Maximizing IAP Revenue With Pricing Optimization

[Music] and next up is a regular speaker our event and a great friend of pocketgamer over the years um uh ted verrani from wapia who's going to be talking about maximizing iap revenue uh with pricing optimization all right thank you dave anybody can hear me okay in the back okay i got my water what all right all right as uh dave said my name is ted varani i am head of business development for wapier and today we're going to talk about maximizing iep revenue with pricing optimization

and or another way think about how to make 20 or 40 percent more money just by optimizing your prices correctly and why why is this topic important at least to me is uh because yeah pricing is one you know like think about pricing right you know if you read the marketing literature you know pricing is core to the marketing mix it even gets its own p among the four p's you're reading the literature but but it's fun and we come these conferences and we talk about modernization and then monetization is often people want to talk about ad monetization i'm not trying to take anything away from ads and monetizing there that's hugely important too as well too but the other half of that monetization coin is indeed pricing you know and if you are making you're selling your in-app items and expect them to purchase them you know we think that putting some thought in some consideration in terms of what is the right price the right time right location is indeed critical for your success so there's a problem with pricing right now right you know and that's one problem is that most game developers have basically a one

size fits all approach when it comes to pricing so simply put you're mispriced the majority of the world because people respond differently to different prices right now and that's sort of an obvious intuitive sort of you know thing we think about ourselves in terms of how we make current purchases but you know again thinking about gaming it's a digital good with no marginal cost right the right price is what someone frankly is willing to pay for it and if we can get pricing right you know if we can kind of you know the beautiful thing about pricing is that is just a number right you know in a small change to a number has a great outsize impact in terms of whether or not someone make a purchase you know indeed for maximizing your iap revenue a little bit on the company um i don't want to spend a huge amount of time here of course i do have three extra minutes maybe just maybe i just really linger here um but is um but no i don't i really want to mix commercial less but we this is what we do right you're not just pricing but fundamentally uh who is wap here we're an ai company with and we

we have deep insights into player behavior we we take those insights we try to influence you know that behavior to a more positive outcome for the game developer in case of pricing it's right price right time relocation we do that with a lot of big game companies you know out there um right now um and you know so i'm going to share with you now a little some information about how you can really do it yourself as well so it's not really just about you know come work with us type thing two of the main things that we focus on as a company not the whole entire thing but part of our i guess pricing optimization suite if you will is and two things for you to think about you know for your own game you know is first global pricing you know what is the right price on a per country level you know for your game and then secondly going past that is promotional pricing right now here we really are now thinking about per user pricing for your individual game first let's talk about global pricing right

you know i don't know how many of you guys are game developers here too but like if i were to ask you i have a show of hands which is a few of us stuck here you know like how many have localized their game if you are a game developer like do you think about when you go to new country you should put you know in another language right you know appropriate for language do you think about the same thing in prices right you know you know i guess my point of view is that if you've localized your game made the effort frankie to translate it to spanish you should maybe also think about what it is for right in the local currency for that country because in our you know my view is that there's no one size fits all when it comes to pricing and yet most game developers you price your game for united states that's fair it's your largest market you know out there you price it for united states but then you just let the officers do currency conversion for other countries it's not sufficient right you know i mean and you're going past that right you know even if you know is that you know because first of all you know is the app stores will adjust your current conversion when you actually upload and

create yeah you're not even managing an ongoing basis according to you know currency fluctuations a lot going on in the world right now and currency rates actually going all over the place so but even that alone is not sufficient but if you are doing that i applied to you on doing that you know most you know people are not doing it but then pricing to demand curve and really understanding the price of elasticities does take some really deep insights into local purchasing power for the individual local economies and then you know going past that though you know games you know i'm playing your games you know is you know you're talking about hundreds of price skus potentially you're talking about magnifying that on 30 different countries potentially you're talking about managing thousands of price cues so as you do this you need to think about how you're going to manage you know these different skus but again you know just to kind of bang on the point you know they mentioned earlier you know small change into a number just your price you know as it makes all the difference to whether someone's converting to a pair you know where they're going to come back and keep making more purchases yourself and that's what global pricing is

localizing your pricing right you know and it's going beyond just we want to go beyond just the local currency rate you know fluctuation but instead you know it says optimize your prices according to someone's willingness to spend across all live skews i want to stress that when i was having a conversation earlier today with someone who was you know things right oh yeah we did some special promotions in brazil i'm like well that was all live excuse no no it was just like a special offer i'm like okay so that's cool that you were doing that but like you actually potentially was hurting your game economy in that situation because you know you've got u.s prices effectively in the storefront and the other special offer was you know dramatically lower in terms of you know the realities you know conversion so it was became actually more of a mess so if you are doing you need a horizontal price adjustment across all live skus is important and then what we're seeing on average across you know like 100 games is you know 20 to 40 on average increase on revenue outside u.s you know just by managing prices sometimes a little bit lower sometimes you know even higher

