The Escapist Magazine (of Zero Punctuation fame) recently put out a series of articles about piracy.  One of the articles I thought that was very interesting was one about the culture in Brazil where practically every piece of software available for sale is pirated.  This is very true in Asia as well.  But it was the price point that caught my eye:

The asking price is ridiculously small – usually around R$10 to R$15 (or $5 to $7.50) – but after a little negotiation, you can easily end up paying half that. You won’t, of course, receive a receipt; instead you might be giving a business card with the name of the game you purchased written on the back, with the promise that you’ll be able to exchange the game in that store if it proves to be faulty.

In general, there is speculation that the price of software – even AAA title software is too high.  Valve experiemented with Left4Dead by lowering it’s price point to see how much sales increases occurred at different price points:

10% Price Reduction – 35% Revenue increase
25% Price Reduction – 245% Revenue increase
50% Price Reduction – 320% Revenue increase
75% Price Reduction – 1470% Revenue increase

Note: This is revenue increase – not number of units sold.  The profits shot through the roof as the price came down.

I’m estimating that the correct price point for indie games is somewhere in the $3-$5 range.  This undercuts pirate prices.

In a bad economy, people will be seeking the most value for their dollar.  Games offer far more value than a movie because of replayability.  Therefore, a game that outprices books, comics, and even rental movies will do very well in this downturn economy.