How Pricing Works

There's a lot of discussion about pricing, but I don't think people really understand how pricing tends to work out there.

This is generally how pricing works in pretty much any industry.

Civ VII is going to have sales and profit targets, and a forecast to match those. That forecast is how much they expect to sell and how much they expect to spend.

Whether those targets are greedy is tough for us to know. But as someone who has done a lot of pricing, they are probably pretty high, at least on the revenue side.

Why? Because Civ VII is a pretty sure thing and on a company wide basis, sure things tend to have to support riskier ventures. Everyone who buys a popular video games is almost certainly subsidizing failed ones in one way or another.

One you have your revenue requirements, you build that revenue plan. The important thing here is that the target isn't changing (as long as your costs stay the same).

So you devise a revenue model to hit that number.

There's a bunch of models. One is a game with no special editions and no DLC, but keep in mind you have to hit that number.

That version of the pricing model almost certainly has a base price higher than $70. It's also a pricing model that might not even get to your target because it is fundamentally inefficient to basically only offer one product for one price.

The variable pricing model Civ VII has is smarter for them but it also likely means if you want to wait or don't want everything, you are likely paying less.

By offering a $130 option that is targeted at completists, hardcores, or people with a lot of money, they are creating something that people will pay more for because they value immediate access or completism or don't value money.

Are they getting value for that extra $60? From most people's point of view, they are not. That's the point. From theirs, they are.

And guess what, that extra revenue means that they can offer a slightly lesser version of Civ VII for you at $70 rather than $80 or $90.

And it means that a year from now, they can offer a sale to you at a much more discounted price. Because they've gotten the hardcores to pay more.

If anything, the people getting screwed are those who actually pony up. But you notice that they don't care. Because the value equation is different.

Is this greedy? YMMV, but for me that comes down more to the overall target. I don't know if their target is unreasonably high; I don't know their cost structure. I don't know the risk elements.

What I would say is that this model is not inherently greedy without knowing that. It's smart. I think it actually creates a situation where the game is available for cheaper for people who don't value those extra leaders.

And it milks idiots like me who want to play day one to fund it. Please note that this is basically true EVERYWHERE. The premium model is almost always a higher profit margin and meant to target people who value different things or things differently. Cars. Airplane Tickets, etc.

Finance Geek Note: Later DLC and add-ons are likely done on a separate model with separate expectations based on user base, etc. Evaluated individually. They may include an option value in the base evaluation for this cash flow that supplements the revenue; they may not.

TLDR: Pricing decisions aren't made one by one for these immediate things. It's all part of a larger revenue model and if they didn't do the planned DLC, they'd either need to cut that content or raise the base price. That doesn't mean they aren't greedy; the profit expectations may be sky high. But the model isn't inherently greedy. People gotta get paid.