Aces High Bulletin Board
General Forums => Aces High General Discussion => Topic started by: Pyro on November 01, 2000, 11:19:00 AM
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As most of you know, we've recently been conducting pricing research with a few different test groups that we've selected. This test is now complete and has furnished us with invaluable data. We can now build models around the data collected and see if a reduced price would make more sense and what it would require to implement.
Not everybody agrees with the what, how, and why of us doing this. We've stated our purposes and reasons and while we don't expect everybody to agree with us, we do want people to know where we're coming from.
A lot of the suggestions and criticisms that have been posted here have been based on some simple assumptions that aren't true.
Point: If you halve the cost, you just need to double the customers to make the same amount.
Counterpoint: That's false because it ignores the incremental expenses of adding more customers. It would only be true if all our expenses were fixed but hardware, bandwidth and support personnel have to be added as the customer base grows. So the reality is, to achieve the same net revenue you have to add customers in a greater proportion than your price reduction. The higher the incremental expenses the higher the proportion of customers that need to be added to offset the cost of the price reduction.
Point: We would have been better off if we just dropped the price for everybody without conducting this test because it's obvious that we'll get more people if we lower the rate.
Counterpoint: It is obvious that we can attract more people with a lower price, but how many and at what price? All speculation on this matter is just that - speculation. That is why we have conducted this research. Speculation is not good enough for us to act upon. If we dropped our price without getting the return we needed, that would hurt things. If we dropped our price and got more return than we were prepared to handle, that would hurt things as well. It does our customers and us no good if we price ourselves out of business or get caught in a position where our infrastructure cannot support the demand.
Point: This would have been acceptable if the accounts created under the test could only keep their price for a limited duration.
Counterpoint: The purpose of this was to quantify different levels of price sensitivity in order to see if a different price would be better. Offering a reduced rate trial only tells us how many people who aren't interested in subscribing at the current rate would be interested in a reduced rate trial, not how many would actually subscribe to a lower rate. That's not collecting beneficial information that's a customer drive. Those people who are upset that this offer was limited to a test group would still be upset that it wasn't offered to them. Doing it that way would tell us little, still be a pain, and would not be worth doing. It would be the equivalent of getting half a vasectomy in an attempt to save you some pain. There's no point in doing it.
Point: We should have announced this prior to implementing it.
Counterpoint: That would exacerbate some people's reaction by turning it into an ultimatum. We feel that doing this study was essential to any serious examination of different price points. There is no decision we will ever make that will be received with unilateral agreement. To suggest otherwise is not being realistic.
The question now is what's going to become of this. We have no answer and in no way are trying to imply any outcome. HT is currently taking a well-deserved vacation and when he returns we'll begin to analyze the data we've collected. Should we find that a price reduction would be beneficial, it is still something that requires a lot of planning. It may require short-term losses to see long-term benefits. It may require significant expenditures to upgrade our infrastructure. We have to make sure we have all the bases covered before we can do anything or even talk about any plans. We will not announce or imply that any change will be made to pricing unless we are ready to make a change at that point. Right now all we can tell you is that it is something we are looking into as evidenced by our recent market research.
So that is where we are. I bring this up again because our posts on this matter are buried. As stated at the beginning of this post, we don't expect everyone to agree with us, but we do want people to at least be aware of our side on the matter and the dilemmas we face in trying to look in this direction.
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Doug "Pyro" Balmos
HiTech Creations
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Just wanted to be the first to say "Rah Rah!" (http://bbs.hitechcreations.com/smf/Smileys/default/wink.gif)
Thanks for the information!
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<Rip kicks back, cracks a cold one, lights a big fat Fuente, and waits for the Pessimists to show up, wonders where Badger is...>
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Gee, the whole market research thingee just doesn't sound too unreasonable now - does it, boys?
Thanks Pyro. Good luck.
Sour
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"So that is where we are."
Thank Cod you put this all to rest Pyro!! Thanks.
Now folks.... Can we all just move on now to critising and speculating on Version 1.05 before it's released and leave this pricing soap opera, some people have forced us to live through, behind us? (http://bbs.hitechcreations.com/smf/Smileys/default/wink.gif)
-Westy
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Hey lets get on with 1.05. The pricing issue will work its self out.