i get this question you know is it a big mac index you're using like and somehow like you know whispering that to me to like like they're dialed into some sort of like secret you know so i don't even know where it began maybe someone else knows that where did somehow where did it begin there where people started thinking that you know a big mac was some sort of universal product around the world that we would somehow price against too so you know but no fast answer is not doing it because if you think about it you know i'm from the u.s and big mac is quite inexpensive sometimes you see like 99 cents average i think it's just an excuse to sell soda as far as i can tell um you go to some countries lower in typically lower income countries where you would think you know you got to think about lowering price a big mac might be date night you know and actually the local food which i frankly would prefer you know it's gonna be less expensive than say going to mcdonald's so it's a no not a big mac index not to belabor that point instead what you want to do and what we do is look at a lot of other data outside of your game right you know so it's not about how people engage in data within your game i'll get that you know a little bit later

but it is um the um you know all this information is publicly available right you know so it's really a macro economic data you know so as i mentioned gdp you know gdp publicly available your currency you know rates out there the exchange rates and how they're fluctuating against each other publicly available this is something you can run this is what we do that's what you can do in terms of monitoring going past that we do want to understand household purchasing power right so that's where understanding microeconomic data so getting idea of household purchasing power for doing that and then going past that you know is game statistics right so you know what is the ratio of smartphones in the individual country what's your you know what's the um you know ios versus you know android you know and then you know then in game statistics itself right you know what is the transactions are going to kind of because it's not about necessarily gdp in the country but it's what's the gdp or purchasing power among the gamer population of that country and then with that data you know we we've done what we've done in effect is create a whap your index has been doing this while we know what other games are doing too but like if you start ingesting this you know then start make some sequential price tests

directly onto diff into the app stores you know for that you know this is what we do people key point here is you know caution is you know we get this question you know too but you don't change price in the next day look at it and see if it's working it's not enough time because when you're measuring impact try to measure working you know you want to look at arpu on a country level you know and let's face it you know you talk about small number of payers per country you know so it's to get enough data to sort of have a measurable impact you need to let some time pass so you need to be patient right so in our case we'll make monthly price adjustments you know on that and so we do ask our customers for patients but after like a basic three-month calibration we know we've priced it correctly we're pricing it according to the demand curve going forward it's small changes to price right so we're not suggesting dynamic pricing here willy-nilly sort of changing very quickly but very slow very cautious very deliberate price adjustments according to local purchasing power doing this correctly you know what you're going to see is a big increase in

payer conversion you will you know the truth is that some people already were spending in your game you know big spenders they can get a better deal right and that's okay you know because you know what you're going to have now is more people spend your game frankly making your game more healthy right you know as we bring too and then you're going to see also this is an increase in the number of transactions you know for your game too so again healthier so really what we see also is improvement retention just from pricing so it's not just about iap revenue but we also see improvement retention taking all over all together you know you're going to see increase in iep revenue just by making a small change to price across all countries so again all live skus on a per country basis more or less the same sort of you know discount just some cases we raise prices you know so there are some countries that you can think of high income you know the intuitively obvious perhaps you know where we've done like uae the qatar in switzerland in those cases we might have raised price actually funny enough did ireland once you know so i don't know why but um but you know we had the data that backed it up you

know and every game is different so just because you know we've had some experience in one game we always test everything very thoroughly for the next game so it's even if it's the same genre it doesn't always so it begins with a good starting point but that's not going to be it's not copying one game and taking to the next game a couple couple case studies to share um i like this one um it's a casino game i mean let's name them but it's part of a large public company so they do real money and gaming they um rely on us for pricing they you know we've it's been live in 2018. so the point being since the pricing is not a set at once done in proposition right as i said earlier we know it's you know the world changes people come in and out of your game you know your pricing also needs to adjust accordingly but i also like to slide too similar it shows your experience because you know an easy assumption to make and it's true that you'll see you know growth among your lower income countries so you know you expect to see your peru your brazil you increa romania increases there too but higher income countries as well like

so check out germany 81 increase in revenue right similar income is the us but 81 so point being is just because you know someone spends a lot you know in the u.s on your game does not necessarily mean sweden or germany in this case will you know this won't sell for you jin's journey another game you know let's name him so very large game hidden objects games out there you know on average about 10 43 increase on a monthly basis does fluctuate up and down harry potter from jam city um big game over two million dollars of revenue you know we're optimizing you know for them about 50 countries um again similar story we see this across the board right you know is that you know it's a mix of high-income low-income eurozone for instance great opportunity right think about one currency one euro currency but you got your high income finland to you know greece you know and the country so a lot of variety but yet one you know currency there too and also you know a bigger revenue base often you know so getting

