Getting players comfortable with spending a little is the key to getting them comfortable spending a lot. Read on and I’ll show you why.
If you’re at all involved with the gaming industry, you know they’re a crucial piece of the puzzle. Will a game survive beyond its opening year? Will it keep its players engaged? Will it accrue enough revenue to hold its market real-estate through the long term?
For every one of those questions, your in-game offer strategy has a hand in the answer.
It’s fundamental to your game’s health: letting you earn the profits you need to keep developing. It’s essential to your game’s survival: giving you the freshness you need to keep the attention of your audience. And it’s integral to your game’s character: helping you cultivate the right relationship with your players – one that’s oriented around mutual satisfaction, bringing you closer together instead of further apart.
When done right, an in-game offer strategy has the power to launch your game to the highest of highs – for monetization and for engagement. So leaning on one seems like a no-brainer, doesn’t it?
Absolutely. But we’re not here to discuss why you need a great in-game offer strategy. We’re here to break down how you get one. How do you craft a strategy that activates your audience? How do you implement your offers in exactly the right ways, at exactly the right times? How do you cultivate a lasting relationship with your players through the opportunities you deliver them?
Don’t worry – we’re going to get into it **all. But before we do, we need to shine a light on where some folks in our industry have gone… well, wrong.
“Big offers generate the biggest results.”“Big spenders are born rather than made.”“Success should be immediate – if it’s not immediate, it’s not working.”
Feel the pull of temptation to believe ‘em? These are some of our industry’s most damning myths – and in this article, I’m going to walk you through why they’re not just misguided, but dangerous. To your strategizing and to your bottom line.
So: if you’re ready to view the missteps that have taken many an expert down and the tactics that can get you from subpar to soaring the skies, then follow me. Because today, we’re dissecting the truth behind a winning strategy – and we’re leaving no myth unturned as we do it.
But before we zero in on crafting the perfect strategy, let’s make sure we’re on the same page about the basics. When we’re talking about in-game offers, what are we actually talking about?
An In-Game Offer, Defined:
Any opportunity for a player to pay a fee in exchange for an item, advantage, or currency in a mobile game – after the initial download (or purchase).
From a new skin to a new character, access to an exclusive event to a whole potful of tokens, in-game offers can take on an endless number of forms. And, for the sake of crafting a strategy with mastery, it’s helpful for you to know all of them… or at least: know all of their categories.
Here are the categories:
Definition: Any item, ability, or exclusive access offer that can be used by a player a finite number of times before disappearing.
Example: An extra life in a challenge; in-app currency; the limited-time ability to fly.
Definition: A new character; weapon; vehicle upgrade; an unlocked race-course.
Example: Any item, ability, or exclusive access offer that can be used by a player infinitely.
Category: Automatic Subscriptions
Definition: VIP Status that provides players with more characters, abilities, or special features.
Example: Any automatic, continually-charged paid subscription that grants players access to the app, a premium version of the app, or exclusive features & events
Category: Manual Subscriptions
Definition: Monthly Passes that give players access to exclusive environments or challenges.
Example: Any paid subscription that has to be manually re-upped to grant players access to the app, a premium version of the app, or exclusive features & events.
So there you have it: the component parts of in-game offers. But while those four categories might read simple to you, the possibilities for what can be produced in each are nearly endless. For good reason.
Think about it like this: in 2023, our players are the most desensitized that they’ve ever been. Seeing the same old content – and fielding the same old offers – won’t keep them coming back. Creativity will. Authentic and intentional strategy will.
But what does that look like in practice? These two powerhouse games – and the real-world strategies that launched them to greatness – will show you:
Candy Crush Saga
When Candy Crush Saga was first released in 2012, its monetization strategy was a mixed bag: half ads, half in-app purchases (IAPs).That framework wasn’t giving its team the revenue they believed was possible.
In 2013, the game removed ads – relying entirely on its IAP strategy:Highly relevant offers at highly accessible price-points – never shoved down players’ throats, but presented among other (non-paying) options.The choice was always the players’.
From 2013 on, the game raked in hundreds of millions in revenue annually – a pattern continued to this day.
In 2021, it pulled in a cool $473 million.
