Marketing 101 in the Flight Sim Industry

[Guest byoung]

When determining price points for Flight Sim related products, especially on the hardware side, I am amazed. I know it is kind of a Catch 22.Is it because of a huge initial investment? Or maybe the market is just too small to apply a good volume based production model.Take the GoFlight Rudder Pedals for example. Probably better quality than the CH Products Pedals (a guess), but over twice the price? PFC even higher!If the quality is that much better, you think that GoFlight would offer it at maybe $199 to lure potential CH Products customers. Could you justify the $70 price difference?My understanding is that with the PFC controls and threads I have read here on AVSIM, the quality of the PFC Pedals more than justifies the price point.I look at my Go Flight LGT, P8, rack etc, and see maybe $50-$75 worth of parts and see it at much less cost in a good volume production model. Not that I haven't enjoyed my Go Flight stuff. It is great quality. I think CH Products probably has adapted this idea. The Catch 22, you have to have the market before you start producing, But if you reduce the selling price, potentially you sell more. If you sell more, your cost per unit goes down (volume discounts on raw materials). CH Products even sell through retail stores and online distributors. Go Flight does on a limited basis as well.I wonder what the total number of FS 2004 units sold. It appears the flight sim community will always be stuck in a nitch type market, where everything is considered "specialized", thus priced at accordingly.On the add-on aircraft and utility side, more bundles should be offered where applicable. When new products are released, I see no incentives to push volume. Special 24.95 7 days only, then the price goes up to 34.95.. That kind of thing.I am sure most companies feel fine with their current models. But it seems like everyone would benefit, if a good volume production model can be applied. Maybe it just isn't possible.Barry

[Guest wathomas777]

Unfortunately, it is what the market will bear, and as can be attested to on these boards, many simmers flock like lemmings to jump over the cliff and spend their hard earned cash on the latest sim "enhancement". The latest example seems to be Lago's Maddog MD80 addon. No manual, incomplete work, and a high price tag to boot. Yet if one were to do a simple browse of Lago's support forums, or of some of the threads here, we would see that perhaps we need to keep our hands on our wallets before we hand over more cash to Lago.I find it astonishing how much some add-ons cost without any real justification. I don't see how anyone can spend $40 to $60 on a single plane. But then again, I am not a real pilot, so I would not know a realistic flight envelope if it bit me in the rear. And I am sure there are planes out there (PMDG comes to mind)that are worth every penny, if that's your "thing".For me, the critical price point is $20. I spent $15.00 on a Gibraltar scenery which I love, because I have very cool memories of the place. I also spent $20.00 for Lago's Honolulu, because of my 6 years of living in Hawaii.The only Addon's that I have broken the $20.00 rule with are Ultimate Traffic (which to me was a no brainer) and USA Roads. Both of which were worth the $30.00 I spent on them, although I might give a second thought about USA roads if I had the choice...We have been suckered into believing that we have no choice but to pay a high premium price, otherwise we are simply robbing food from the poor developers mouth... So with charity in our hearts, we give, and give, and give....Of course it's all fiction. FSGenesis is a perfect example. Justin has been creating and modifying high quality mesh for 10 years now. Justin didn't wake up one day and say, "hey, I am gonna go this full time....". No, he started FSGenesis part-time and through superior customer support, great word of mouth, and reasonable pricing he "built" the business into something he can support his family full time on. Another good example is Pete Dawson. Although many, including me, criticized his decision or perhaps "timing" to make FSUIPC payware for the FS2004 version release, I can honestly say that the small $20.00 donation has more than paid for itself. Again, Pete generated a "market" first, and then priced accordingly. We can moan and groan about the high prices in our niche community, but until we stop buying everything blindly, handing out our cash to software developers like they were ringing a bell in front of a pot at Christmas, then we will continue to pay.

