2
$\begingroup$

Usually intertemporal price discrimination worked like this : Releasing something at higher price, then lower the price later.

But did this work in reverse too?

I've seen some example on video games where the publisher charge lower prices for in-game cosmetics at release and increasing the price later(Giving Discount at release). Is this type of pricing strategy more effective than the usual intertemporal price discrimination?

edit :

To give you some context : In-Game Cosmetics or Skins changes your characters appearance. which means they share some properties with Fashion in real life. They both can give prestige to their consumer("you're rich when you buy X skin").

which means if the publisher applying the usual price discrimination, when you buy a skin at release, you actually get more utility (You can use your skin more, and some additional prestige in the time where the price not yet lowered).

and usually skins are leaked before release, so the hype/publicity usually already there before the skin was released

The Problem is why there's some publisher that actually giving release discount on their skins? While charging higher at release can potentially raise their revenue and profit?

And BTW, Skins Has Effectively 0 Marginal cost, since what they do when a consumer purchase it, it just changing/editing some data on player account details on their server.

$\endgroup$
0
1
$\begingroup$

Airline seats are often priced lower when first released and the price can rise, especially as you get closer to flight time.

The effectiveness will depend on the market, pent-up demand, and thus substitution effects. There are not many substitutes for a given video game while for a flight there are many substitutes such as flying earlier or using another carrier. The intertemporal aspect comes in since people buying later were not able to plan ahead and so pay a premium versus people who did plan ahead or are able to fly later.

For something unique, a low price early on might be justifiable as generating publicity; however, I doubt extending that low price to all early buyers would be optimal.

$\endgroup$
6
  • $\begingroup$ 1. This does not really answer the question. (It's a nice example!) $\endgroup$ – Giskard Aug 26 '20 at 16:50
  • $\begingroup$ 2. The situation is somewhat different; there are hardly any capacity constraints on software, and intertemporal substitution is likely to be different. I probably don't need to buy a game on day $X$, but I might need to fly on day $X \pm 1$ day. $\endgroup$ – Giskard Aug 26 '20 at 16:51
  • 1
    $\begingroup$ Addressed the questions; thanks for pointing out that I missed that. As for capacity constraints wrt software, I don't think OP was looking for a software-specific answer. $\endgroup$ – kurtosis Aug 27 '20 at 6:39
  • $\begingroup$ I disagree somewhat. I still think you do not address why purchasing a video game today is poorly substituted by purchasing it a month from now. The only example in the question given is video games, but you can ask the OP if they want a general answer; in which case a more general answer would be better than one focusing on air travel. I like your point on publicity, it could be generalized for network effects. $\endgroup$ – Giskard Aug 27 '20 at 7:52
  • $\begingroup$ btw, i asked about In-game cosmetics on online games, not video games in general. As far as i know game industry already applied the usual intertemporal price discrimination, this usually make sense for paid online game, the first one to buy will have more play hours, which means more utility if you buy first. by the way Sorry for not giving any context about in-game cosmetics on the post, i will give it now. $\endgroup$ – Fahrul Aug 27 '20 at 8:47
1
$\begingroup$

if the game you are talking is already has a large chunk of active players , and when certain skins which are demanded less they tend to get discounted however publisher don't actually increase the price of high demanded skins , instead they tend to charge premium for newer skins which are about to get released. release discount is given in a case when the publisher knows the price band where he can sell maximum skins , i.e for example if in a particular game large amount of active players spend less amount on skins and large part of money on other things (in last day on earth survival game people spend more money on resources like guns , construction equipment ) ,thus they tend to issue skins at discount , pricing differs based on its active user base and game's genere.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.