On a somewhat related note, who loses money when steam puts stuff on sale? Is it them, the company who made the game? Both?
No no no. When they put something on sale, they win less money, by product. But they win more money by selling more.
I don't know how explain that exactly in english, but, basically, exists two types of cost: one which is fixed and one is per product. Normaly you have to sell certain amount of products to cover the fixed cost. The idea of a sale is sell more, so, while you need to sell more products to cover the fixed cost, they are betting they will not only sell enough for cover the fixed cost, they are also betting they gonna to surpass that and make even more profit by selling a lot more than usual. And since this is digital distribution, they don't have to sell stuff for make inventory space, so, they will never sell something to a loss.
Anybody actually understand what I just said? Really?
@ Ginny: You have hte right idea but your wording was a little awkward...
Basically (I think) she's saying you can sell a few at full cost and make $$$ or you can sell LOTS at low-cost and still make money.
The only flaw here is we dont know how TTG gets a cut from this. If they have a fixed cut (i.e. $1,000 per game) then steam is makign a profit after the inicial $1000 even if they sold the games at $1 each. If TTG is opperating on a % of sales, again they make a profit no matter the cost. However, if TTG gets a fixed $ ammount PER DOWNLOAD then they have to go above the $ they pay TTG to make a profit, but ANY ammount over that is profit and likely the $/download is rather low (I'm guessing around $3)
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Rofl. Always glad to educate
No no no. When they put something on sale, they win less money, by product. But they win more money by selling more.
I don't know how explain that exactly in english, but, basically, exists two types of cost: one which is fixed and one is per product. Normaly you have to sell certain amount of products to cover the fixed cost. The idea of a sale is sell more, so, while you need to sell more products to cover the fixed cost, they are betting they will not only sell enough for cover the fixed cost, they are also betting they gonna to surpass that and make even more profit by selling a lot more than usual. And since this is digital distribution, they don't have to sell stuff for make inventory space, so, they will never sell something to a loss.
Anybody actually understand what I just said? Really?
Basically (I think) she's saying you can sell a few at full cost and make $$$ or you can sell LOTS at low-cost and still make money.
The only flaw here is we dont know how TTG gets a cut from this. If they have a fixed cut (i.e. $1,000 per game) then steam is makign a profit after the inicial $1000 even if they sold the games at $1 each. If TTG is opperating on a % of sales, again they make a profit no matter the cost. However, if TTG gets a fixed $ ammount PER DOWNLOAD then they have to go above the $ they pay TTG to make a profit, but ANY ammount over that is profit and likely the $/download is rather low (I'm guessing around $3)