# Free to play Game item pricing Case study: Pokemon GOFree to play Game item pricing Case study: Pokemon GO

How much should we charge for a particular game item? this is the question all the monetization designer ask themselves, but hard question to answer.

YongHee Kim, Blogger

August 15, 2016

How much should we charge for a particular game item? this is the question all the monetization designer ask themselves, but hard question to answer. Often times we sell game items as a package(mostly in the form of Gashapon), without knowing the exact price for each item inside them. I will introduce basic techniques for measuring the price of items inside the package.

# Introduction

Every free to play games has some form of reward Items to encourage players to keep playing and game assets that consume those rewards to grow. For example, Clash of Clans rewards the player with gold and elixir, and those items are used by various buildings to level up. Similarly, Summoner war rewards a player with mana, monster, runes. And a huge amount of those needed for leveling up monster and runes.
So it’s natural that players are desiring those items -Because we designed our game to build up that desire-. So if players have sufficient fund and offered right prices, they will buy. How many players will buy 10k elixir for 0.99? What would be the right price for 10k gold? those decisions cannot be made with mathematical precision, but only with intuition and experiences. And knowing the exact price we are offering to players is essential to make that decision. (including items that cannot be bought directly with \$)

In the post, we will look into basic techniques for measuring the price of game items with Pokemon GO as an example.

# Currency

To calculate a price of the specific game item, we need a point of reference for value. Most of the games have its own monetary system.

[Clash of Clans - Currencies]

the monetary system of COC is transparent, Gem is a substitute for real money in a game, and can be exchanged to other in-game currency like Gold, Elixir, DarkElixir.
but a monetary system in Pokemon GO is not transparent. At glance, they seem to have only Pokecoin as currency. But after playing for a while, you will learn that stardust and candy are an in-game currency like gold and elixir in COC. And you can only buy stardust and candies through egg incubator.

[Pokemon GO - Currencies]

A goal of this post is measuring the price of game items. and those are stardust, candy, and Pokemons. Pokemon consumes stardust and candy for the powerup and evolve. So, if we can figure out the price of stardust and candy, we can calculate the price of Pokemon by power up levels as well.

# Calculation

We can derive price of stardust and candy from expected reward of egg hatching. but first, we will have to set some assumption about our model to simplify the calculation.

Assumption
1. Consumer seek to maximize utility.
2. Labor has zero value. Pokemon GO players didn’t mind walking more distance to save few dollars.
3. all candies has the same value. regardless of Pokemon type.1

## 1. Relative Value between stardust and candy

We can derive relative value between stardust and candy from powerup cost table. powerup Pokemon requires both stardust and candy, so the value of 80Lv Pokemon can be calculated by this.

Since stardust and candy are not exchangeable, accumulated amount of stardust and candy for maximum powerup has the same value. we know those numbers are 280,000 for stardust and 320.23

## 2. Price of egg hatching

Since we assumed consumer seeks to maximize utility, and their labor has zero value. They will use egg incubator only on a 10km egg.

## 3. Expected rewards from 10km egg

We don’t have actual probability table of egg hatching. but I have accumulated egg hatching results from YouTube and this is average rewards from each egg.4

EGG distance

Stardust

Candy

2km

600.4

7.3

5km

1229.8

15.7

10km

2455.9

24.3

Now we know expected rewards of stardust and candy from \$0.5 and relative value between stardust and candy.

## 4. Price of Pokemon GO items

The price of stardust and candy calculations follows.

Thus cost of making max level Pokemon is

# Conclusion

Calculations on this post are simplified for demonstration and have obvious shortcomings. Besides, this is meant to be done by a game developer with complete in-game data. More calculations can(and should) be done to increase an accuracy of the result.
The point of doing this calculation is not about finding the right price. It’s about making an informed decision based on the price you’ve already set. A price of any new item is bounded by the price of egg incubator and its reward table. For example, let’s say you want to add new items that give a player chance to get stardust and candy from PokeStop for an hour. If you set the price too low, then egg incubator sales will suffer. If you set the price too high, then new items won’t sell. You cannot make decisions based on merits of each item without knowing the price you’ve chosen for those items.

# Footnotes

1. Reflecting different value for candy types makes calculation much more complex. And require complete egg hatching probability table by Pokemon type.

2. To be precise, we have to consider candy cost of evolution and average Pokémon starting level as well. Because accumulated cost of stardust and candy varies by those two factors.