What should games cost?

Recently, Amazon.com purchased one of the larger game portals, Reflexive Arcade.  As part of the integration, Amazon chose to lower the prices on all the casual arcade games to $9.99.  This angered publishers , causing PopCap and others to pull their games from the portal.

Jeff Tunnel (founder of Garage Games, and currently at Push Button Labs) says this about Amazon’s price change :

Now the flood gates have been opened, and I am telling you to look out below. Today Reflexive, recently acquired by Amazon, opened their new download store, with lowered front tier pricing of $9.99 and second tier pricing of $6.99 for Indie casual games. All of the other casual portals like Big Fish Games and Yahoo games have pricing of of $6.95 by joining their “clubs”. It is my belief that even these prices will not hold up over time.

As an example of the future, look at the game section of the iPhone App Store. In this market, the right price for a game is $0, and I believe that is where all game prices are heading. For a while, there will be successes at $3.99 to $1, but eventually, I think you will see capitulation to the $0 price point.

Jeff Vogel, of Spiderweb Software, a maker of classic turn-based RPGs, takes this up in series of a couple of posts.  They charge $28 for the majority of their downloadable games. In his two articles he goes into depth about why he charges what he does, and how he figures his pricing decision.

First he says :

I have a friendly little message for my fellow Indie game designers.

You really need to start charging more for your games.

Every year, life is getting more and more expensive. Insurance. Rent. Food. And, at the same time, your games are getting cheaper and cheaper, sometimes as cheap as a dollar, as you engage in a full speed race to the bottom.

In a follow-up post he offers this as part of his pricing prescription:

Distributors – Don’t set arbitrary price ceilings (like at Amazon or XBox Live Community Games). If you are setting the price yourselves, use the developers price as a guide. Then let the magic of the marketplace do its work, punishing the foolish and rewarding the smart.

In any money-making business, pricing is one of the hardest things, especially since it cannot be decided by value alone. A controversy erupted over Braid‘s price, because users have developed certain expectations for the cost of XBox Live Arcade games, regardless of whether they are worth their price or might cost more in a different venue. Outraged publishers see a $10 price cap as far too low on the PC, while a five dollar price seems too much on the iPhone.

Even AAA games have fixed price points.  What does that do for them? Anna Anthropy  notes at her blog :

the eighty-hour game is a dead end. publishers attempt to justify the prices of their titles with lots of content, and content requires lots of people, and staff size inflates while individual creative control and accountability, conversely, diminishes. and none of this addresses the problem that an eighty-hour game is just an hour’s worth of ideas – if even that (remember, content and ideas are different things) – stretched across a much longer period. an eighty-hour game has seventy-nine hours’ worth of filler. long games waste our time.

What do you think the answer is?