankrupt. I think many indy artists are like that, that's why they say they'd rather you pirate their games. They could have used more strict DRM instead, if they only cared about money.
  - cgriswald 7y ago
    > They could have used more strict DRM instead, if they only cared about money. Maybe, maybe not. DRM costs money and imperfect DRM can cost future customers, so in the case of an indy developer, it might be a net loss.
  - nybble41 7y ago
    > But importantly, the bakery can't charge the poor people price for everyone or they'd bankrupt. In this situation the bakery is basically running a charity funded by the extra money they're getting through price discrimination. That's separate from their role as a business. The minimum sustainable price in the absence of price discrimination would not be the "poor people price" or the price paid by the rich, but rather the cost of material, labor, and capital which lies somewhere in between. Price discrimination and the absence of arbitrage allow the bakery to charge rich customers more, but it's entirely their choice to use that extra income to provide goods at a loss to those of lesser means. They could instead just keep the extra revenue for themselves.

close04 7y ago

Not necessarily. Sometimes you use profits from the high priced copy in a country with high purchasing power to cover up the losses from the lower priced copy in the country with lower purchasing power. In the case of games it makes sense especially if you rely on a large community of players for its success. You need more people to play it but you can't sell it at a loss everywhere in the world just to access all markets and gain the numbers.

mikeash 7y ago
How can you possibly sell software at a loss?
- saint_fiasco 7y ago
  Tech support and bandwidth, maybe? I'm pretty sure I costed Microsoft money when I was younger and poorer, because I knew how to download most security updates for my pirated Windows without getting caught, so I costed then bandwidth and payed nothing. Maybe they let that happen or did not work as hard as they could have to prevent it because they figured they'd recover their investment when I grew up and became a paying customer.
  - mikeash 7y ago
    Tech support is optional. Bandwidth is a possibility, but you'd have to work really hard to lose money that way, given how cheap it is. Sell your game for 10 cents a copy and you'll still make money.
    - close04 7y ago
      I may be missing something but what pays the developer salaries and rent? Or maintaining the infrastructure for your sprawling online game?
      - mikeash 7y ago
        Developer salaries and rent are the same no matter how many copies you sell. Each ten-cent copy sold brings you closer to covering those costs. If you don’t make enough to cover costs, you’re not selling at a loss, you’re just not selling enough. The marginal cost on infrastructure is like the marginal cost on bandwidth: really small.

Notre1 7y ago

I'm curious, what are some good examples of companies/industries that are successful in not price discriminating across national/world-region borders? Most of markets segments I can think of (pharmaceutical, automotive, SAAS) do it in one way (direct price discrimination) or another (separate products for a region).

mikeash 7y ago
Apple comes to mind. Their products are usually even more expensive in poorer countries. Just about any commodity would qualify. Oil companies aren’t giving discounts to poorer countries or selling them a cheaper inferior product. Lots of indie software makers can’t be bothered to put in the effort to target individual countries, and just sell at one price worldwide. I believe both Apple’s and Google’s app stores work this way, with no ability to set a different price in different countries.
- beefalo 7y ago
  You can't compare physical goods to software in relation to price parity. The cost to sell an iPhone in South America is higher for Apple then it is to sell one in the US so it makes sense that they cost more. For a game it costs the same, and costs virtually nothing for each sale. Google play supports setting different prices by country.
  - mikeash 7y ago
    You’re saying, they don’t price discriminate because they can’t. I’m saying, the fact that they don’t proves that it’s not necessary. These two statements are perfectly compatible with each other. Again: I’m not arguing for or against price discrimination. I’m just saying it’s not a need.

bdowling 7y ago

It's all about risk versus reward. Making an indie game for the saturated indie market is a risky endeavor. The potential for high reward has to be there for developers to spend the time and money to make a game with a low probability of success. So some games absolutely need the ability to maximize profitability, including price discrimination (market segmentation).