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NHFoxtro
-XO-NightHawks
(http://heathblair.tripod.com/nhcouger.gif)
NightHawks "WE BAD"
[This message has been edited by NHFoxtro (edited 11-01-2000).]
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Gets home, gathers up the laundry, throws the cats outside, fills the dishwasher back up, turns off all the lights that were left on throughout the house, and waits for the pessimists to show up.
Geesh Rip, where did I go wrong? hehee
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Thanks for a well-stated explanation of some tough business issues. Darn, I just missed the special rate offer, but it wouldn't have applied to me anyway since I'm hooked and definitely will continue after my free trial. Amazing how far everything has come since those shareware Air Warrior disks that required something called "on line" to work.
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Pyro..
Please leave the price at the current 29.95 or even better, bump it up to an even 50.00 a month. I have my own reasons to keep your pricing a little high, at least till you find out what wwiionline has in mind. As they are heading in the same direction as HTC as far as ground units and Ships, pricing shouldnt change till then.
And since Ships are soon to come, i would like to see my favorite plane ever modeled. The little beer barrel ( FM2 ) F4F..
Dog out.........
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Shakes head. Waits for roll call of chearleaders to be complete. Tries to read pyros post through all the pom poms.
Thanks for the info Pyro.
I didnt see a leave pass cross my desk for HT...
consider him AWOL.
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Pongo, I have a Ford hat, and I like Ford products, they've given me good service over the years, so, my question is....am I a cheerleader for Ford? (http://bbs.hitechcreations.com/smf/Smileys/default/wink.gif)
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Hiya's
Dang Wardog $50 a mth for me is too much (http://bbs.hitechcreations.com/smf/Smileys/default/frown.gif) lol lone parent having to work around school times (scratching even to do this, not much demand for my services where i am (http://bbs.hitechcreations.com/smf/Smileys/default/frown.gif) ) enough of my moaning (http://bbs.hitechcreations.com/smf/Smileys/default/smile.gif) at the moment i enjoy AH to it's fullest (http://bbs.hitechcreations.com/smf/Smileys/default/smile.gif)
Read ya post n nearly fainted lol, i would gladly pay more if i could afford it after all i'd like to see the room at full capacity and have to have several rooms packed to the hilt too (http://bbs.hitechcreations.com/smf/Smileys/default/smile.gif) but alas in this world almost everything boils down to money and amounts available
So please please don't go putting silly ideas about $50 about (http://bbs.hitechcreations.com/smf/Smileys/default/smile.gif)
Lol hope you don't take offence this is meant to be read light-heartedly (http://bbs.hitechcreations.com/smf/Smileys/default/smile.gif)
Tit
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Thanks for the info.
I personally hope the price doesnt drop too much. This might sound crazy to some, but I fear that if it is too cheap AH would fill up with dweebs and quakeheads. Those 12 year olds who only play free or real cheap, and never develop any sense of community with the others in the game.
Either way, its nice to get some info on the situation.
Dago
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Good points. I still disagree,tho. But at least I understand your views.
Now lets see how does this end in pricing.
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text removed.
[This message has been edited by Pongo (edited 11-06-2000).]
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Pyro;
After just having read your message and without going down to see any others, I say thank you. Thank you for a clear explanation which leaves me with the feeling that perhaps we will get a reduction which undoubtedly would be welcome. Thank you for providing us with a great game which at least in my book is definetely worth the $29.95 you suck out of my Amex each month. Thank you for the vasectomy analogy which brought joy to my life and finally, thank you for understanding that expressing a contrary opinion doesn't necessarily mean that we don't value the product or those that bring it to us.
Beeg
P.S. Do not raise the price above $29.95 or you will find out what a botched vasectomy is all about (http://bbs.hitechcreations.com/smf/Smileys/default/biggrin.gif)
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So how many folks signed up on the $39.95 price plan... (http://bbs.hitechcreations.com/smf/Smileys/default/smile.gif)
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I'm reminded of the old adage.. "When yer up to yer bellybutton in alligators; it's tuff to remember the original objective was to build the best WWII flight simulator ever offered, and instead wind up having to drain the swamp."
Hang dips his oar into the water...
