The Price of a Norwegian Sweater

Yesterday, my family and I visited Epcot at Disney World. It was Eve’s first time there, whereas I’ve been to Disney World many times as a child, so I was looking forward to showing her around! Of course, I’m incapable of seeing Disney World in the innocent way that I used to — not just because I’m older, but because now I can’t help but look for elements of game design and marketing theory in every element of the park. As far as game design is concerned, I was disappointed. Where was the playable Epcot metagame? And why were so few of the rides really interactive? But on the marketing front, I certainly can’t complain. Nobody knows how to market quite like Disney.

One example: I was exploring the Norway exhibit in the Epcot world village, and popped into the exhibit’s clothing store. The first sweater that caught my eye, displayed prominently along the wall, cost $540. I played “guess the price” with Eve, who made seven guesses before stopping at $450 and insisting that I must be pulling her leg. Nearby the sweater but farther down the way was a rack of toddler’s clothing. There was a cute winter jacket on display which I was guessing would cost about $200, but in fact, was tagged at $40. The first words out of my mouth were, “hey Eve, here’s a bargain!” And then I bit my tongue. They almost got me.

When it comes to human perception, everything is relative. Price is not something we judge in a vacuum, but in comparison to the best known relevant data. Of course, Disney understands that most visitors will have no idea what clothing from Norway (with an exotic-sounding brand name) should cost. So it sells the sweater for $540, knowing that the average person will assume some price inflation, but also assume that the correct price lies somewhere between, say, $300 and $500. This becomes the anchor value against which the toddler’s jacket’s price is compared. And woah… $40 sure looks good by comparison! Never mind that the true value of that $540 sweater may have been $100 or less, for all I know. Or maybe the true value really was that high — it still shouldn’t have any bearing on the value of the jacket to me. But for many shoppers, it does.

Many high-end restaurants do something similar to their customers. They put Beluga caviar or a fancy bottle of wine on the menu for hundreds (or thousands) of dollars, not just because they make a big profit when they sell those goods, but because the mere presence of those goods on the menu at those prices makes everything else seem cheaper by comparison.

So what does this have to do with video games? A few things. The most obvious lesson, to me, can be learned by operators of F2P games that sell virtual items. Like the average shopper in the clothing store at Epcot Norway, the average player of an F2P game has nothing to compare in-game item prices with (except, of course, other in-game items.) How does she know what a “Mithril Sword of Ultimate Luck” is worth, except through the prices the game operator specifies? This isn’t the kind of thing you can compare across games. That’s why smart F2P game developers will sell a small number of virtual items for tens or even hundreds of dollars — not because they hope to sell many, although that would be nice! No, you want a few such items in your virtual marketplace because they make spending a buck on other items seem so much more reasonable.

Everything is relative.

PS.  I referenced this in an AoI post a long time ago, but for those of you who missed it, a nice related article on pricing featuring Dan Ariely.

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