Yavuz Acikalin (Data & Insights Lead at N3TWORK) covers offer design and pricing strategies that can help maximize lifetime value across customer segments that represent a wide range of wallets and engagement patterns, based on real trials and failures from N3TWORK's Legendary: Game of Heroes.
A “loot box” IAP (where there is some probability for users to get an item) generally performs really well when it comes to monetization. The reason is that it enables you to charge higher amounts for various items. Example: their Legendary game had a hero item that was really rare, and customers on average would have to spend $200-$250 to get the hero in a loot box (amongst other things). But as a direct purchase of $50, people were not ready to pay.
However loot boxes can alienate customers that are uncertainty-averse. To take that into account, you can bundle the loot box with some guaranteed rewards. Example: specific hero bundled with a random hero.
Passes (an IAP that gives you value over time e.g. 300 gems) are great to drive retention, however if you layer too many you might see diminishing returns. So if you have one compelling pass, the rest should be direct offers.
Subscriptions are great because your app can automatically charge customers, whether weekly or monthly. However, subscriptions can introduce a bit of friction when first purchasing: the same exact content will convert better with an offer vs. a subscription because there is no renewal.
Not every game needs to have some hard currency. The switch from a real currency spend (e.g. $) to virtual currency spend (e.g. gems) becomes valuable when people do not spend the virtual currency immediately but over time. If players are “sitting on some balance” of the virtual currency then it will perform better than charging for dollars when they’re considering things like boosters, but on the other hand charging in actual dollars for purchases that provide value immediately will not change anything (it will actually just add more steps/friction).
There is a ton of value in being able to price-discriminate in a way that allows you to touch as many points of the price sensitivity curve as possible so you can drive more revenue. This can be done through personalizing prices and/or breaking down the purchase experience into smaller bits.
To personalize prices: early on (after the install) you can vary the price based on geo or type of device, then later on based on past behavior. Example: went from a $50 offer for each lapsed player (players that used to pay to play) to an offer depending on the player’s LTV and got a 10%+ improvement in D30 revenue.
Breaking down the purchase experience into smaller bits is about allowing incremental purchases. Doing this through step-up plans is extremely valuable in driving monetization from high value players. Example: if a player “willing” to pay $500/week has to purchase in $1 incrementals, there is a lot of friction. So you make the first purchase $1 for 1 hero, then $2 for 2 heroes, then $2.75 for 3 heroes, etc.
When you use these step-up plans, you do take the risk of losing revenue from players not willing to keep purchasing higher offers. To compensate for that you can start introducing limited one-time smaller offers. Example: you got 3 heroes for $3 but not willing to spend $4 for the next offer, you get a one-time offer to purchase 2 heroes for $2.
N3TWORK found that limited time offers perform better than persistent offers. Whenever they made a discount last a month, they’ve seen the positive effect go away after 2-3 weeks and could never generate the same kind of revenue with the initial price point afterwards.
However, persistent discounts can be valuable when you sell them as a consistent value proposition for another offer. Example: a subscription that gives subscribers 10% off something else that you sell in your app.
When you discount the price, it’s hard to generate enough incremental revenue. If you add a bonus, you do generate more revenue immediately but then people don’t purchase as much in the future. To combat that, you can put a purchase limit on anything that is purchase-repeatable so that your big payers do not purchase too many.
Now, the most effective for N3TWORK is to change the content of an offer by not just increasing the amount of the initial offer (e.g. 10,000 gems) but also bundling it with something else (e.g. guaranteed hero or other content). This limits the “hangover” effect of people buying more virtual currency than they need.
In games that have a social component, you can also create peer pressure by adding a gift for one of the player’s social group contacts in the game to the initial offer. Example: you get 10,000 gems + 1,000 gems for someone in your clan.
A “loot box” IAP (where there is some probability for users to get an item) generally performs really well when it comes to monetization. The reason is that it enables you to charge higher amounts for various items. Example: their Legendary game had a hero item that was really rare, and customers on average would have to spend $200-$250 to get the hero in a loot box (amongst other things). But as a direct purchase of $50, people were not ready to pay.