[Guest Zevious Zoquis]

er, I see. So you and you alone are capable of making the decision to go above that magic price point but anyone else who does so is a lemming? LOL. You said it yourself - "The only Addon's that I have broken the $20.00 rule with are Ultimate Traffic (which to me was a no brainer) and USA Roads. Both of which were worth the $30.00 I spent on them"I've bought about half a dozen add-on planes ranging in price from about $25 to $40. I feel each and every one of them was worth what I spent on them. Why is it only you who are capable of making a sensible buying decision? I could just as easily say only a lemming could spen $30 on an AI traffic program but I don't becuase I know for people who are interested in that aspect of the sim, $30 may be totally reasonable (as it apparently was for you).

[Guest cw1011]

There are several things to keep in mind here. 1. Volume: PFC, CH Products, Go Flight, PSS etc, will never sell millions of copies of their products. Thus, development costs have to be amortized over fairly small product sales. This dynamic tends to result in higher prices in general, not just the flight sim community. 2. If someone pays $40 for an airplane, and enjoys it, and believes they got good value, then the plane is fairly priced. This is the ballancing act in price setting. Finding the spot where you can make enough to cover your initial invesment, yet not charging so much that you leave money on the table from folks who would have bought it were it a bit less expensive. 3. Characterizing flight sim customers as lemmings is unfair. There is absolutley nothing unique about how flight simulator products are marketed and priced, and any other short run product for a small and highly specialized market. 4. The difference in materials between CH and PFC is night and day. CH makes a very good set of plastic pedals. PFC makes products that are all metal with many parts custom cast, milled or stamped. They will be with you long after you have retired FS 14, and have dropped yet another $500 on a new mobo to support the ADM 64 6.5 ghz chip to run FS 15 with its complete world sattelite image terrain system. Heck you might as well put them in your will, they will be around that long. Thus, PFC's costs are dramaticaly higher than CH's to make their pedals, and they have to charge more money. Same is true of Go Flight - though I havn't explored their pedals. Are they worth it? Only the buyer can judge. Most flight simmers are spend more hours with FS than any other program. Put within that framework, perhaps so. I know I couldn't land anything until I got my pedals and yoke from PFC. The precision, weight and heft finally gave a sense of control and inertia to the sim that made it much more like flying the full motion sim that I got to try in Denver in September. So they were worth the price. 5. The programming that goes into a modern airline simulation like the PMDG 737 is staggering. Robert R. of PMDG estimated that its 777 product for Fly 11 required two man years of programming to complete, even before beta testing, patching etc. I think that $40 for a plane that simulates virtually all the systems of a $100 million airliner to not be outrageous - but that is me. Just som ethoughts. Colin

[Guest]

Well said. To me an AI program isn't worth anything.I spend most of my flying online where there's no AI and the little that I do fly offline the old PAI stuff I've running (not updated in 2 years now) is enough.But for a good aircraft I pay the price because that is worth it to me. I've had it up to here with downloading a hundred freeware aircraft and several hundred panels and maybe find one combination that's more than halfway decent.Of course not all those commercial offerings are decent either but the percentageis high enough to more than offset the cost of my time which I saved (I'd rather have fun flying around than trying hundreds of panel/aircraft combinations to see if any work like I want to).Same for scenery. Most addon scenery to me isn't worth the money.Why pay (or spend the time downloading and installing freeware, remember time is money) for an airport you visit maybe once a year?Yet that airport will be the main focal point of someone's flying, making it worth the investment to him.Does this mean I have no addon scenery? Certainly not. I've some for areas I fly frequently and I've quite a lot of mesh and a full set of FScene textures which cover entire continents at the price of a single of those airports.If I needed new pedals at the moment I'd seriously consider the GoFlight pedals. I've had several CH yokes and pedals and they just don't last more than a year or two before being worn out the way I use them. If GF can deliver pedals that last twice as long the 30% or so higher price is earned back rather quickly.

[Tom Allensworth 1,532]

"I am sure most companies feel fine with their current models. But it seems like everyone would benefit, if a good volume production model can be applied. Maybe it just isn't possible."Marketing 101, Chapter 2: volume production is driven by market size and product life cycle. Small market size = lowered volume. Long product life cycle = lowered volume. Small market size and long product life cycle mean that costs must be recouped on smaller volume, and therefore higher product retail price.Both of these apply to the flight simulation market, so you might as well accept that fact, and adjust your expectations about pricing accordingly. What continues to amaze me is that higher prices are not actually the rule.

