Matrix pricing

[wodin]

ORIGINAL: Hertston

ORIGINAL: battles_atlas

No doubt the regulars here (which lets face it will be all of you as the casuals wont stick around having seen the prices) will totally disagree with this, so I'll add one thing that perhaps is less contentious: not including VAT on your quoted prices is not something that any reputable retailer should do, particularly when the product is a game and hence highly unlikely to qualify for VAT exemption for anyone. I was actually gonna bite my lip and order Panzer Corps at £27.99, but when I clicked through I found the actual cost, at which point I thought enough was enough. If you're going to charge high prices for your games at least be honest about it.

There's nothing 'dishonest' about the VAT; Matrix are an American company contracting out their internet sales and hence have no dealings with VAT themselves at all. Why Digital River and now Plimus have never been able to show gross prices is a different question, but it is nevertheless the norm for US companies without the sort of international set-up Steam has, for example. If you buy direct from indie developers using Paypal the first you will know about the VAT is just before you hit the final Paypal authorization (the irony being that it's exceedingly unlikely they have the turnover level that requires they account for it, anyway).

As to pricing levels, I agree with you, IMHO they are too high for some titles like Panzer Corps and Battlefield Academy. As with yours, though, my opinion means diddly; Matrix have far more information for an informed pricing decision than us. If I think a game is too expensive I don't buy it.

By 'AAA' titles, I assume you mean such stellar efforts as Brink, RAGE and Duke Nukem Forever. Hmm...

I do believe it's against the law not to state that the price doesn't include VAT in the UK..whether this applies in this case I'm not sure but I wouldn't be surprised if it does. Obviously if your charging VAT your registered in the UK. SO you may well be breaking the law.

Matrix has to have something to do with VAT as they have to pay it back to the UK government. It's a TAX not freebies for a company.

[Erik Rutins]

Hi GoodGuy,

ORIGINAL: GoodGuy
Lützow and me duscussed this in detailed postings in a Matrix Forum thread, Erik - you might remember that, a while ago.
Actually, it's not the law for US businesses. The European union has no authority in the US and in how US businesses conduct their payment processes. Matrix is an american business based in the US.

If you "would love" not to charge VAT, then you could have just ceased doing business with Digital River, there are many many other trustworthy payment processors out there, and I'm sure there are other feasable solutions regarding warehousing/prints for shipping to the EU. The VAT is being applied by DI, just because Digital River has warehouses and departments in the EU, so they have to play according to the EU rules. THAT is the only reason for them charging VAT, as their European HQ used to be registered in Luxemburg (IIRC) and probably still is. They even have departments in Ireland, Germany, Shanghai and Brazil now.

First of all, we are both a US and a UK company now. Second, we no longer do business with Digital River, we now do business with Plimus, but all of these are global companies. For example, we have a warehouse in Germany to allow us to better server our customers in Europe and globally.

[quot]eOn a sidenote, the Digital River payment site charged 16% VAT for Matrix customers from Germany even AFTER Germany had raised import tax and VAT to 19%, for the longest time (2-4 years).
As a result, German Matrix customers owe German tax authorities money, just because DI failed to update their tax infos in the software.[/quote]

That's not true at all. I remember that question being raised and we brought it to DR and resolve it and I posted with resolution in the forum. The rate being charged was the correct one, there is a special VAT rate for download purchases.

Does Digital River transfer the VAT for German (and other countries') tax authorities at all, or did they just transfer the 16%, where it wasn't noticed by German authorities (as they just received the total sum as one payment, every year)?
I still doubt that German authorities would have been satisfied with 16%, IF the actual VAT amount was 19% at the time, already.

We also discussed and resolved this a long time ago, on that thread. We confirmed that the correct rate was being charged and that all of the collected VAT was being legally paid to the proper EU authorities.

Regards,

- Erik

[GoodGuy]

Hi Erik, I edited my post while you were writing your post, where I included the switching to a diff. payment processor, already.

ORIGINAL: Erik Rutins

That's not true at all.

Well, the total amount for German customers included exactly 16% of the Matrix price for a given Matrix product. So DI used the special tax for digital downloads, where I don't think that they applied it correctly.

I remember that question being raised and we brought it to DR and resolve it and I posted with resolution in the forum. The rate being charged was the correct one, there is a special VAT rate for download purchases.

Yes you did. But neither Lützow (IIRC) nor me fully trusted their statement. Lützow confirmed my observation that DI charged 16% only.

We also discussed and resolved this a long time ago, on that thread. We confirmed that the correct rate was being charged and that all of the collected VAT was being legally paid to the proper EU authorities.

