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The power of free-to-play app pricing

"Free-to-play." For mobile gamers, those simple three words (often abbreviated as FTP) have a host of different meanings. For optimists, it means people can play high-quality games with little or no financial investment of their own. For others, it's a game-crippling inconvenience that ends up getting in the way of a good time. This writer falls into the latter category of "just let me buy the game once and leave me alone," but as the success of FTP games like Candy Crush Saga has shown, I'm in the minority.

In fact 82 of the top-grossing games on the iPhone are FTP. They're here to stay, so we should probably learn to live with them. What makes a successful free-to-play game? Geoffrey Goetz of Gigaom.com has written an incredible -- and long -- rundown of the free-to-play market that answers the question "Why is free-to-play pricing so effective?"

The answer is simple to understand, but complex to fully explain. It works a lot like how your parents probably explained drugs to you -- the first hit is free, but from then on, you start paying.

As a developer, how do you make that first "hit" enjoyable? It comes down to three major factors, according to Goetz: Flow, Intermediate Currency and Dynamic Pricing. Flow is a game's ability to get you involved in play, and keep you involved. This is done by giving you a clear task, such as gardening or clearing all the Jellies in a level of Candy Crush.

Intermediate Currency is removing the obvious exchange of money from your transaction. That's why so many games have you buying gems or coins for in-game purchases instead of using your everyday money. Your brain doesn't see gems and coins as real money when you're spending them in real time.

Finally, these games use Dynamic Pricing to give you the illusion of saving money when the game wants you to. You might balk at paying $5 for access to a fire-breathing dog in an iOS game, but holy crap! Did you know that same dog is only $2 if you buy him on Labor Day? Those are the kind of savings that will drive you from the picket lines!

The rest of Goetz's article examines the other aspects of the free-to-play marketplace and is well worth your time to read. Gamer happiness with in-app purchases, how parents can control their children's app spending and an examination of the real expense of virtual goods are just some of the angles he covers that I've personally never considered.

Head over to Gigaom for the complete article. Depending on where you're at in Candy Crush, you probably have anywhere from 30 minutes to a few hours before you can play again anyway! Unless, of course, you want to throw down a few extra dollars...

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