*SNAP* (stares incredulously at the shredded stump)
"Damn! ...and it appears the alligators are PC!!"
Hang
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Well I came here for a couple of reasons: Flat rate vs $2 an hour; better connects; better service.
Same still applies, so I'm staying. If it gets cheaper... sweet.
To all the whiners out there... IEN fisted me via my Mastercard for many a year. The grass is greener here and I'm staying.
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I guess I typically will take the side of HTC (or anyone else for that matter) when the comments directed towards them are basically thinly-veiled insults.
I don't feel character assaults are warranted for any reason about anyone. If you read the board you see there are many times that legitimate comments get buried by the snide comments that wrap them.
When a parent comes in and talks to me about their children and concerns, I'm all ears. The minute they start the insults they are mentally filed away as hotheads, and I don't concern myself about their cares any longer. I still work with the kids, but the parents are cut out of the loop unless absolutely necessary. They can come in and yell at me all they like, but I don't listen to them any more. I nod my head and let them blow themselves out. They think they "taught me a lesson", I go about business as usual.
Am I unresponsive? No way. But there is a way to get your way and a way to get ignored. I will kill myself to accomodate someone who behaves respectfully. I will very quickly ignore someone I believe cannot rationalize or behave like an adult.
I have no complaints with anyone complaining about HTC or their business practices. I don't even necessarily disagree with some of it. Some of the posters did come across as jumping up-and-down with clenched fists and teeth. It isn't surprising the reaction that vision created.
Now it seems if you agree with HTC you are a cheerleader. Well, then guilty here. You see, I do think it is still ok for a business to handle their own business. Whatever you think of their choice it is their choice to make.
Maybe I am too optimistic- maybe I read too much positive into the pricing test. See, I think the price reduction isn't an "if", it's "how much".
It is also very fair to say that there were many eloquent posts against the test, and they should not have been attacked (if indeed they were). I feel it has come full circle to become a double-standard; it's quite ok to be harsh and critical of HTC, but don't dare challenge the person who makes such statements, or you are an HTC butt-kisser.
One thing I can say I have learned from my time online (over several years); if you flame, you can expect to be flamed. More correctly, taking a strong stance on any issue will give you a strong response, both positive and negative.
[This message has been edited by Kieren (edited 11-01-2000).]
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Agree with all that keiren. When a teacher starts discussing their own personality problems or their union collective aggreement, I tune them out. I will still tell my kid to listen to them, but I wont.
I think that wholesale atacks on people that complain or disagree are far more harmful to the comunity then the people the complaints in the first place. Im not saying dont disagree with me, Im not saying dont flame me if I piss you off. But dont group flame and taunt people that legitimaltly and honestly critisise HTC just because they did. Posts are being started just to stir up more flames against people that didnt like the pricing survey. This excellent thread of pyros was instantly turned into another flame the disenters thread.
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WB is under 30 bucks. Apparently WW2OL is going to be less than 30. IL2 is up in the air. But a boxed sim, with multiplayer shouldn't be that much. Anyway you look at it. its a good time for prop simmers.
Ill probably end up in the one with the most challenging FM, and believable gunnery. Regardless of price
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i agree easymo.
and anyone who wants to up the price is a lunatic.I wouldnt be able to afford $50+phone bills from UK.
I struggle now to pay but enjoy it so much i keep doing it.thanks for the post pyro it was interesting.
Hazed
<tick tock tick tock> (http://bbs.hitechcreations.com/smf/Smileys/default/smile.gif)
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Im trying not to be a hypocrite here. Im not shy about mixing it up with people that disagree with me. Many things that I post and others post that are negative about details of AH should be open for critism in the veign that they were offered. But if you constantly alline yourself with the status quo and attack instinctivly and viciosly those that do not. If you troll insults for them out of the blue then you are a chearleader.
I agree, Pongo. Where we seem to disagree is that I think Badger's second post (before anyone posted anything negative towards him regarding this) about the price change went far beyond acceptable criticism. In it he called everyone that isn't upset by the offer a martyr willing to die for HTC out of blind faith, and he speculated that Pyro's explanation for the offer was a lie meant to justify a subscription drive. Take out the big words and you have an insult to people who don't share his viewpoint, and damaging speculation about HTC's motives made in front of their customers.