[Guest wathomas777]

No, you misunderstood what I was saying, or I did not make myself clear.The lemmings are those who buy each and every addon they can willy/nilly without doing a bit of research and without holding the company accountable if they distribute trash.I personally said, I can't see my self buying a 40 to 60 dollar airplane because I wouldn't know a "realistic" flight model if it bit me in the butt. It doesn't make people who buy planes lemmings, it's just that I would not be able to appreciate the work done, and thus not see it as a value.I also don't buy a lot of airports. I've bought two. They hold special meanings for me because Gibraltar, was the first time in my life I had been outside of the North American Continent. I was in the Navy and it was my first step on European soil and opened my eyes to a whole new world, (or old world, so to speak). The "rock" was charming. So Gib in FS2004 was a no brainer for me because of it's detail.Honolulu is where I spent 6 years in the navy. I lived less than 2 miles from the airport. So it too has a special place in my heart. In fact I had the freeware version of Honolulu installed, but it was a terrible FPS drain on the system, so I went with the GMAX Lago version instead.The point I was trying to make is that many companies are making tons of cash by overpricing mediocure product, which is something we should not accept. There are also some very high quality sceneries such has Switzerland Pro which are drop dead gorgeous, but at $130.00 US is price out of reach for many of us. Is it too much a stretch to believe that at $65.00 they could sell twice as many copies?My comments were not to imply that people who don't subscribe to my purchasing habits are lemmings. I was simply stating that as a flight sim community we should guard our wallets and think before we purchase. Companies that have known issues in "quality" and "customer support" should have to re-earn our trust before they release another lemon on the market.I'm sorry that my comments were taken in the wrong context.

[btacon 1,772]

Agreed...You gets what you pay for, and you pay for what you getbt

[Guest]

>The point I was trying to make is that many companies are>making tons of cash by overpricing mediocure product, which is>something we should not accept. >they're not making tons of cash, despite what you want to believe about evil companies selling millions of addons it took no effort to create.If one in ten addons even breaks even it's a lot. Poorly received addons (which most poor quality ones will be) sell far less and never get out of the red.Sales volumes overall are very low. Most groups are happy to sell a thousand copies of any one product a year for a period of at most 2 years with maybe a few hundred overall more in later sales.>There are also some very high quality sceneries such has>Switzerland Pro which are drop dead gorgeous, but at $130.00>US is price out of reach for many of us. Is it too much a>stretch to believe that at $65.00 they could sell twice as>many copies?>They'd sell maybe 20% more at most, and at the cost of a more expensive support infrastructure.>I was simply stating that as a flight sim community we should>guard our wallets and think before we purchase. Companies>that have known issues in "quality" and "customer support">should have to re-earn our trust before they release another>lemon on the market.>no, you're stating that most all addons on the market are overpriced pieces of junk and that as customers we're collectively responsible for perpetuating that situation by buying that junk in massive quantities.Mistakes are made. I'd not be surprised if someone at Lago (yes, that's the one you're specifically targeting isn't it?) forget to put the correct files into the installer and so caused some textures to not show up.It's an honest mistake, it's been made before and will be made again.But that's hardly the beginning of why people have problems with addons they purchase.The majority of users never read their supplied manuals, have trouble, and flame the product for their failure to use it as intended and described.Then there's a smaller but still significant group of users who have systems that are unstable or otherwise unsuitable to run the addon in ways which the manufacturer never envisioned. If those people ask for a refund many manufacturers will grant it, maybe after trying to help the customer to get the product to work (sometimes at considerable cost to the manufacturer who needs to spend hours or days trying to replicate a spurious and usually poorly defined problem).Yet despite this effort on the part of the manufacturers some customers still see the need to flame the product in public forum, harming the good name of the manufacturer.Hardly surprising if support requests are met with ever greater hostility in a market where the customers go backstabbing you even while you're attempting to help them at cost to yourself...

