Outside of philosophy, there are 2 main academic disciplines concerned with the question of value: economy and linguistics (and by extension semiology). While economics and linguistics are concerned with a different object of study, they both converge on one crucial point: value is arbitrary. It means there is no such thing as a natural, objective and intrinsic value. Assigning value involves an arbitrary and contingent judgment call.
This is important when considering gacha, its content and its probabilities. When you are designing a gacha, your goal shouldn’t be to try to find the probabilities that match the objective value of its content. There is no intrinsic value to what’s in a gacha. Designing gacha is the process through which you will attribute the value of the items it contains. Stated differently, when you define your gacha you decide what its content are worth.
Thinking about the value of the gacha content
A gacha pull has a clear price point. Let’s assume it’s 100 gems. But knowing it costs 100 gems to get a gacha pull doesn’t tell you how much its contents are worth. Imagine a gacha which is set up as follows:
First, you cannot say item value = price gacha pull ÷ P(a) item. If you were to approach things that way, then you would have the following prices:
If you act as if item value = price gacha pull ÷ P(a) item then you are only looking at what users are walking away with – and not what they have purchased. In the process of doing this you are also over valuating everything in your gacha. Users spend 100 gems but would always walk away with something that is worth more gems. That doesn’t make sense – and it’s simply not the case. Because when thinking about gacha and value, you cannot think in terms of what the users are walking away with. You need to think about what the users are buying. When users buy a gacha pull, they are not buying the object they are walking away with. They are buying percentages of each objects in the gacha pool. One user might spend 100 gems and walk away with an apple. Another user will spend 100 gems and walk away with a banana. But both have purchased the same thing (at the same price): 1% of an apple + 10% of an orange + 25% of a pear + 64% of a banana.
0.01 apple + 0.1 orange + 0.25 pear + 0.64 banana = 100 gems (if fruits aren’t your thing, imagine we’re talking common, uncommon, rare and epic). That’s the only reality of value you are working with. If you’re working as if item value = price gacha pull ÷ P(a) item, then you have 400 gems = 100 gems. When you are designing a gacha and an in-game economy, you cannot start thinking in terms of individual occurrences – and the randomness that accompanies it. You need to think in terms of actual percentages and fractions of items – where the randomness of gacha is no longer a factor. With gacha some users will be luckier than others, but in the grand scheme of things everything will balance itself out.
The challenging part is, you can’t derive from the price of one gacha pull and the probabilities of each item how much an apple, orange, pear or banana are worth. There are multiple price scenarios were 0.01 apple + 0.1 orange + 0.25 pear + 0.64 banana = 100 gems (goal seek in Excel is your friend). For example:
In each of those cases, the prices vary greatly – although 0.01 apple + 0.1 orange + 0.25 pear + 0.64 banana always add up to 100 gems. But the probabilities – and the experience of the user doing gacha – remain the same. This is why you don’t tune your gacha based on the price/value of the items in gacha. That is an artificial process that misses the reality of the user experience.
Defining your gacha with user experience in mind
You need a starting point, an anchor point, to start defining your gacha. And the best way to do that is to start by deciding what you want the experience of your paying users to be – not what the price of the items are.
First you are going to identify what your “prize item(s)” is/are. What’s the most valuable in your gacha; that which users aspire to the most? Once you have that figured out (and it’s usually pretty easy, it should be the best thing in your game) you need to start asking how many gacha pulls you want users to do to get the prize item. You can say you want 1 prize item for every 100 pulls – that’s 1%. You can get fancy and frame your goals differently: you want 50% of users to have gotten at least one prize item after 100 pulls – that’s 0.7%. Either way you should determine the probability of your prize item from the perspective of the user’s experience of gacha – not from the perspective of the price of the item.
You can repeat the same process for all items (or item categories) except one – usually the lowest value/rarity item. Say you want 1 in 100 pulls for an apple, 1 in 10 pulls for an orange and 1 in 4 for a pear. You are then left with 64%. That’s what the filler of your gacha is for: completing the rest of the gacha with lower profile items. Filler items are usually the items with the highest probability. If you don’t get a prize item(s), everything else will be a filler.
But getting a filler item doesn’t need to be – and shouldn’t be – a disappointing experience (even though it will never be as good as getting the prize item). This is where you need to design your overall economy to ensure your gacha and purchase experience will always be positive. If you have a premium gacha which is mostly aimed towards customers, then you should ensure the filler item is always better than anything else you get for free. To make your purchase experience rewarding and worthwhile, make sure your filler is better than anything a non-payer can realistically aspire to. By doing that you are ensuring the gacha you are selling will be valuable for any buying user (that helps boost conversion and redeposit). And the prize item(s) will remain a strong aspirational purchase driver for any engaged customer.
Gacha price point and item cost
If you wanted to increase the monetization performance of your gacha, the best way to do that is rarely to decrease probabilities (unless your starting point is something ludicrously high). We’ve seen that a) the price of an item in gacha is arbitrary and more specifically b) it’s not item value = price gacha pull ÷ P(a) item.
That means you are not increasing the price of an item when you decrease its probabilities. But you are increasing user dissatisfaction. And leveraging negative emotions is not an effective way to monetize in a sustainable way. Most users convert early, even before they fully understand what they are buying. And the earlier a user converts (displaying a high level of enthusiasm for the game – rather than frustration) the more s/he will spend in the future. Customers also churn – that means you shouldn’t rely on user’s propensity to act according to a “sunk cost fallacy” (this especially applies if you are doing a step up gacha).
So, you don’t increase the price of an item within gacha when you decrease its probability. More importantly, it’s not the price of the item in gacha that is driving your revenue. Every user is buying the same thing – regardless of what s/he is walking away with. And all buying users are spending the same amount: it’s the price to do gacha. What is real from a revenue perspective is the price point of your gacha pull. And that should always be the main lever you play with to optimize the way you monetize your gacha.
If you were to run a test and see purchase patterns for a same gacha at 2 different price points, you would see that the cheaper price point might attract more customers (especially lower LTV customers). But purchasing users within comparable LTV brackets don’t tend to make more purchases when gacha is cheaper. Incidentally, the average number of purchases is usually very far off from what’s required to get the prize item. So lowering the price of gacha rarely (not to say never) translates into greater revenue.
That means users don’t buy gacha until they get the item they want. They’ll buy gacha a few times and then move on – regardless of what they got. Because of all that, it’s usually better to try to play with the price of a gacha pull – rather than the probabilities within gacha. Changing anything that is clearly user-facing will usually always have a bigger impact on user behavior than modifying something that is hidden to the user. And leveraging the gacha price to improve monetization is in line with one of the key principles of mobile monetization. Price only marginally impacts user motivation and propensity to spend in mobile games – and that makes sense in the context of digital entertainment (it’s not the same logic at play with consumer-packaged goods or durable goods – or any goods with a tangible functionality and utility).
I do not understand final excel table LTV bracket is what? How to calculate ratios in the table as 1.32,1.42…
The numbers in the final table are “actuals”. When gacha costs 260 gems, a player with an LTV of $10 or less does on average 1.32 purchases. When the price of the same gacha is 150 gems, a player with an LTV of $10 or less does on average 1.42 purchases.
The point of the graph is to illustrate the fact that lowering the price of gacha doesn’t mean players will purchase it more often. Players are willing to make a certain number of gacha pulls – more than spending a certain amount of currency on gacha.
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