However loot boxes can alienate customers that are uncertainty-averse. To take that into account, you can bundle the loot box with some guaranteed rewards. Example: specific hero bundled with a random hero.
Passes (an IAP that gives you value over time e.g. 300 gems) are great to drive retention, however if you layer too many you might see diminishing returns. So if you have one compelling pass, the rest should be direct offers.
Subscriptions are great because your app can automatically charge customers, whether weekly or monthly. However, subscriptions can introduce a bit of friction when first purchasing: the same exact content will convert better with an offer vs. a subscription because there is no renewal.
Not every game needs to have some hard currency. The switch from a real currency spend (e.g. $) to virtual currency spend (e.g. gems) becomes valuable when people do not spend the virtual currency immediately but over time. If players are “sitting on some balance” of the virtual currency then it will perform better than charging for dollars when they’re considering things like boosters, but on the other hand charging in actual dollars for purchases that provide value immediately will not change anything (it will actually just add more steps/friction).
There is a ton of value in being able to price-discriminate in a way that allows you to touch as many points of the price sensitivity curve as possible so you can drive more revenue. This can be done through personalizing prices and/or breaking down the purchase experience into smaller bits.
To personalize prices: early on (after the install) you can vary the price based on geo or type of device, then later on based on past behavior. Example: went from a $50 offer for each lapsed player (players that used to pay to play) to an offer depending on the player’s LTV and got a 10%+ improvement in D30 revenue.
Breaking down the purchase experience into smaller bits is about allowing incremental purchases. Doing this through step-up plans is extremely valuable in driving monetization from high value players. Example: if a player “willing” to pay $500/week has to purchase in $1 incrementals, there is a lot of friction. So you make the first purchase $1 for 1 hero, then $2 for 2 heroes, then $2.75 for 3 heroes, etc.
When you use these step-up plans, you do take the risk of losing revenue from players not willing to keep purchasing higher offers. To compensate for that you can start introducing limited one-time smaller offers. Example: you got 3 heroes for $3 but not willing to spend $4 for the next offer, you get a one-time offer to purchase 2 heroes for $2.
N3TWORK found that limited time offers perform better than persistent offers. Whenever they made a discount last a month, they’ve seen the positive effect go away after 2-3 weeks and could never generate the same kind of revenue with the initial price point afterwards.
However, persistent discounts can be valuable when you sell them as a consistent value proposition for another offer. Example: a subscription that gives subscribers 10% off something else that you sell in your app.
When you discount the price, it’s hard to generate enough incremental revenue. If you add a bonus, you do generate more revenue immediately but then people don’t purchase as much in the future. To combat that, you can put a purchase limit on anything that is purchase-repeatable so that your big payers do not purchase too many.
Now, the most effective for N3TWORK is to change the content of an offer by not just increasing the amount of the initial offer (e.g. 10,000 gems) but also bundling it with something else (e.g. guaranteed hero or other content). This limits the “hangover” effect of people buying more virtual currency than they need.
In games that have a social component, you can also create peer pressure by adding a gift for one of the player’s social group contacts in the game to the initial offer. Example: you get 10,000 gems + 1,000 gems for someone in your clan.
A “loot box” IAP (where there is some probability for users to get an item) generally performs really well when it comes to monetization. The reason is that it enables you to charge higher amounts for various items. Example: their Legendary game had a hero item that was really rare, and customers on average would have to spend $200-$250 to get the hero in a loot box (amongst other things). But as a direct purchase of $50, people were not ready to pay.
However loot boxes can alienate customers that are uncertainty-averse. To take that into account, you can bundle the loot box with some guaranteed rewards. Example: specific hero bundled with a random hero.
Passes (an IAP that gives you value over time e.g. 300 gems) are great to drive retention, however if you layer too many you might see diminishing returns. So if you have one compelling pass, the rest should be direct offers.
Subscriptions are great because your app can automatically charge customers, whether weekly or monthly. However, subscriptions can introduce a bit of friction when first purchasing: the same exact content will convert better with an offer vs. a subscription because there is no renewal.
