Here's the dirty little secret of discount pricing: it only works as long as people think it's a discount. As soon as they leave the page they see it on, it isn't a discount anymore, it is just The Price.<p>Valve's "here, have 75% off" works because it is seventy-five percent OFF, not because it makes software inexpensive. If your software was inexpensive all of the time, it wouldn't help you.
Jeff seems impressed by Valve.<p>Across all industries a well publicised one-off sale is going to get in the crowds. See Boxing day rushes and seasonal sales in retail.<p>These are about publicity and shaking out any latent buying intent remaining after the high value people already paid full RRP. Don't forget stores have to clear stock before the next season's shipment arrives. Perhaps Valve has a Left8Dead sequel on the way??<p>--<p>But would lower prices all year round help? All of the pricing theory debates can find backing by looking at a Retail Niche which sells at a similar price point.<p>All I can add is that individuals do not do well at the cheap end of pricing. Overheads are a much higher proporton of small-concerns. So higher prices would probably be better for HN coders.
The comparison with OS pricing seems like a fallacy. You need an operating system on every computer; most people are scared of "that Linux thing". You can only sell as many Mac OS upgrades as there are Macs out there, so the way to sell more copies is to sell more hardware. For a large part of the population, Windows is therefore more or less inevitable.<p>Now, if Microsoft wanted to get more people to abandon XP, then offering a direct upgrade to Windows 7 and lowering the price would probably work.
One of the reasons the App Store prices are so low is that there is no “try before you buy”.<p>If I test a piece of software for a month and find it useful, I will pay a reasonable price to keep using it.<p>If I read a paragraph written by the author and view a screenshot, no way I am going to put down more than a few bucks to test if this software is actually useful to me.
Don't forget that games are also bought by teenagers that don't have a lot of money. $ 49 was a lot when I was a teen.<p>The right price changes from one person to another. That's why you segment the market.<p>That's what Valve does. People willing to pay $ 49 <i>already</i> bought the game. People who didn't were probably stopped by the price. If you lower the price, you lower the barrier.<p>In other words, you segment the market based on the willingness of someone to wait for the price to lower.<p>Segmentation maximizes your revenues.<p>As for Windows, most people don't buy Windows, it comes with the new PC they're going to buy for X-mass. People who buy upgrades are a different market segment.
Theres two points that I see here:
1) Convenience/ease of purchase
2) Low enough price to accommodate impulse shopping<p>The Steam deals definitely do this and I've often bought games on Steam for exactly those reasons. Theres a lot of games which I would never have thought about buying, but then I see them there for €5 and all I need to do is click and wait for the download and it looks fun... why not!? So yeah, if somethings convenient and inexpensive enough to buy on impulse, people will.
I think there is an important point to note in relation to this: which is that Appstore and Steam are similar ideas. i.e. a platform with games/software within easy reach and all purchasable via the same standard mechanism. But more crucially they also have a community aspect (less so Appstore I suppose) that means word spreads very quickly.<p>It would be interesting to see the same thing tried with a more standard retailer like Play.com or perhaps EA (with it's smaller store).<p>I have no idea of what would happen - but it would be interesting.
Don't understand the comparison of the Mac upgrade vs. Windows 'upgrade'. The Mac upgrade is not an OS in its own right - it is <i>only</i> an upgrade. Windows 7 is an entirely different OS.<p>Feel like I missed something, there...<p>Edit: see below - I did miss something (serves me right for not clicking through Jeff's amazon affiliate links)