After that, things got nasty for him. Rightfully so.
Its one thing to disagree and to offer opinions about the way HTC does things. Many people did that (Maverick, Ram, yourself, etc...), and I have no problem with them. I can even understand why they are upset, even if I myself am not.
It is quite another thing to insult people of differing viewpoints and to tell a business's customers that the business is feeding them a line of BS. If someone wants to make those type of obervations and have nothing but speculative rhetoric to back up their opinions, then they themselves have tossed civility to the wind. Whatever they get, they deserve.
Gordo
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Thanks for the info Pyro.
After reading your post and considering the hardware implications, I can imagine the b****ing that would have been all over this board if a bunch of new players suddenly flooded into AH (Not that I don't want that to happen mind you...), I just had an incredible image of a flaming BB.
Kudo's to HTC for the way you guys handled the entire situation. Tell HT to tip back a couple of cold frosty ones on me (Just add it my bill this month).
SD
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<ppuuuunnnnt!>
An excellent post by Pyro, hope people see it.
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vividly remember thousands of people on aw at 10 bucks a month 4 years ago nite after nite that is at least 4 times what you have now at peak . so the numbers issue is mute. so is it bandwith that is the problem ? cause its hard to understand why you would hire another company to determine the obvious. and make large numbers of customers angry at different prices for different folks. and the appologists/cheerleaders are the worst thing about this game save the horrible decisions reguarding the c hog so far. so again is it bandwith ?
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Sort of Towd, but more than that too.
You have to factor in support for a bunch of new guys that come in with a lowered price, meaning more trainers which means more free accounts to keep the new guys flowing in and not leaving because they can't figure out the game.
Then you factor in RAM and HDD storage and CPU power to keep track of all the players in the MA, and their score.
Then comes bandwith. It's not that there's a lack of bandwidth, there's plenty for the current customer base. The only problem is that as new players come in, HTC would need to increase the bandwidth 3x per everyone 100 customers(or thereabouts, depending on their connection and stuff). Bandwidth costs a boatload of money, so lets say HTC lowers their price to the much desired 10$/month.
Now, lets say currently we have 300 users and each are paying 30$/month under the current version. That's 9K/month. I'd say atleast half of that goes towards keeping the server running, the connection going and enough bandwidth for us to not have plane's warping across the skies. The other half goes to the 6 employees of HTC. $4500 a month divided by 6 employees=750$/month per employee. That's about 4 and a half dollars an hour if they work a full 40 hour week. That's well below minimum wage.
Now lets say the price is reduced to 10$/month and we get an influx of 300 new users. Double what we used to have. 10$ * 600 users= 6K/month. That's 3K less than they had with a 30$ subscription. And now more than half of that goes to maintaining the server and to give them more bandwidth to support the new increase in players. Lets say 70% of that goes to all of the upkeeping and bandwidth. That's 4200$ that goes to the server and bandwidth. 1800$ is left over for the 6 employees. They can no longer support themselves, HTC folds and the game is gone in a month or two.
So, it's not worth it to lower it to 10$/month unless we can get a thousand new users.
-SW
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id say way moore than 300 paying users, but just a guess.
more arond 1000 id think, since in a tour around 2000 ppl play. Id guess at least 1/2 are paying?
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I dunno the numbers Zig, I was just using numbers easy to manipulate to give an idea of what it costs HTC to keep everything going and still be able to live.
-SW
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Towd-
There is no question you get more people if you lower the price. The question is whether you can make money with the lower price. You don't have all the information to make that decision, neither do I. If HTC decides to research (in whatever method they see fit) the possibility of different price structures, I think it is only fitting we wait and see what comes of it.
