Economics of Game Apps

I've been mulling over economics lately. I know, weird thing for me to fixate on--and I am fixated--but I've been trying to puzzle through a couple of things. Today, let's talk about game apps for your phone or tablet and the pricing model in the latest one I've been playing.

My latest app that's kept me interested is a coloring book/color by number game that has in-app purchases. There is no chance that I'll overplay this game because it only charges to 100 energy points and it takes 40-50 energy points to color a picture. Lower levels were less energy points and I'm assuming that as I advance, it will have higher costs. So if my game energy is fully charged, I can color two pictures.

I find this endlessly frustrating. I want to color more than two pictures, especially when I'm stressed because it's oddly relaxing.

I didn't need to look up the pricing model because it was in my face every single time I used the app. It might be every picture, but I can't remember for sure. Anyway, I would have been interested in signing up for the extended features, except for the price. $7.99 A WEEK!

That's more than $415 dollars a year! For real!

And that's when I started contemplating WTH the app developers were thinking. The game is slick, it's pretty, it's relaxing and I'm sure they have to pay artists to make the coloring pictures, but there is literally zero chance I'm paying what they're asking.

When I had economics classes in college, pricing was one of the elements we covered. How many people are willing to pay $415 a year or $7.99 a week? Wouldn't the developers make more money if they charged $29.99 a year (which is the max I'd be willing to pay for this game) and entice more people to pay? In Econ, the answer was volume more than makes up for the lower price, IIRC.

Then I wondered if there was a fixed audience that was willing to pay at all? Maybe they wouldn't make up the income in additional subscribers. What if pricing was inelastic for coloring games? If there are X number of people who are willing to pay $7.99 a week and not very many more beyond X who would pay at a lower price, then perhaps they're priced correctly?

I tend to think that is not correct, though. The game is enough fun that I would pay $29.99 a year for it, but I wouldn't pay more than that. So I play the two games I get with my free energy points and let it recharge so I can play again later.

I have to believe there are a lot of other people like me out there and that the game developers have priced themselves out of income.