Clash of Clans
When Clash of Clans was first released in 2012, it made a huge **splash. In 3 months, it earned more than any other app in the U.S. In 1 year, it earned more than any other game in the world.
In 2015, after it hit $1.8 billion in revenue, it faced a new problem. How could it keep up with itself?
Over the next few years, its earnings dropped and dropped. Something had to change.
Four years after it hit its peak earnings, the game introduced a new – and innovative – IAP opportunity.
It was a subscription that leaned on exclusivity but still remained affordable. It was a subscription that would need to be purchased again and again for players to really reap its benefits.
The allure of the innovative tactic caused immediate impact.
For the first time in nearly half a decade, the game’s revenue increased. Before the new IAP launch, earnings hit a $572 million low. After the launch, they shot up – bringing in $722 million.
Thanks to its IAP strategy, the game was reborn.
See? Your offer strategy has the power to make or break your game – not just once, but over and over again. Every year. Every quarter. But that doesn’t mean you have to go out and imitate these infamous success stories; these examples were cases of extreme efficacy because they were carefully crafted for a controlled environment. For those **games and for those **playerbases. Which means you need to craft a strategy that speaks to your game and your playerbase.
Are your players socializers, looking for opportunities to engage with each other? Are they achievers, looking for quick ways to conquer more ground? Are they explorers, revved up most by uncharted territory, or killers, simply looking to outdo everyone around them? By understanding the composition of your audience – and taking in the trends of your genre’s history and your competitors’ strategies – you’ll be better equipped to produce the tactics that work. Not just generally, but specifically: for your players.
Before we move on, I want to make sure you’re inspired – nay, hungry. So let me give you a healthy helping of the big picture…
In 2022, there were 4.67 million apps in the Google Play Store and 3.78 million apps in the iOS App Store. In the Google Play Store, 97% of those apps were free to download; in the iOS App Store, 94% of them were. It doesn’t seem like there is room to profit, right? Wrong.
In 2022, consumer spending for gaming apps alone **hit $167 billion. $167 billion. If that doesn’t scream opportunity to you, I’m not sure what will.
Whether they know it or not, your players are ready to spend. Here’s how you drive them into action.
Introducing… The Penny Gap Theory
Remember those claims we outlined earlier? “Big offers generate the biggest results.” “Big spenders are born rather than made.” “If success isn’t immediate, it isn’t working.”
I told you they’re misguided. I told you they’re dangerous. But now, I’m going to introduce you to an economic theory that’ll explain, in no uncertain terms, why.
Ladies and gentlemen, the Penny Gap Theory.
The Penny Gap Theory, Defined:
It’s harder to convince a user to make the jump from “free” to “paid” than it is to convince them to pay more for something they’ve already paid for.
In other words…
It’s harder to get them to spend their first cent than it is to get them to spend more.
Is your instinct an immediate hmm, unlikely? Do you feel your internal defenses going up, telling you that there’s no way it’s easier to get someone to move from $50 to $100 than it is to get them to let go of $0.01?
Well, let’s take a look at two different scenarios.
You’ve been playing a game for weeks – enjoying it, progressing smoothly, and getting handed offers that aren’t just affordable, but make the gameplay more exciting. So you’ve bought in. You’ve purchased a couple of $3.99 bundles, you’ve been entertained by the extra lives and fancy vehicle wrappings they’ve included, and now – when a new $5.99 offer pops onto your screen – you take a second to think it over.
You’ve been playing a game for weeks – enjoying it, progressing smoothly, but you’ve never made a purchase. You haven’t needed to: the entertainment is already there. The pull for you to engage is already there. So now, when a new $0.99 offer pops onto your screen, it’s an interruption to your game-play. You don’t need it – because you don’t need to spend to enjoy the experience. You click the ‘x’ in the corner without another thought.
Seems logical, right? If you haven’t spent yet and you’re getting what you need from the experience, why spend at all? If you have spent already, making another purchase is bound to feel less risky – and require less conscious thought. (You’ve already bit the bullet and it’s paid off, so why limit your joy now?)
The way Josh Kopelman – the entrepreneur behind the theory – explains it is this: “People (mistakenly) believe that getting a consumer to go from ‘free’ to $1/month is just as difficult as getting someone to go from $1 to $2/month. I think that there’s a huge burden to getting a consumer to pay anything…
…and entrepreneurs tend to underestimate the level of effort.”