Not every game needs to have some hard currency. The switch from a real currency spend (e.g. $) to virtual currency spend (e.g. gems) becomes valuable when people do not spend the virtual currency immediately but over time. If players are “sitting on some balance” of the virtual currency then it will perform better than charging for dollars when they’re considering things like boosters, but on the other hand charging in actual dollars for purchases that provide value immediately will not change anything (it will actually just add more steps/friction).
There is a ton of value in being able to price-discriminate in a way that allows you to touch as many points of the price sensitivity curve as possible so you can drive more revenue. This can be done through personalizing prices and/or breaking down the purchase experience into smaller bits.
To personalize prices: early on (after the install) you can vary the price based on geo or type of device, then later on based on past behavior. Example: went from a $50 offer for each lapsed player (players that used to pay to play) to an offer depending on the player’s LTV and got a 10%+ improvement in D30 revenue.
Breaking down the purchase experience into smaller bits is about allowing incremental purchases. Doing this through step-up plans is extremely valuable in driving monetization from high value players. Example: if a player “willing” to pay $500/week has to purchase in $1 incrementals, there is a lot of friction. So you make the first purchase $1 for 1 hero, then $2 for 2 heroes, then $2.75 for 3 heroes, etc.
When you use these step-up plans, you do take the risk of losing revenue from players not willing to keep purchasing higher offers. To compensate for that you can start introducing limited one-time smaller offers. Example: you got 3 heroes for $3 but not willing to spend $4 for the next offer, you get a one-time offer to purchase 2 heroes for $2.
N3TWORK found that limited time offers perform better than persistent offers. Whenever they made a discount last a month, they’ve seen the positive effect go away after 2-3 weeks and could never generate the same kind of revenue with the initial price point afterwards.
However, persistent discounts can be valuable when you sell them as a consistent value proposition for another offer. Example: a subscription that gives subscribers 10% off something else that you sell in your app.
When you discount the price, it’s hard to generate enough incremental revenue. If you add a bonus, you do generate more revenue immediately but then people don’t purchase as much in the future. To combat that, you can put a purchase limit on anything that is purchase-repeatable so that your big payers do not purchase too many.
Now, the most effective for N3TWORK is to change the content of an offer by not just increasing the amount of the initial offer (e.g. 10,000 gems) but also bundling it with something else (e.g. guaranteed hero or other content). This limits the “hangover” effect of people buying more virtual currency than they need.
In games that have a social component, you can also create peer pressure by adding a gift for one of the player’s social group contacts in the game to the initial offer. Example: you get 10,000 gems + 1,000 gems for someone in your clan.
Notes for this resource are currently being transferred and will be available soon.
The first question to ask yourself when creating an offer is “what’s in it”: sell an item individually, bundle it with other things like virtual currency or place it in a loot box where players have some probability of getting it.
[💎@03:35] A “loot box” IAP (where there is some probability for users to get an item) generally performs really well when it comes to monetization. The reason is that it enables you to charge higher amounts for various items. Example: their Legendary game had a hero item that was really rare, and customers on average would have to spend $200-$250 to get the hero in a loot box (amongst other things). But as a direct purchase of $50, people were not ready to pay.
[💎@04:34] However loot boxes can alienate customers that are uncertainty-averse. To take that into account, you can bundle the loot box with some guaranteed rewards. Example: specific hero bundled with a random hero.
The offer can be a direct offer (you buy and you get), a pass (an IAP that gives you value over time e.g. 300 gems) or a subscription.
[💎@06:00] Passes (an IAP that gives you value over time e.g. 300 gems) are great to drive retention, however if you layer too many you might see diminishing returns. So if you have one compelling pass, the rest should be direct offers.
[💎@07:00] Subscriptions are great because your app can automatically charge customers, whether weekly or monthly. However, subscriptions can introduce a bit of friction when first purchasing: the same exact content will convert better with an offer vs. a subscription because there is no renewal.
It’s typical to have virtual currencies in games. But not every game needs to have some hard currency (e.g. gems that you buy with your $).
[💎@08:22] Not every game needs to have some hard currency. The switch from a real currency spend (e.g. $) to virtual currency spend (e.g. gems) becomes valuable when people do not spend the virtual currency immediately but over time. If players are “sitting on some balance” of the virtual currency then it will perform better than charging for dollars when they’re considering things like boosters, but on the other hand charging in actual dollars for purchases that provide value immediately will not change anything (it will actually just add more steps/friction).