just a change price can have a big impact so global pricing works the clicker doesn't so um okay we fixed our prices global basis you know are you still leaving money on table yes you are um the because really what you know we want to think about nexus promotional pricing you know so this is what we do for books first think about gold pricing is fixing your prices on a per country basis across the board promotional pricing this is when we start really taking advantage of our machine learning technologies inside super um player behavior and start doing per user pricing but we're not talking about dynamic pricing here we're not talking about like you know just rapidly changing price on people we don't want to become like an uber you know within your game that's not the id suggestion here at all but price special offers within a game is a great opportunity when you think about right because special offers they tend to be event-based they tend to be time-based or seasonal right you know so we are already pre-conditioned as a customer just see a special offer and

expect for it to go away so from a game developer perspective that's a great opportunity to sort of what's the right price and the right price is what someone's willing to spend for it right so in a very simple level someone's a new year game haven't spent at all obviously it should be less expensive for that person than someone who's already spending your game but right now most people treat special offers or almost the same for everyone segment your your players in there as it comes to them and deliver different prices so we do it for machine learning perspective between technology i don't want to necessarily describe that what we're doing because you know something we hope instead what i'd like to offer you is sort of three do-it-yourself hacks that you can do yourself you know to think about it's more about behavioral psychology you know one is personalize the special offer all right you know here um one way you know and one way to personalize a special offer is to think about um seasonality and you know so first of all you know you know for any of your special offers in the game you know any and downtime

means player engagement right so whether it's the morning commute or it's after school or to on the evening time any down time is more what more people play in your game so that's you know more players coming in the game you really want to think about you know you know we're doing special offers for them too the season also senility also translates to time of year so think about the holidays or the summer months right those are times when people have more time on their hands again translates engagement but you know also consider that whenever you know just because you have more people coming the game doesn't mean they're inherently buying it's actually a little bit the opposite so you know they are actually probably less engaged on your game itself so it takes something a little extra to get them to encourage them to buy beyond that you know so that's why you want to think hard about that special offer that you put in so whether it's a first purchase discount or you know some sort of you know holiday special thing you know thinking about how you're packing up making that offer for them to be compelling because you great opportunity more players you know coming in during this time checking you out but more important to just you know when they're

at that moment of purchase consideration to have the right offer in front of them general we're seeing you know 15 to 30 percent increase when we're doing promotional pricing for people um just from you know making it targeted one thing i read so i brought it up you know here is um a you know one study did saw that for doing your holiday specials correctly saw 83 increase in revenue above the annual average you know so so time as you're leading into those holiday months it's your biggest purchase time some real thought consideration in terms of how you want to do those um obviously when you do black friday day but don't just do black friday day just like everyone else make your special offer timely so that you know point number two and i mean you know so seasonality is the time of year so i mean time of day and what we want to do here is try to pinpoint prime time right you know what do we mean prime time so prime time is um you know the time when someone is actually more likely you know an average people in the u.s you know i'm not sure the global student you know you know the u.s probably played 24 minutes a day within

the mobile game and that is um you know the peak usage is actually fine six pin 10 pm which kind of makes sense but for me it's kind of funny too because primetime was a coin you know made by advertisers for broadcasting right so that's when their best tv shows were always in the evening after work and the biggest ad dollars or the most expensive commercials when on network tv were that's what i call the prime time within your game that is might also translate that so that's interesting point to know but get the data for your game really understand in when people really when it because your data might tell you something different or even better it's trying to pinpoint that time outside of like the average prime time in the same time like that what's prime time for your game i once we did some pricing with the game it was a it's a shooter game next we're shooting dinosaurs uh and you know and for whatever reason we saw like there was a lot of people like shoot you know activity engagement late at night you know i just imagined people like getting drunk at a bar or something and like oh the bars go what do i do now so i shoot up some dinosaurs you know i

don't know what it was but you know let's so you know it's but knowing your game when is that period of time that is a good time to price something is a great opportunity for you to think about so questions asked like when are people making purchases what are the you know average sessions what are the average session you know length within the game you know how long you're playing you know when's your you know when have they made a purchase in last seven days you know are they getting do you anticipate them making a purchase right it all depends on the company and the data you have the insights and the data science you might have you know within your company but all this data information can really help you to think about how you optimize those special offers for your for your players third one make special players feel special you know make new players feel special rather so like the idol boss used to say bring in the noobs you know and and what we do know is that you know 30 of your players are going to come after day one they're not going to come back right you know so one-third of people who download you and you spend a lot of money to download however they come into your game they download your game you're excited