So that’s the theory: that getting users to pay is boatloads harder than getting users to pay more. But how does that apply to the wonderful world of games? What does the Penny Gap Theory mean for developers and publishers looking to extract every possible morsel of value from their players’ lifetimes?
It means three things.
- The first purchase matters.When players buy in once, they’re more likely to buy in again – so getting them to their first finish line (regardless of what the entrance price is) is crucial.
- The game’s role matters.Most players who spend don’t enter a F2P game with the intention of spending – which means it’s up to the game to nurture an environment that makes them feel comfortable, incentivized, and excited enough to buy in.
- Your patience matters.Rather than overloading players with offers or seeing the first days of their game-play as the bottom-line for what you can expect from their spending, your strategy should be oriented around the long-term – allowing players to trust the value you’re offering them and buy in, again and again, down the road.
So how do you develop an in-app offer strategy oriented around the Penny Gap Theory – doing justice to each of those tenets?
Let’s break it all down.
The Penny Gap Theory, Applied
We know that the goal is to push players into the land of spending – fast. We know that getting them there is a delicate undertaking. We know that in any free-to-play title, the number of players who do spend will be significantly lower than the number of players who don’t.
So how do you craft a strategy that acknowledges the reality – but still optimizes the outcomes? How do you craft a strategy that empowers you to reach your fullest earning potential? It all comes down to three pillars:
Size. Time. Lens.
Let’s get into it.
Size: Start Small
Imagine this: you’re playing a game, fully immersed, and your very first offer appears. It’s huge. I mean: huge. Its price is so far outside the realm of what you’d pay in a game – let alone one you’re not even sure about yet – that it’s more than an annoyance. It’s an insult. It feels like the game thinks you’re dumb enough to throw away your money or worse: that it’s smart enough to manipulate you. Either way, you’re turned off. Not just of the offer, but of the whole game.
You’re probably thinking, are games really unaware enough to start things off with a high-cost bang?
The answer is: yes. Often.
For many games, believing that large-scale offers generate large-scale returns is an easy trap to fall into. And can you blame them? From expensive price-points “conveying more value” to lavish costs driving up intrigue, consumers have long been swayed by pricing tactics.
But not players. And more specifically: not free-to-play players.
Free-to-play players hit ‘download’ with the understanding that they don’t have to spend to enjoy. Sure, there are players who spend, but it’s not a prerequisite to the experience. And for the games that do follow the ‘pay-to-progress’ model? Well, players sleep well knowing they won’t last long.
So now, back to that first offer. Remember: our goal is to convert players as quickly as possible, when they know they don’t have to spend – which means they need to feel enraptured by the opportunity. But more than that, they need to feel comfortable with the game. And, as we’ve seen in our scenario, high-priced listings don’t create environments of safety; instead, they create the opposite. Environments of hostility. Players on the defensive. A game seen as nothing more than the opposition. (We won’t get manipulated. We won’t be outsmarted.)
Size means everything. Where that huge offer will get your players backing away with their hands up, a more manageable offer – tiny in comparison – will get them curious. The risk is lower. The intrigue (they now allow themselves to feel) is higher. Deciding to spend $0.01 is much different than deciding to spend $5, $15, or $25; it’s less serious, less stressful, and less overall impactful. It’s comfortable.
So, let me double-down here: start small. Small offers invite new faces in, regardless of whether those faces belong to big spenders or users who’ve never considered spending before. They allow you to hit the widest possible user-base effectively, and they allow you to get the highest number of players comfortable with spending.
Players who’ve crossed the threshold from “free” to “paid” are primed to pay more – that’s the truth. They’re primed to field higher-priced offers and consider them, rather than getting offended. Rather than questioning their engagement to begin with. Small offers don’t mean lesser returns – they mean more returns.
Start small, get your players comfortable, and then – once they’re hooked – grow with them.
Time: Land Carefully
Another tactic, another batch of scenarios:
You’re in a new game for what feels like seconds before an offer pops up. Or…
You’re in the middle of a challenge, deep in the throes of high-focus play, when an offer pops up. Or…
You’re days into a new game, gliding along leisurely, when all of a sudden – your first offer pops up.