Think about the following: are you benefiting from currency design or are you just adding clicks for players?
You can use competitor-based or value-based pricing but ultimately the price will depend on the value of your product.
There is always some price sensitivity: the higher the prices, the lower the demand; the lower the prices, the higher the demand.
[💎@11:28] There is a ton of value in being able to price-discriminate in a way that allows you to touch as many points of the price sensitivity curve as possible so you can drive more revenue. This can be done through personalizing prices and/or breaking down the purchase experience into smaller bits.
Two main ways:
1. Personalizing prices
[💎@11:54] To personalize prices: early on (after the install) you can vary the price based on geo or type of device, then later on based on past behavior. Example: went from a $50 offer for each lapsed player (players that used to pay to play) to an offer depending on the player’s LTV and got a 10%+ improvement in D30 revenue.
2. Breaking down the purchase experience into smaller bits
[💎@13:25] Breaking down the purchase experience into smaller bits is about allowing incremental purchases. Doing this through step-up plans is extremely valuable in driving monetization from high value players. Example: if a player “willing” to pay $500/week has to purchase in $1 incrementals, there is a lot of friction. So you make the first purchase $1 for 1 hero, then $2 for 2 heroes, then $2.75 for 3 heroes, etc.
[💎@15:12] When you use these step-up plans, you do take the risk of losing revenue from players not willing to keep purchasing higher offers. To compensate for that you can start introducing limited one-time smaller offers. Example: you got 3 heroes for $3 but not willing to spend $4 for the next offer, you get a one-time offer to purchase 2 heroes for $2.
Promos/sales are a good way to boost revenue. You need to define if the offer is for a limited time or persistent (something over time).
[💎@17:08] N3TWORK found that limited time offers perform better than persistent offers. Whenever they made a discount last a month, they’ve seen the positive effect go away after 2-3 weeks and could never generate the same kind of revenue with the initial price point afterwards.
[💎@18:07] However, persistent discounts can be valuable when you sell them as a consistent value proposition for another offer. Example: a subscription that gives subscribers 10% off something else that you sell in your app.
To drive a 50% discount, you can take off half the price or add twice the content.
[💎@19:04] When you discount the price, it’s hard to generate enough incremental revenue. If you add a bonus, you do generate more revenue immediately but then people don’t purchase as much in the future. To combat that, you can put a purchase limit on anything that is purchase-repeatable so that your big payers do not purchase too many.
[💎@20:40] Now, the most effective for N3TWORK is to change the content of an offer by not just increasing the amount of the initial offer (e.g. 10,000 gems) but also bundling it with something else (e.g. guaranteed hero or other content). This limits the “hangover” effect of people buying more virtual currency than they need.
[💎@21:31] In games that have a social component, you can also create peer pressure by adding a gift for one of the player’s social group contacts in the game to the initial offer. Example: you get 10,000 gems + 1,000 gems for someone in your clan.
The first question to ask yourself when creating an offer is “what’s in it”: sell an item individually, bundle it with other things like virtual currency or place it in a loot box where players have some probability of getting it.
[💎@03:35] A “loot box” IAP (where there is some probability for users to get an item) generally performs really well when it comes to monetization. The reason is that it enables you to charge higher amounts for various items. Example: their Legendary game had a hero item that was really rare, and customers on average would have to spend $200-$250 to get the hero in a loot box (amongst other things). But as a direct purchase of $50, people were not ready to pay.
[💎@04:34] However loot boxes can alienate customers that are uncertainty-averse. To take that into account, you can bundle the loot box with some guaranteed rewards. Example: specific hero bundled with a random hero.
The offer can be a direct offer (you buy and you get), a pass (an IAP that gives you value over time e.g. 300 gems) or a subscription.
[💎@06:00] Passes (an IAP that gives you value over time e.g. 300 gems) are great to drive retention, however if you layer too many you might see diminishing returns. So if you have one compelling pass, the rest should be direct offers.