[oqvist 11]

Yes FS add ons are very expensive if you look outside. You can get full games for the same price that offer much more than a single plane for your money. But they are sold in bigger volumes even though they suffer more from piracy then FS 2004 add ons does. However the development teams are bigger and they invest more in their games so... They won

[Guest Zevious Zoquis]

whether or not a dev might sell twice as many copies by lowering the price (and I doubt very much that would be the case) doesn't matter since it's up to the developers to decide how they want to present their product to the market. They might actually prefer to make a few more dollars off a smaller volume of sales rather than sell at a lower price, make less on each sale, and then have more expense in the form of customer service issues to deal with. The more people who buy, the more support emails you're going to get. The point is, they are the ones who know what they need to do to carry on. If the product is way over-priced and they can't sell enough to make a go, they'll be gone. It takes no more than about 3 hours after the release of a product for opinions to start appearing in the forums and word of mouth is deadly in this industry. If a product doesn't meet the expectations of the "lemmings", we all know about it PDQ. "I was simply stating that as a flight sim community we should guard our wallets and think before we purchase. Companies that have known issues in "quality" and "customer support" should have to re-earn our trust before they release another lemon on the market."Nobody could possibly dissagree with the above statement. The problem arises with the implication that the market is saturated by "under-handed" developers "getting rich" by selling wildly over-priced add-ons to all the "lemmings."

[Guest wathomas777]

I never cease to find it amazing how I can agree with you on somethings 150% and then find you on the other side so terribly misguided the other times.Will you not even acknowledge for a second that some companies out there do not give a "cr*p" about the customer or customer support?Everytime someone does mention a problem, you are so quick to back the manufactuer? Why????I am not under the delusion that the Flight Simulator well is so shallow that developers have to scrape and scrap for a few precious drops to drink.The flight simulation addon community has if anything "grown" throughout the years. There are no less than 2 magazines devoted full time to this product. Every year there are more and more companies devoting themselves to flight simulation and flight simulation products.Many of these companies do their business as direct downloads, and as a result, have no distribution overhead to speak of (No shipping costs, no manual printing costs, no packaging). Perhaps my post seemed to imply that everyone making addon's is a crook, and that is not what my intent is. However, everyone in the Flight Sim addon business is hardly facing bankruptcy, or else they would not be in business to begin with.I can buy a company missing a texture in a download. Hey stuff happens. But to release a "complex" simulation product without even having a manual ready? Is that really the actions of a responsible company. How about another famous company e-mailing a customer and implying that if they are having problems with their product, perhaps they are too stupid to own the product in the first place.You seem to be under the misguided assumption that it's the customer is expected to meet the needs of the publisher, not the opposite.I work in customer support every day. I work for a company that develops and sells hardware and software products. If we took the attitude that you have shown towards our customers, we'd be out of business within no time.I will be the first to admit, that there are some tough to satisfy, and impossible to satisfy customers. But amazingly you think that if someone has something negative to say about their experience that their a malcontent?Is it too much to expect a manual? Is it too much to expect a word that the manual in your language is still being translated BEFORE you purchase the product?Why are you so unwilling to try and hold companies to the most basic of responsibilities to their customers? A majority of the companies I have dealt with have adequate customer service, and adequate quality. Some companies, such as FSGenesis go way above and beyond. And some companies, and you must admit this, are very lacking in that area.For a company to come to a public forum and solicit people to e-mail and attack a customer it thinks is a pirate, is irresponsible to the point of being criminal. I don't care how much evidence you have. A company that denegrates it's customer by implying that if they are not smart enough to install the product, they are not smart enough to use it. A company that for some reason advertises a multi-lingual manual, and then releases a product prior to the manuals being available. Again, these are not simple "mistakes" of ommission. They are violations of trust between the consumer and the customer. And said companies should be held accountable for that violation of trust.On a positive note, purchased PMDG's Beech 1900D, and it is very nice. The positive experience I have had with the Beech, may very well convince me to try their other products as well.

