You probably shouldn't leave your job to work on an indie game.

A friend of mine always talks about leaving his cushy job at $BIGCORP to go work fulltime on his indie game venture. I don’t think it’s a good idea, and I’ll try to show why in my trademark hand-wavy way.

When there’s a lot of demand for a product, concurrents move-in to try to capture some of the market. If the products are very similar — economists say “undifferentiated” — there will be a pricing race to the bottom.

This is what happened to the PC market in the late 90s. In hindsight, Microsoft’s strategy in the 80s and 90s was brilliant. Hardware makers have never been very good at developing software. They’ve never been interested in developing OSes, so they happily gave this responsibility to Microsoft.

The problem is that a Dell and a Compaq PC are essentially the same computer but with a different logo on the box. They both run Windows, so consumers have little incentive to choose a Dell over a Compaq except price. So PC makers competed on price, until they got to the very very thin margins they have today (about 16$ per PC sold). Essentially, in their effort to get more shares of the market, the makers all competed to sell more windows copies.¹

I think there’s an similar phenomenon ongoing for indie games. It’s not very visible yet, except for some genres like roguelikes.

Roguelikes on Steam are priced terribly low; I checked out the prices of a dozen games on Steam and every one of them was priced between 4.99$ and 14.99$.² This is clearly not enough to make a living. So, either all their developers collectively thought “Yep, pricing my game between 4.99$ and 14.99$ feels just right”, or they did this because they had to. Obviously, the latter is more likely.

When you’re the only one to sell something, you can set the price you want (economists call this having “pricing power”). The Kerbal Space Program devs are the only ones to sell a sandbox game where you can build a spacecraft, so the game is priced accordingly at 26.99$. If you decided to release a roguelike at 26.99$, people just wouldn’t buy it because there’s already tons of similar roguelikes they can choose from. Because of this, there’s just some maximum price people expect to pay for a roguelike.³

Take some time to think about your positioning and how to price your game taking the plunge.

Key takeaway: if you want your game to sell at a good price, you should probably do it in a genre without a lot of concurrents.⁴