[💎@07:00] Subscriptions are great because your app can automatically charge customers, whether weekly or monthly. However, subscriptions can introduce a bit of friction when first purchasing: the same exact content will convert better with an offer vs. a subscription because there is no renewal.
It’s typical to have virtual currencies in games. But not every game needs to have some hard currency (e.g. gems that you buy with your $).
[💎@08:22] Not every game needs to have some hard currency. The switch from a real currency spend (e.g. $) to virtual currency spend (e.g. gems) becomes valuable when people do not spend the virtual currency immediately but over time. If players are “sitting on some balance” of the virtual currency then it will perform better than charging for dollars when they’re considering things like boosters, but on the other hand charging in actual dollars for purchases that provide value immediately will not change anything (it will actually just add more steps/friction).
Think about the following: are you benefiting from currency design or are you just adding clicks for players?
You can use competitor-based or value-based pricing but ultimately the price will depend on the value of your product.
There is always some price sensitivity: the higher the prices, the lower the demand; the lower the prices, the higher the demand.
[💎@11:28] There is a ton of value in being able to price-discriminate in a way that allows you to touch as many points of the price sensitivity curve as possible so you can drive more revenue. This can be done through personalizing prices and/or breaking down the purchase experience into smaller bits.
Two main ways:
1. Personalizing prices
[💎@11:54] To personalize prices: early on (after the install) you can vary the price based on geo or type of device, then later on based on past behavior. Example: went from a $50 offer for each lapsed player (players that used to pay to play) to an offer depending on the player’s LTV and got a 10%+ improvement in D30 revenue.
2. Breaking down the purchase experience into smaller bits
[💎@13:25] Breaking down the purchase experience into smaller bits is about allowing incremental purchases. Doing this through step-up plans is extremely valuable in driving monetization from high value players. Example: if a player “willing” to pay $500/week has to purchase in $1 incrementals, there is a lot of friction. So you make the first purchase $1 for 1 hero, then $2 for 2 heroes, then $2.75 for 3 heroes, etc.
[💎@15:12] When you use these step-up plans, you do take the risk of losing revenue from players not willing to keep purchasing higher offers. To compensate for that you can start introducing limited one-time smaller offers. Example: you got 3 heroes for $3 but not willing to spend $4 for the next offer, you get a one-time offer to purchase 2 heroes for $2.
Promos/sales are a good way to boost revenue. You need to define if the offer is for a limited time or persistent (something over time).
[💎@17:08] N3TWORK found that limited time offers perform better than persistent offers. Whenever they made a discount last a month, they’ve seen the positive effect go away after 2-3 weeks and could never generate the same kind of revenue with the initial price point afterwards.
[💎@18:07] However, persistent discounts can be valuable when you sell them as a consistent value proposition for another offer. Example: a subscription that gives subscribers 10% off something else that you sell in your app.
To drive a 50% discount, you can take off half the price or add twice the content.
[💎@19:04] When you discount the price, it’s hard to generate enough incremental revenue. If you add a bonus, you do generate more revenue immediately but then people don’t purchase as much in the future. To combat that, you can put a purchase limit on anything that is purchase-repeatable so that your big payers do not purchase too many.
[💎@20:40] Now, the most effective for N3TWORK is to change the content of an offer by not just increasing the amount of the initial offer (e.g. 10,000 gems) but also bundling it with something else (e.g. guaranteed hero or other content). This limits the “hangover” effect of people buying more virtual currency than they need.
[💎@21:31] In games that have a social component, you can also create peer pressure by adding a gift for one of the player’s social group contacts in the game to the initial offer. Example: you get 10,000 gems + 1,000 gems for someone in your clan.
The first question to ask yourself when creating an offer is “what’s in it”: sell an item individually, bundle it with other things like virtual currency or place it in a loot box where players have some probability of getting it.
[💎@03:35] A “loot box” IAP (where there is some probability for users to get an item) generally performs really well when it comes to monetization. The reason is that it enables you to charge higher amounts for various items. Example: their Legendary game had a hero item that was really rare, and customers on average would have to spend $200-$250 to get the hero in a loot box (amongst other things). But as a direct purchase of $50, people were not ready to pay.
