When the bigger boys drop their prices on the App Store, there's no point competing. Instead, claims Fishlabs CEO Michael Schade, you should put your prices up, and watch your sales rise accordingly.

"When you try and get into a price war with someone like EA you lose," Schade said at the GameLab 2011 conference in Barcelona.

"When they dropped their prices down to 99 cents, instead of trying to compete, we put the price of Galaxy on Fire up from $6.99 to $9.99. Not only did we see an increase in revenues, but also in sales."

The price is right

If that sounds a rather flippant assessment, Schade went on to explain to GamesIndustry.biz that there is some science behind such a move.

"Obviously we observed the episode quite closely and we saw that the big guys were trying to squeeze out the smaller guys by having their AAA, high production values at 99c," he added.

"I believe that if the top ten or twenty positions are already cluttered with these games, it doesn't make sense to price drop.

"It rather works if you go up in price and try to differentiate yourself, because on the categories you might still be top ten, so people can find you if they look for a specific genre of game."

Up and down

Likewise, Schade concluded, if a major player such as EA raises their prices, there's value to be had in dropping your own. Differentiation, he said, is everything.

"Always do the opposite of what the big guys do. So we switched from $6.99 to $9.99, and it was around Christmas. Everyone was going for 99 cents or free.

"Of course, the game has to deliver the right quality and the experience has to be top notch - then you can differentiate."

However, despite success with this pricing approach, Schade admitted the publisher will adopt a different strategy with future releases.

"Actually, for upcoming versions of Galaxy on Fire we will take a pricing approach that's more similar to a PC digital download game," he concluded.

"You can say, I don't care what others do on iOS - if you want to play Galaxy on Fire, you're part of our core fanbase, that's our price."

[source: GamesIndustry.biz]