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i really think that the numbers might be the real problem. ah is from what i have seen worlds ahead of the competition . and being a long time flight simmer they day i fly a new sim the old one is out the door.(guys at work all bought mscombat sim 1 i cant even stand to play the monstocity) there are several large communitys of people who would transfer over quite quickly . even at my own workplace ( i sell computers ) there are several people, like 8 or 10 that wont even try it at the price it is now. my real objective is to get more people in the game . as it becomes more fun with more numbers and a larger community. also new games are comming and there will be a exodous when the new one ( guess the name ) comes out as people are not gonna keep a 30 buck subscription and pay another 20 or 30 for a similar game really i just wish i could get my freinds to play (http://bbs.hitechcreations.com/smf/Smileys/default/smile.gif)
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Pyro,
Why don't you tier the pricing and create term commitments? For example, introductory rate of (new subscriber) $9.95 a month for three months, then term rates kick in. Month-to-month $29.95. One year commitment, $24.95. 2 year commitment, $19.95 per month. Early termination would incur a charge of something like 50% of the amount remaining under the service agreement. That way you won't have people cancelling on a whim until the next version comes out, etc AND it will give you revenue stability in the face of any competitors that may appear on the scene.
Just my thoughts.
BB
[This message has been edited by BigBen (edited 01-29-2001).]
[This message has been edited by BigBen (edited 01-29-2001).]
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Now that sounds like something that would probably work. Good Idea BB
[This message has been edited by NHFoxtro (edited 01-29-2001).]
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Originally posted by AKSeaWulfe:
Then you factor in RAM and HDD storage and CPU power to keep track of all the players in the MA, and their score.
I think SW has a point here. I'd bet it takes at least 3 employees just to take care of RAM alone! (http://bbs.hitechcreations.com/smf/Smileys/default/tongue.gif)
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sounds like BigBen sells cellphones. (http://bbs.hitechcreations.com/smf/Smileys/default/biggrin.gif)
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Pyro while I cannot argue with your right as a company to "try" any method you wish to get "solid" information, the reasoning seems somewhat like the thinking of some medical science that thinks that sacrificing some humans for the good of mankind is acceptable.
While the results may help you make your decisions, the "bad" feelings created by the process on the part of some "loyal" followers
is in the words of the bard "the rub". I hope that all the flak that you guys took was worth the demographics that you derived from the test. I do appreciate your taking the time to at least explain the thinking of HTC, which at least lessens the pain felt by some of us who did not recieve the benefit but have been here with you since day one.
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Hey ya BB....These are good ideas. However, why not do them like AOL is doing me. $9.95 a month for say 5 hours free play...and $2.00 per hour thereafter. $19.95 for 20 hours of free play, and $2.00 an hour thereafter. And $29.95 for unlimited play. Unfortunately, it still makes the server/servers upgrade, bandwidth additional cost, and potential HTC personnel burden higher. I am not so sure, that this angle wasn't already presented some time back.
Originally posted by BigBen:
Pyro,
Why don't you tier the pricing and create term commitments? For example, introductory rate of (new subscriber) $9.95 a month for three months, then term rates kick in. Month-to-month $29.95. One year commitment, $24.95. 2 year commitment, $19.95 per month. Early termination would incur a charge of something like 50% of the amount remaining under the service agreement. That way you won't have people cancelling on a whim until the next version comes out, etc AND it will give you revenue stability in the face of any competitors that may appear on the scene.
Just my thoughts.
BB
K-KEN
http://www.cutthroats.com/ (http://www.cutthroats.com/)
(http://www.cutthroats.com/art/buttons/on_patch8Xs.gif)
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The benefit of a tiered rating structure associated w/ some sort of commitment is that you have a guaranteed revenue stream over a period of time. Therefore, you know that have a chance to recoup any infrastructure and/or capital investments you make to support the larger subscriber base. You also have an easier time managing churn of the subscriber base. Best of all, you create a real incentive for a subscriber to sign a longer term. So let's pretend "CHogKila" joins today and pays $29.95 per month, and 6 months later he gets bored and leaves, you've made $180 dollars. If , on the other hand, he signs a one-year agreement at $24.95 you've guaranteed $300 of revenue AND reduced the chance that you'll have to waste time and resources re-registering the guy when he deceides that WWIIOL sucks and he wants to come back to AH. Reducing churn is everything when it comes to success. And yes, I do work in telecom (but not cell phones (http://bbs.hitechcreations.com/smf/Smileys/default/smile.gif)
BB
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There is an additional icentive to subscibe to a long term plan also "Savings" for the customer. As BB stated, $24.95 a month for a 24 month Commitment saves you $120 over two years. At the very least, even if HTC doesn't change the monthly Flat Rate subscription, a long term commitment plan like BB suggest should be STRONGLY considered. (I wouldn't go more than 1 year though.)