EDIT: DI's statement was not really convincing there, and I remember now that they argued that the tax rule and rate for LUX (and/or Digital Downloads) would apply, if I am not mistaken, but I do still think that the VAT of the target country should be applied.

I don't blame you or Matrix in general there, as you depend on their statements to be honest. Their statement left/created some doubts, imho, though.

ORIGINAL: Erik Rutins

First of all, we are both a US and a UK company now.

Well, then have your US branch sell products without EU VAT, no?

For example, we have a warehouse in Germany to allow us to better server our customers in Europe and globally.

Is that warehouse operated and owned by Matrix?

Whatsoever, my guess is, that you wouldn't need a warehouse for "shipping" digital downloads to EU customers, coming from the US branch (physical location [US server] and regarding billing). Right?

[JudgeDredd]

I'm sure I tried to buy a game once and it told me I wasn't in that region. I may have been "trying" to buy through the US store - in fact I WAS - I remember it was for your ET game...and it told me I didn't belong to that region or something - so it knows where I am purchasing from...no?

By the way - I meant to say I don't actually mind the fact you don't specify VAT...I know it's not included now so either work it out on the initial page or carry on through to the end...quite often I get to the end and say "err...no" and don't buy...quite a few times.

Though I do see other peoples points where they regard the end point as being "committed"

[Murat]

First let me deal with this erroneous legal argument.

The laws that are relevant here are not the US laws (actually US treaties are relevant, which are "laws" of the US but not in the strict sense), they are the laws of the nation where the CONSUMER resides since it is the CONSUMER who owes the tax, the corporation is only in charge of collecting the tax. So why would a US company want to collect the tax? Because they are doing business in the consumer's nation and want to continue to do so. If they refuse to collect the tax, at some point the government of the consumer's nation can go after the corporation for evading the taxes and fine them, often in vast multiples of the original tax and then enforce those judgments through the treaties they hold with the US. In extreme circumstances they can place an embargo on the goods from that company or find the principle officers of that company to be in violation of criminal laws and incarcerate them, extraditing them under treaties. EDIT well there you go, Matrix is UK and EU as well as US, they have to deal with all 3 legally.

But some US companies do not charge VAT. That is because they are set up so that you make your purchase in the US, probably in a state that will not charge a sales tax for an out of state purchase, and they pretend that they do not know you live outside North America (NAFTA guards Canada/Mexico). While it should be obvious that your card is not US issued, they choose to ignore this fact based on a cost/risk analysis. Small companies do not make enough $$$ to really be worth going after, big companies have the resources to win a legal case through tax attrition by running up legal costs until it is politically unsupportable to continue pursuing litigation in most cases. But some do not choose to pursue these little deceptions and instead comply with the law.

As for the Paradox Interactive example, even they issue between 500,000 and 1 million copies on an initial release and can do price pointing over time. I may be wrong but I do not believe the games here are issued in anywhere near that quantity so the fixed costs of production are spread over a much smaller product base making for a higher cost/lower profit margin situation which in turn lends itself to the fixed pricing schematic at what is felt the market will bear. Here when you pay for a game it is the price they need to make the proft they desire for the time invested by a handful of people, with a sort of co-op of several developers (many small units, developers only get the profit from their product, not from the products of other developers) working through Matrix and their subcontractors. At Paradox Interactive for example, they are paying 28 game developers and their costs of operation and distribution with multiple releases of games numbering in the millions, all done as a unit (all the work of all the developers is pooled together). They may only need to average U$20 a game to make a decent profit. Here we have a developer and Matrix who may sell say 100 games and need to figure out a good price, say U$60. If half the games are bought upon release and the rest mostly over the next 2 years (say 25/25), it is easy to see how Paradox can start at a price point of U$50 and then drop down to U$20 a year after release and then to U$6 the next year. So we are looking at a pool of U$31.5 million for a HOI (of which they really only needed U$20 million for their desired profit) -v- U$6000 for an EiANW (Empires in Arms), which probably paid Matrix and gave Marshall a food budget for a couple months in exchange for his 6 years of labor, probably netting him pennies an hour (he needs a lot more U$ to make a profit similar to Paradox but no one will pay U$2500 per copy). For EiA to achieve their desired sales goal of $6000 under the 50/25/25 scheme and locking in a U$20 for the 2d year and a U$10 for the 3d year, the release price would need to be U$105 for those first 50 units. It is more likely that you will sell the 100 @ at a flat U$60 than that you will get U$105 upon release for the first 50 allowing you to drop your price over the next 2 years.