Three different scenarios, three differently-timed offers, one thing in common: in all examples, offers are oriented around the game’s desire to monetize – not the game’s desire to bolster the player’s experience. Not the game’s desire to provide its audience with more value.
When an offer comes out of nowhere, when it interrupts the play experience, or when it’s introduced without contextual need, its motives are clear: get players to spend. The problem? If I can see it from a mile away, so can the players. And since it’s already hardest to get players to spend anything at all, positioning your offers in a framework of aggressiveness, obnoxiousness, or randomness won’t just push them away from spending – it’ll push them away from playing.
Instead of falling victim to bad timing, successful in-game offer strategies choose their ‘when’ with care – and couple that entrance moment with a defensible ‘why.’ Why would players pause to consider buying in at that precise second? Why would the benefit be great enough right then for players to traverse the line between “free” and “paid”?
Let’s switch up the earlier scenarios so you can see what I mean:
You’re in a new game, following along with the tutorial. When it ends, you’re hit with a one-time opportunity: get a ‘Starter Pack’ bundle for ¼ the price. It contains an extra life, a custom costume, and some tokens for future use – all things that’ll elevate your early play experience.
You’re in the middle of a challenge, grinding hard to prevail – but it’s not enough. You lose. You’re going to have to restart the whole level, which is overwhelmingly annoying, until an offer pops up: a new life for $0.99, a pack of 4 lives for $2.99, or a pack of 8 lives for $3.99. If you buy a new life, you’ll get to restart the challenge from where you were. You’re enticed.
You’re on your 12th day of gameplay, and you’re really enjoying the experience. You look forward to getting back into the game when you leave it, and you get excited when you discover new environments inside it. Then – you pass a level, and you’re immediately hit with an offer: for $6.99, you can get an exclusive Pass to a challenge outside the realm of normal gameplay (only available to players who’ve passed certain levels). You’ve fielded other offers before – all priced affordably – but this one speaks to you most. It’s an opportunity you actually want.
Each offer is different. Each enters the player’s view at a different time. But the one commonality the examples share is that they bring contextual relevance to the table.
By hitting players at the exact moment they want something more, the intrinsic value of the offers skyrocket – because they’re no longer just the ‘thing.’ Now, they represent an upleveled experience to the player. Now, they represent the chance for them to empower themselves to achieve something meaningful.
That shift from a nuisance to an opportunity is what your strategy should be centered around – and the key to that shift is shooting off intentional offers at intentional times. Forget about random items at random price-points; forget about random bundles offered at random moments of play. Instead, situate your strategy in player-focused value – in meaning-packed urgency – and allow your audience to eagerly step over the barrier from “free” to “paid.”
The last pillar of your in-game offer strategy isn’t tied to a concrete tactic like pricing or timing, but to something much more abstract: your philosophy as a whole.
You might be wondering – what does a philosophy have to do with my in-game offer strategy? How can it possibly alter the course of how I monetize – or engage?
My answer to that is simple: your philosophy, consciously or not, is your guiding force.
Made up of your fundamental priorities, it steers every step you take. In strategizing. In decision-making. In implementing. When you take action to convert your players through offers, your philosophy is at the wheel – deciding which tactic to deploy when. Deciding which outcomes are most crucial to your success target.
If your philosophy champions conversion at any cost, your strategy will be oriented around immediate returns. It’ll be impatient and aggressive, bombarding players until it gets their wallets open – unconcerned about what comes after.
If your philosophy champions attracting whales at any cost, your strategy will be oriented around one branch of audience. It’ll be limited by its own goals, focused on tactics that are so preoccupied with reeling in a minority that they can’t help but ignore the rest.
But if your philosophy champions the long-term? Well then, my friends, you’re in business. The sweet-spot for sustained returns, your strategy won’t be oriented around one quick purchase or subset of audience, but around a dynamic that gets all players comfortable with spending. Your strategy won’t be analyzed by its ability to monetize by D2 or attract players who are born ready to spend, but by its ability to extract as much as possible from as many as possible – over their entire tenure with the game.