Pyro,
I believe there was a way that you could have informed the community that you were going to be doing some testing, designed to find a way to possibly lower the subscription price. I understand why you didn't inform the community. I can't tell you what I would have said and regardless you would have offended some members of the community. I certainly was more bothered by Badger making an issue out of it here than by your not making an announcement.
Would it be possible for you to give us a rough estimate of what the data your pricing survey suggested.
Also, with a possible change of pricing (lower I assume) do you expect a massive influx of new subscribers, that would really cause a major outlay initially on your end. Is there a possibility of some form of tiered expansion (I don't know how this could be done?) that you can consider, perhaps Skuzzy could better answer that question.
Crossing my fingers for $14.95 a month.
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"Looks Mean as Hell! Clare Lee Chenault.
(http://www.tir.com/~lkbrown1/06212.gif)
When?
"Downtown" Lincoln Brown.
[This message has been edited by Downtown (edited 01-29-2001).]
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Well, BB and Downtown, contrary to what you propose, the only way to accomplish the contractual agreement is up-front. IMHO. Having spent the last 25 years in the retail environment, and with todays' laws and loopholes, customer satisfaction issues and strategies....you would never collect the balance, unless it were up front. You only have leverage if you have their money. Otherwise, litigation will eat up your business. Ya can't afford to take someone to court for $100.00. You lose that in productivity alone.
I disagree with the plan, unless paid up front. It makes MY plan look better on a month to month basis. I'll explain.
First....a casual user at $9.95 a month, with 5 to 10 hours of free time....won't increase the bandwidth..because if he does, he pays the additional by the hour. <in your plans-this could be a trial period too> We may be in agreement there too. If he flies 10 hours over his allotted time, he pays $29.95. 15 hours over, $39.95. Tough break, ya might consider unlimited.
Second....19.95 a month and say 20-25 free hours. At 10 hours over, $39.95. At 15 hours over, $49.95. Another tough break. Again, limited hits on the server, slight hit on bandwidth, and possible personnel costs. BUT it's priced right.
In this scenario, you can build a customer base, but limit access. I am sure that would be temporary. 75% of the folks would convert to unlimited, the others would have a minor share, and if they created a bulge in the network and on the servers, then the costs could be recouped by the additional hourly rate. At least, I think that sounds workable. I am sure HTC has looked at these and many other options.
My experience in the Body Shop business as a manager, has had me picking up sandpaper on the floor, rolls of masking tape in cars or on the floor....and counting them monthly.
A business loses money on waste, theft, carelessness, and complacency. Every penny needs to be counted and accounted for, or the business will fail. (mostly small businesses)
You have to watch the bottom line every day, not once a month or annually.
Oops.... was on a roll. That IS a bad thing! (http://bbs.hitechcreations.com/smf/Smileys/default/smile.gif)
K-KEN
http://www.cutthroats.com/ (http://www.cutthroats.com/)
(http://www.cutthroats.com/art/buttons/on_patch8Xs.gif)
[This message has been edited by K-KEN (edited 01-29-2001).]
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So, who has vodka in the freezer?
Oh, good post, Pyro (http://bbs.hitechcreations.com/smf/Smileys/default/wink.gif)
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leonid, Kompol
5 GIAP VVS-KA, Knights (http://www.adamfive.com/guerrero)
"Our cause is just. The enemy will be crushed. Victory will be ours."
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Originally posted by leonid:
So, who has vodka in the freezer?
I do (http://bbs.hitechcreations.com/smf/Smileys/default/smile.gif) Two bottles of "pshenichnaya" (http://bbs.hitechcreations.com/smf/Smileys/default/smile.gif)
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K-Ken,
I would like the opportunity to perhaps get a one year subscription at a reduced rate.
I.E. pay $249.95 for a year. Or even $300.00 for a year. If you pay for 10 months in advance you get the next two free, something along those lines.
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"Looks Mean as Hell! Clare Lee Chenault.
(http://www.tir.com/~lkbrown1/06212.gif)
When?
"Downtown" Lincoln Brown.