Developers here accept a low return on their time investment because they make games they love and want to play. Even with that low return, due to economies of scale they need to charge more than a Paradox does. I would rather pay extra to have these choices at Matrix, even with their bugs and the slower support (I have always found developers very responsive to my concerns, they may not agree, but they do look into my issues). Sure maybe if we never bought these the developers out of the kindness of their hearts might suck up the costs and make shareware but then again, maybe they would not and these games would never see the light the day.

EDIT Let me add here I am by no means a cash cow for Matrix. I have purchased probably 6 games over 8 years, one of which I would have personally chased down Grigsby for my money back ala South Park because it was such a piece of crap (GG's WAW) and he should have plenty of $$$ from his successful games and even that one had enough supporters to absorb my refund imho, but I would rather eat the cost to keep him trying to make games.

[Martin James]

Dear Erik

I wish Matrix well and do not think they are an unethical company. I would suggest you look at the VAT thing again however, at least as regards UK customers.

As a control, I have just gone through to check-out ordering a PC game from Amazon's UK website. The site quotes a headline price in £ sterling, which includes VAT from the outset, so there is complete transparency. I am not sure whether or not that is a legal requirement in the UK, but it is certainly typical. In fact I cannot think of another online retailer here where quoted prices do not include VAT.

I hope you regard this feedback as constructive, which it is intended to be .

Kind regards

[battles_atlas]

I don't want to get into the legal fine points of charging VAT, and the explanation that you admins have given makes sense. Although the second page which does give the VAT is within the matrix site, its an embedded plimus page. That said there is no technical reason why your site couldn't take account of the ip as plimus does, but I get that its a complication that would cost to implement. A reasonable compromise it would seem to me would be to have a "(VAT exc.)" with the price quoted, so at least we'd be ready for it.

Murat - Your argument is assuming that the market for matrix titles is fixed, which clearly isn't true. Ok I don't dispute that a lot of the hardcore stuff on here is never going to shift big units, but a game like Panzer Corps, and also the Close Combat titles you have, could still sell in significant quantities. Close Combat originally was a mainstream title, and the PC market isn't that different from what it was back then in terms of taste (no matter what the suits at Activision might wish to believe). Champ/Football manager still sells huge amounts. That said, I get that its difficult for Matrix given they're a publisher with their own sales platform. I suspect if the devs behind Panzer Corp stuck it on Steam at £10 they'd make far more than they would on Matrix at £30, but for Matrix themselves they don't have the profile to attract the numbers necessary to make Steam economics work. Then again, high prices will ensure that they never will.

Its complicated [:)]. I'd suggest Matrix consider selling some more mass appeal games like Panzer Corps on Steam instead, if only as an experiment, but its your business obviously. Wish you the best either way, PC gaming wouldn't be the same without its niches.

I should conclude by admitting that I've actually swallowed my doubts and bought Panzer Corps! Hope I get as many hours out of it as I expect to.

[Lord Zimoa]

I`m not going into sale details, but we worked on Panzer Corps for about 18 months now, and we pay for all development costs ourselves.

After reduction of costs and taxes, the profit calculated per month per person, is less than the average minimum wage per person/per month in the European zone, if you calculate what we make as a "profit" per month on a game like this.

Making these kind of games is a labour of love and passion in the first place.

So a big thanks for all those who have paid 39.99 USD for this game! Thanks for the support and trust, we hope to bring more fun, good and stable games in the future...

[GoodGuy]

ORIGINAL: Murat

The laws that are relevant here are not the US laws (actually US treaties are relevant, which are "laws" of the US but not in the strict sense), they are the laws of the nation where the CONSUMER resides since it is the CONSUMER who owes the tax, the corporation is only in charge of collecting the tax. So why would a US company want to collect the tax? Because they are doing business in the consumer's nation and want to continue to do so. If they refuse to collect the tax, at some point the government of the consumer's nation can go after the corporation for evading the taxes and fine them, often in vast multiples of the original tax and then enforce those judgments through the treaties they hold with the US. In extreme circumstances they can place an embargo on the goods from that company or find the principle officers of that company to be in violation of criminal laws and incarcerate them....

Well, embargo? Well, the EU never placed an embargo on US software products, afaik. What they did was that they threatened to introduce (I am not sure whether that was ever put into effect) import taxes on say INTEL hardware products, for example, or on PCs (Intel, Dell, etc., everything containing INTEL chips) assembled in or shipped from the US, or on Microsoft products, for several reasons, where the next step (in this threat) could have been a possible ban of some US products. The issues had been resolved through negotiations, usually. Part of the issue back then with INTEL was Intel's market leadership and/or their actions to help suppress the competition, same with Microsoft.
And an embargo for a company of Matrix' size .... no further comment.