one-third is not going to come back so let's think hard about like you know first purchase if they do see you know price you know for that you know because really our goal here is try to in the first three days try to get a purchase out of someone those first three days are very critical because in fact even 18 you know i said 30 leave the first day 18 of an average games revenue actually comes that first day so people are making some decisions pretty quick on one one whether they like your game and return you know two where they're going to purchase and this early early decisions are going to form you know the lifetime value for that player within your game too so so how do we get people to be you know one is to you know leverage existing data create a compelling first purchase discount everyone should have a first purchase discount right let's just you know thank people for coming in you know it's encouraging make that first purchase better is to you know segment your players if you can think about if you have the insights around affluence so geolocation if you're able to track that you know the device type are strong signals of affluence right someone's

coming in from i live in the san francisco bay area high income area that's affluent you know other parts of the united states you know are less affluent right you know and um so that's an important signal set an iep promotion to run once a user hits their first challenging level so what is the next that first challenge level you know create a promotion geared around that we want to get person you know more engaged in the game get them that next level reward them for doing that great bundles of negatively correlated goods what's a negatively correlated good this is two items that people might not actually purchase together right and so think of a medieval fighting game if someone buys the broadsword they're not going to buy the short sword okay so well let's package those together present it as a very steep price discount player just thinks wow what a great deal you know as long as it's more expensive than this one item you're ahead you know on that too and they've really and the player actually feels really good about their purchase so they're actually feeling better about your game you know and then they made it by you know as soon as one makes a purchase they're more likely to purchase again right so again that's our

goal here get that first purchase order spoop it's got to move along message user directly to alert them to various personal opportunities better do contextual in-app messages than push notifications and determine what high low friction high value um item special offers to people we do know is that you know majority of purchases are single use items but 65 of revenue actually actually comes from lifetime items so understanding your own game the mix between those two think about use that information to think about what sort of special offer you want to give that the player and then a word of caution just to kind of close this out is don't be too generous you know and i know what does that mean want to give too much away right you know again deferred the goal of the first purchase is to get them to come by again right it's enough you want to give them enough to have they have a taste of it they have a snack they're more engaged they want to you know you don't want to give them so much so that they have no reason to buy again right so while everything been saying so far is about trying to get that first purchase

in three days d7 retention is your most critical you know statistics right so the most important is you know you want to make sure you having a 10 d7 retention and you want 10 of those players actually be payers if you're not quite hitting that mark you may be being too generous in terms of what you're giving away earlier on so watch that very closely and how you give that out and then you will be and i've run out of time these are turning signals into but case study here it works you know this is a perfect example an innovative hollywood story where we took them from global pricing to the promotional pricing um a net positive impact you know so again first fix your prices globally across the board next think about how you can you take leverage insights into player behavior to start making special offers more targeted to boost payer conversion maximize overall revenue run out time but i will be in the hallway if anyone has any questions it's a great thing we started early

you know that was great and perfectly to time even with the extra time appreciate that did anyone have a question we could take one question trying to maybe run down here do you want to take a question ted will we let's move on i don't mind i don't want to just take away from the next one we'll build it in at the end and i met him in the hallway this team very nice so you should stick around yeah super quick for um games with larger communities do you notice that international for games with larger communities do you notice that international players will compare notes when it comes to pricing or uh make a an unwarranted stink when prices adjust well the fast answer is no but um but you know worthy of some you know elaboration on that is that um so and it's a good question asked right you know because i think you know games are social inherently and something that kind of worried that we do not from global presence but it's also how we do it so we are and i mentioned earlier about doing you know sequential steps and waiting some time pass the only time people notice things like price changes are coming when people generally people only go to message boards when they see something they don't like so mostly we're in lower prices and

frankly make the prices more fair on a per country basis so generally there's not much complaining about that so people human natures we only we only complain you know when we talk about it we don't like hey it's a low price but you know but going past that the biggest change that we do to a price when we're localizing prices on a per country basis is right away so let's agree right away your game is very mispriced you know and but then after that one month later it's a smaller change and after that even smaller change and then going forward you know because it's we do optimize monthly but after that's most recurrence rate fluctuation so it's five ten percent so no people do not notice it but you know and we've tested it we run you know we've we're just you know harry potter you know big game you know it's also social you know worked with you know some scopely games also that have you know where these concerns are very no so far no but you know we don't say it's impossible yeah

you