With a future-focused outlook, you do today so that you can do more tomorrow. You set your players up to want more and trust that the game will give it to them, and you set your players up to feel like they’re a welcome part of the experience – rather than a means to an end.
Okay, so… future focused. What does that look like in practice?
- Pulling players in little by little, over time:Instead of inundating your audience with offers – a transparent attempt to get them to spend – grant them low-risk opportunities to buy in at a pace that’s non-threatening and carefully thought-out. (Remember: once they cross the pay threshold for something small, they’ll be primed to do it again for something larger.)
- Building trust instead of manipulating:Players hate pay-to-progress games, but they also hate games that trick them into spending. To ensure you’re retaining your audience while monetizing, use tools of engagement (a mentor character, for example) to give them genuine advice about their options – so players see the buying experience as a form of empowerment instead of a bid for sales.
- Harnessing your power to turn players into buyers:The secret to long-term returns isn’t huge price-tags or a couple of big spenders – it’s your intrinsic ability to persuade players, of all kinds, to spend. And that ability is contingent on a strategy that’s value-based and patient. On a strategy that trusts it can convert – so it does.
And look: I’m not going to lie to you. The games that prioritize quick conversions through any means possible will see fast returns. The games that put everything into finding and engaging big spenders will accrue a few players who are naturally ready to spend.
But… what about the play sessions after those early conversions? What about the majority of the player-base that isn’t strategized for – or cared about?
The key to optimal monetization is extracting all of your players’ value potential over the course of their lifetime. And the key to opening up the door to that value is getting them – all of them – to spend once. Not massively or jarringly, but comfortably. In a way that enhances their game experience so clearly that they couldn’t possibly feel regret.
The Penny Gap Theory is clear: there’s no harder task than getting users over the line between “free” and “paid.” But once you do that, your entire ability to monetize them – again and again and again – opens right up.
Think long-term and you won’t be disappointed.
Look around – you made it.
You moved through in-game offers, observing their component parts and strategies. You traversed through the Penny Gap Theory, understanding its underlying reasoning and the core principles for tactic development. You’ve read, you’ve digested, and now you’re ready to see the results.
It’s a good thing I’ve got them ready for you.
Let’s pull up the two examples we kicked things off with: Candy Crush Saga and Clash of Clans.
Both titles enacted in-game offer strategies that led to immaculate returns and legendary reputations – but now, it’s time to look at them through a new lens. A lens that’s oriented around the Penny Gap Theory. A lens that understands how pricing, timing, and patience can change everything for monetization – and drive two very different titles to unimaginable heights.
Let's look at Candy Crush Saga
Strategy Recap: Unhappy with its Year 1 monetization strategy – a mixed bag of IAP’s and ads – the game changed things up. Removing ads, it went all-in on in-game offers. The strategy paid off: heightening reach, engagement, and revenue, it earned the title hundreds of millions in player spend. Not just once, but over and over again.
Most recently, the game was set to hit [$607 million](https://prioridata.com/data/candy-crush-revenue/#:~:text=As of 2022%2C Candy Crush,usage statistics of Candy Crush.). Whew.
The Penny Gap Theory: Tactics in Candy Crush Saga
Rather than generating high revenue from high-priced offers, it played the numbers game – utilizing affordable offers to monetize as many players as possible. (Extra moves for $0.99, extra lives for $0.99, and 10x Gold Bars for $0.99 were its most popular options.)
To get players over the hump between “free” and “paid,” the game utilized a variety of low-priced offers – so players could buy-in based on their preference, without great risk.
Contextually, the offers hit players right when they’d derive the most value from them – that is, when all 5 of the lives they’d started with were gone. At that point, they’d get 3 options: wait 30 minutes for a life to rejuvenate, ask a Facebook friend for a life, or purchase one (or more).
Since they had options, the game wasn’t their manipulative opponent – it was their conduit to a heightened game experience.
Consistent, Not Annoying:
By showing up with value-focused options on a regular – but not interruptive – basis, the offers became part of the game-play (instead of a nuisance). Users were never forced to buy-in early; they could play, and spend, at their own pace.