[Guest]

20% is an educated guess about the sales increase based on what a similar percentage price reduction usually does.Simply thinking that half the price equates twice the sales at no higher cost is a fallacy. Whether the actual sales increase is 20% or even 50% is irrelevant in that context... It won't be 100%, it won't in fact even be close.

[Guest]

>Will you not even acknowledge for a second that some companies>out there do not give a "cr*p" about the customer or customer>support?>Never said that... Only said that attitudes like yours which seem to claim that ALL or at least the vast majority companies engage in such practices are incorrect.>I am not under the delusion that the Flight Simulator well is>so shallow that developers have to scrape and scrap for a few>precious drops to drink.>In that case you're wrong.Most can't exist on the income from their sales, using it mostly as a means to finance a hobby.>The flight simulation addon community has if anything "grown">throughout the years. There are no less than 2 magazines>devoted full time to this product. Every year there are more>and more companies devoting themselves to flight simulation>and flight simulation products.>Yes, and each of them reduces the sales for all of them...>Many of these companies do their business as direct downloads,>and as a result, have no distribution overhead to speak of >(No shipping costs, no manual printing costs, no packaging). >In place of that are massive bandwidth cost, packaging cost, paying a percentage to an online store and/or credit card company, etc. etc.The idea that everything on the internet comes free of charge is wrong, most of it in fact costs a lot of money.>Perhaps my post seemed to imply that everyone making addon's>is a crook, and that is not what my intent is. However,>everyone in the Flight Sim addon business is hardly facing>bankruptcy, or else they would not be in business to begin>with.>For most it's a hobby they'd not otherwise be able to afford...Many of them have daytime jobs and do this on evenings and weekends.Some others are pensioners or independently wealthy and don't need the income.>I can buy a company missing a texture in a download. Hey>stuff happens. But to release a "complex" simulation product>without even having a manual ready? Is that really theI believe it was ready but the person responsible for the website didn't get it delivered in time because of timezone conflicts?Or was that another time?>actions of a responsible company. How about another famous>company e-mailing a customer and implying that if they are>having problems with their product, perhaps they are too>stupid to own the product in the first place.>Yes, there are some bad apples out there. I never denied that. I've in fact dealt with them myself in the past and learned to recognise them.But to consider that the norm is incorrect.>You seem to be under the misguided assumption that it's the>customer is expected to meet the needs of the publisher, not>the opposite.>No I'm not. But I do expect the customer to have a basic understanding of the problems their suppliers face and to accept that those suppliers may not be able to respond in 10 seconds or less to every demand no matter how frivolous.>I work in customer support every day. I work for a company>that develops and sells hardware and software products. If we>took the attitude that you have shown towards our customers,>we'd be out of business within no time.>Same here pal. I work in development mainly but do take support calls when I'm the one with the knowhow to solve the problem so I stand in the same spot you do more or less.Customers are always right indeed, but a customer who comes on the phone cussing and swearing isn't going to get the service he wants.In fact he will be relegated down to the very bottom of the pile of support requests and may well get a call from our sales manager or CEO.>For a company to come to a public forum and solicit people to>e-mail and attack a customer it thinks is a pirate, is>irresponsible to the point of being criminal. I don't care>how much evidence you have. A company that denegrates it'sIf that company has no other means to get in contact with that customer, it may well be a last resort.I don't know the history of the event you're referring to here, it may well have been something in which private communications had failed so completely someone lost his nerve.Remember that most people in the flightsim addon business, in contrast to us, aren't IT professionals or professionals in another service industry.They're not trained (either formally or through experience) in dealing with customers remotely (some might have worked in a supermarket to pay for college, it's not the same).Most learn in time, if they don't get so frustrated by irrate customers that they completely lock down and stop supporting anyone unless they know them personally.And some seem to thrive, but those people are few and far between.

[Guest Kingair315]

<<>. Try spending $60 to 80 and more for a Used aircraft. The maintainence alone cost more than the FS and all addons...