, extraditing them under treaties. EDIT well there you go, Matrix is UK and EU as well as US, they have to deal with all 3 legally.

As far as I know, the US have not agreed to/signed any treaty that puts domestic businesses at a major disadvantage (EU businesses are allowed to export to non-EU countries tax-free).

Also, a separate US business is in NO way bound to EU jurisdiction, the EU can come up with all kinds of new impertinent attempts to pester US businesses and to bolster EU sales to the US and other countries, but that will not change. The "Matrix department" in the UK is most likely Slitherine. So, question is whether Matrix really has to be a "Ltd" (which usually means that its HQ and main branch is registered in the UK). If Matrix does that for tax reasons or practical reasons, then why not form a US branch for digital exports only, which doesn't have to succumb to the EU's policy to disadvantage US businesses? I think "customer satisfaction reasons" (uh, I coined a new word [;)]) are not to be disregarded by Matrix.

Then let the customer decide whether he wants to pay VAT or not, as the decision will then be in his domain.

But some US companies do not charge VAT. That is because they are set up so that you make your purchase in the US, probably in a state that will not charge a sales tax for an out of state purchase....

If I am not mistaken, most US states - if not all - either won't charge for export sales, or they will have a greatly reduced tax, as product delivery (be it electronically or physically) to foreign residents (even IN the US, let alone outside the US) qualifies as EXPORT.

US businesses, who follow the EU demands regarding VAT, only do that because they are concerned that EU authorities may put some punishment on their business. This usually turns out to be unfounded if it comes to a Niche business like Matrix. It shouldn't be too hard to find a legal and satisfying (for EU customers) form of business registration for that, anyway, imho.

Developers here accept a low return on their time investment because they make games they love and want to play. Even with that low return, due to economies of scale they need to charge more than a Paradox does.

That actually is related to the low sales numbers (compared to the majors) and the fact that wargaming is a Niche-market.
According to market laws, it's not wise to charge well above the average market price for a longer time. While I enjoy playing Matrix games (maybe except for CAW, due to the lack of content), I don't know if I, as a customer, want to be held liable for the chance that a given developer cannot make a living with such low sales numbers. It should then be in the distributor's interest (and it should be his job) to try and push sales. With the Matrix brand, there are still many people all over the world who never heard about Matrix, and who - even tho they're interested in wargaming - would never find or go to the Matrix website, be it a language problem (say potential French, German or Spanish speaking customers) or just lack of marketing. There are quite some inexpensive marketing efforts, too.

There is still a debate whether putting down the prices down to a bargain rate (and cooperating with distributors like Steam or - maybe less bossy/intrusive - say Direct2Drive) after say a year or 2 (even if for a short time only) will enhance the customer base/player base or not. I'd say it would have potential to create a big booster effect, though. Think about the bargain sales on D2D... I'd never have bought a Paradox game, if it would have cost me more than 9 bucks.... the one I got is so buggy and unfinished, it's unbelievable. And, besides the potential to get more wargaming folks to the bright side (Matrix), casual gamers (non-grognards) may actually pick up some games, if they are available on a well-known platform outside the Matrix domain.

[tgold]

There is-of course-the "pay peanuts get monkeypoop" school of economics which given the overall state of console-based twitch-gaming repetitive tat being flogged these days proves the second part of said school where "sell the sizzle not the steak" applies [:'(].

To date I have purchased JTCS (despite owning the originals), FoF, and today (despite my eyes watering during checkout) I finally broke down and ordered GG WITE. All from Matrix and because I split between my home PC and work/travel laptop I always get the hard copy with the printed manuals as reading pdf's is annoying. And the simple DRM scheme associated with purchases through Matrix is perfectly tolerable and allows my required multi-platform needs (I have a 9 hour flight coming up later this month to Miami and hope to spend it getting my butt kicked on the Eastern Front). I am quite happy to support the price points simply because the enjoyment value over the course of literally years of playtime turns the initial outlay into...well...if not exactly nothing-perhaps a penny a day? Loose change in the car's ashtray?

I compare this with my recent impulse purchase of Deux Ex: Human Revolution which while looking lovely has pretty much zero replay value for your average grognard and is pretty damn short for what it actually costs. Not to mention that in order to "expand" the game the greedy producers dove full bore into the DLC model-and thats an area that makes me want to barf. Although I have to say the Steam bit is actually rather painless and it was pretty fun to find that my original Half Life 2 purchase from yoinks ago was still valid and installable despite my having lost the disc, box, and key code 4 years ago!