Because the strategy wasn’t laser-focused on immediate returns, it had room to breathe – and hit its potential: the monetization of its players over their lifetimes, not just their first session. |
Now lets look at Clash of Clans
Strategy Recap: After hitting its revenue peak in 2015, the game lost traction – losing earnings and its standing in the marketplace. Hungry to bounce back, it began developing a new monetization strategy: manual subscriptions. The monthly Gold Pass became an immediate hit, fueling the title’s rebirth. As a result, its revenue lurched back up with a vengeance…
…increasing by $150 million within one year of implementation. Whew.
The Penny Gap Theory: Tactics in Clash of Clans
While more expensive than a sub-dollar price-point, the Gold Pass was available for a still-affordable $4.99/month – every month. The combination of the low barrier to entry and the consistency of the pricing helped players get comfortable with the cost, because whether they bought in or not, it would remain the same next month. They could expect – and trust – that stability.
To get players over the hump between “free” and “paid,” the game prioritized their comfort – ensuring the offer remained price-stable, and available, whenever they were ready.
Instead of a singular offer that only came after players needed it, the Gold Pass worked by offering players unignorable value – ahead of time. Composed of high-use items & boosts, the bundle offered buyers ~53x the value (compared to buying each item individually), so players felt the urgency to act. And that urgency was compounded by outside forums, where those who’d bought in testified to the worthiness of the offer – generating FOMO for those still considering.
By pricing an offer with immense value at a low monthly rate, the tactic played the long-game – trusting word-of-mouth to lure more players in (out of fear of missing out).
A Safe Gamble:
By implementing the Gold Pass as a monthly offer that players had to re-up themselves, the stakes of the investment felt viscerally lower – because there was no ongoing commitment on the table. Since buying in once had no bearing on whether they’d buy in again, the manual subscription framework meant it was always their choice – which increased their willingness to give it a try.
Since the power to act (or not) was always in the players’ hands, the monthly offers felt more like a harmless option to improve their gameplay than an obvious bid for sales.
In both instances, the strategies’ true power wasn’t from converting players once – but from converting them time and time again. From getting them to cross the threshold between “free” and “paid” and feel good about their journey, so that they could trust the future outcomes of their spending.
So that they would want to spend again to heighten their gameplay. So that they would want to better their experience, on a continual basis, in the same game.
“Big offers generate the biggest results.”
“Big spenders are born rather than made.”
“Success should be immediate – if it’s not immediate, it’s not working.”
Three massive claims. Three rampant myths. If this article has taught you anything, it should be that they have no place in your in-game offer strategy.
Why? Because they’re Just. Not. True.
So then, what is true? The Penny Gap Theory.
The notion that it’s much harder to get players over the threshold between “free” and “paid” than it is to get them spending more. The notion that it’s much harder to convince your users to spend anything than it is to convince them to spend bigger.
That theory rings true for more than just mobile games, but for the sake of simplicity – let’s keep our focus on what we know. We know that getting F2P players to buy in once is the hardest challenge. We know that once they do buy in that first time, they’re all the more likely to buy in again.
On bigger offers. At more frequent rates.
As the Penny Gap Theory dictates: that first hurdle is the toughest. But getting players over it is the key to unlocking their fullest spending potential – which is where your strategy comes in.
A strategy that knows small offers get more players spending. A strategy that understands it’s patience that breeds returns. A strategy that believes all players can be persuaded to buy in. A strategy that champions guidance and value – so that when players do become buyers, they get a better experience. They earn more meaningful play.
Met goals. Sustained returns. Satisfied players. Strategies limited by sweeping generalizations won’t get you there – but strategies empowered by patient pricing will. Strategies made resonant by meaningful timing will. Strategies fueled by long-term potential – rather than immediate proof – will.
Players are smart. Your in-game offer strategy has to be smarter.
Don’t phone it in by leaning on outdated presumptions; get creative, implement with intention, and justify trust. But more than that: believe in your ability to monetize. Not just the players who were ready to spend anyway – but all of them.
Because you can get them over the hurdle. You can get them hungry to buy in.
If you’re looking for more on the topic of in-game offer strategies, I’ve got just the thing: my comprehensive take on why visuals matter – a lot – for players fielding offers. I get into the rationales and the how-to’s so you can apply the takeaways quickly, so if your interest is piqued… get reading. You’ll find it all here.