[💎@04:34] However loot boxes can alienate customers that are uncertainty-averse. To take that into account, you can bundle the loot box with some guaranteed rewards. Example: specific hero bundled with a random hero.
The offer can be a direct offer (you buy and you get), a pass (an IAP that gives you value over time e.g. 300 gems) or a subscription.
[💎@06:00] Passes (an IAP that gives you value over time e.g. 300 gems) are great to drive retention, however if you layer too many you might see diminishing returns. So if you have one compelling pass, the rest should be direct offers.
[💎@07:00] Subscriptions are great because your app can automatically charge customers, whether weekly or monthly. However, subscriptions can introduce a bit of friction when first purchasing: the same exact content will convert better with an offer vs. a subscription because there is no renewal.
It’s typical to have virtual currencies in games. But not every game needs to have some hard currency (e.g. gems that you buy with your $).
[💎@08:22] Not every game needs to have some hard currency. The switch from a real currency spend (e.g. $) to virtual currency spend (e.g. gems) becomes valuable when people do not spend the virtual currency immediately but over time. If players are “sitting on some balance” of the virtual currency then it will perform better than charging for dollars when they’re considering things like boosters, but on the other hand charging in actual dollars for purchases that provide value immediately will not change anything (it will actually just add more steps/friction).
Think about the following: are you benefiting from currency design or are you just adding clicks for players?
You can use competitor-based or value-based pricing but ultimately the price will depend on the value of your product.
There is always some price sensitivity: the higher the prices, the lower the demand; the lower the prices, the higher the demand.
[💎@11:28] There is a ton of value in being able to price-discriminate in a way that allows you to touch as many points of the price sensitivity curve as possible so you can drive more revenue. This can be done through personalizing prices and/or breaking down the purchase experience into smaller bits.
Two main ways:
1. Personalizing prices
[💎@11:54] To personalize prices: early on (after the install) you can vary the price based on geo or type of device, then later on based on past behavior. Example: went from a $50 offer for each lapsed player (players that used to pay to play) to an offer depending on the player’s LTV and got a 10%+ improvement in D30 revenue.
2. Breaking down the purchase experience into smaller bits
[💎@13:25] Breaking down the purchase experience into smaller bits is about allowing incremental purchases. Doing this through step-up plans is extremely valuable in driving monetization from high value players. Example: if a player “willing” to pay $500/week has to purchase in $1 incrementals, there is a lot of friction. So you make the first purchase $1 for 1 hero, then $2 for 2 heroes, then $2.75 for 3 heroes, etc.
[💎@15:12] When you use these step-up plans, you do take the risk of losing revenue from players not willing to keep purchasing higher offers. To compensate for that you can start introducing limited one-time smaller offers. Example: you got 3 heroes for $3 but not willing to spend $4 for the next offer, you get a one-time offer to purchase 2 heroes for $2.
Promos/sales are a good way to boost revenue. You need to define if the offer is for a limited time or persistent (something over time).
[💎@17:08] N3TWORK found that limited time offers perform better than persistent offers. Whenever they made a discount last a month, they’ve seen the positive effect go away after 2-3 weeks and could never generate the same kind of revenue with the initial price point afterwards.
[💎@18:07] However, persistent discounts can be valuable when you sell them as a consistent value proposition for another offer. Example: a subscription that gives subscribers 10% off something else that you sell in your app.
To drive a 50% discount, you can take off half the price or add twice the content.
[💎@19:04] When you discount the price, it’s hard to generate enough incremental revenue. If you add a bonus, you do generate more revenue immediately but then people don’t purchase as much in the future. To combat that, you can put a purchase limit on anything that is purchase-repeatable so that your big payers do not purchase too many.
[💎@20:40] Now, the most effective for N3TWORK is to change the content of an offer by not just increasing the amount of the initial offer (e.g. 10,000 gems) but also bundling it with something else (e.g. guaranteed hero or other content). This limits the “hangover” effect of people buying more virtual currency than they need.
[💎@21:31] In games that have a social component, you can also create peer pressure by adding a gift for one of the player’s social group contacts in the game to the initial offer. Example: you get 10,000 gems + 1,000 gems for someone in your clan.
