Move from money to tokens

Tokens can have an arbitrary value. People respond to price points (99c rather than $1), so if you move them to a token-based currency, you can charge 99 tokens even if that equates to $1.50.

Examples

  • Capcom made the news in late 2011 after a child racked up $1400 in in-application purchases of the Smurfs iPad game. The eight year old, Madison Kay, had purchased smurfberries and other items in the game, which were then charged to her mother’s (the iPad owner’s) iTunes account.
  • More recently, mobile game developers have realized that the “freemium” model (give the game away free, charge for content) is a valuable revenue generator and the app stores are becoming flooded with low-quality games that require in-game purchases in order to proceed.

Principles

By requiring people to purchase tokens, the link between dollars and points is quickly cut. This makes the cost of items within the company’s infrastructure much more arbitrary than it would have been if direct dollar comparison was possible.

How to design for a token economy

  • Decouple the token value from a specific dollar value. Once prices are listed in token currency, people will forget that the magic 99-token price point actually cost them $1.20.
  • Sell tokens in large blocks, corresponding to price points that consumers see as valuable (19.99, 39.99).
  • Keep the process of replenishing tokens separate from the process of spending them, so that people are less likely to consider the real price of tokens.
    • This also allows separate people in a household to be responsible for replenishment than are responsible for spending, further removing any concept of the dollar value of tokens.
  • Ensure that tokens can only be used within the jurisdiction where they were purchased to prevent speculative trading.
  • Use tokens as rewards within the system. Offer a certain limited number of tokens when users achieve specific goals.
    • Potentially only allow redemption of these earned tokens after customers have also purchased tokens outright.

Blog posts about this pattern

  • Scam games designed just for in-app purchases Justin Davis and Brian Altano at IGN made a video play-through of a game that takes in-app purchases to the extreme. Super Monster Bros by Adventure Time Pocket Free Games, written by Mario Casas, is potentially playable without purchasing extras, but the frequency of the purchase requests, their persistence, and their high prices are all aimed ...
  • Amazon Coins – new token currency, same old issues Amazon announced today that it has introduced Amazon Coins, a token-based economy for use in their Kindle Fire app store. Although customers get up to a 10% discount for buying Amazon Coins in bulk, that discount is actually likely to lead to them spending more money, not less, on Amazon’s app store. You must buy Amazon Coins in ...