Look-I guess I am pre-disposed to shell out for quality after years of add-ons for MSFS and X-Plane. You want eye watering...go check out the prices for some of the add-on terrain and aircraft for what is-you guessed it-a niche market just like proper wargames.

Keep right on trucking Matrix. Quality is rare, stands the test of time,  and should be priced accordingly.

Just my opinion. And yeah VAT is rubbish!

p.s. I downloaded and booted Half Life 2 for a giggle and was blown away as the visuals seem to have been totally updated for modern systems. Looks great and still worth a play when I need a break from grognard land [:D]

p.p.s. I purchased Heart Of Iron 3 on the recommendation of a friend. What a hideous train wreck of a game. Promptly uninstalled and shelved. Although the Paradox offering "Mount & Blade" is awesome....and who wouldn't support a husband/wife games studio to boot!

p.p.p.s. Final ps I swear. How many games can actually provide a fully printed manual? Not many but darn if they all seem to be sold through Matrix. Although a bigger font would be nice for my aging eyes.

[Hertston]

ORIGINAL: TedG

p.p.s. I purchased Heart Of Iron 3 on the recommendation of a friend. What a hideous train wreck of a game. Promptly uninstalled and shelved. Although the Paradox offering "Mount & Blade" is awesome....and who wouldn't support a husband/wife games studio to boot!

I just wonder how many people are buying Paradox stuff on release any more? It all seems to get discounted very quickly and, in the case of the last two Steam sales they were almost giving it away.

[Hertston]

ORIGINAL: TedG

I compare this with my recent impulse purchase of Deux Ex: Human Revolution which while looking lovely has pretty much zero replay value for your average grognard and is pretty damn short for what it actually costs.

Hmmm... first playthrough took me 30 hours or so, which is hardly 'short' these days. I dread to think how long the on-and-off second will finally take as I'm trying for 'Legend', 'Pacifist' and 'Foxiest of the Hounds'. It's a totally different game played that way.

[Gilmer]

You just have to get used to the Matrix pricing and if you think want the game, then you must weigh how much it costs. I'm kind of waiting on the Christmas sale to get some of the "Battles In" games and the Disaster on the Donets games.

[Perturabo]

To be honest, I'm always perplexed when I see westerners complaining about prices like 40GBP or 50$. It's less than 7 hours of minimal wage work for tens or in case of wargames hundreds of hours of fun.
Or maybe my countrymen just have insane spending habits with buying new AAA games for about 100-120PLN (30-40USD) each (15,5-18,5 minimal hourly wages).

[parusski]

ORIGINAL: sabre1

I'm on the side of buy or don't buy. A company has the right (at least for the moment) to charge whatever they want, and we can decide to buy or not to buy.

I never bought War in the East or Battles for the Bulge due to prices. My choice. They are great games without a doubt, but I draw the line on some things that are nonessentials.

OT: I also will not buy games with DRM schemes. Matrix's scheme is as much as I will stand for, but just barely.

I get to read more that way.

Amen Sabre. Look at how much(LITTLE) WitE cost. Yet more than a handful must have been sold.

It's up to any company to maximize profit by finding the maximum price point the market will bear.

Panzer Corps is a sweet point as far as I am concerned and the DLC is even better.

[jomni]

Paradox is profitable because they charge $$$ for patches.
Matrix rarely does that but it happened to some titles (ducks and runs for cover ).

[Phatguy]

ORIGINAL: Perturabo

To be honest, I'm always perplexed when I see westerners complaining about prices like 40GBP or 50$. It's less than 7 hours of minimal wage work for tens or in case of wargames hundreds of hours of fun.
Or maybe my countrymen just have insane spending habits with buying new AAA games for about 100-120PLN (30-40USD) each (15,5-18,5 minimal hourly wages).

Well, The most expensive title I saw at Empik this summer was for 99PLN for IL-2 Wings of Dover. Everything else seemed to hover in the 50-60PLN range with the cheap titles hitting 20-40PLN range......

[Phatguy]

ORIGINAL: parusski

ORIGINAL: sabre1

I'm on the side of buy or don't buy. A company has the right (at least for the moment) to charge whatever they want, and we can decide to buy or not to buy.

I never bought War in the East or Battles for the Bulge due to prices. My choice. They are great games without a doubt, but I draw the line on some things that are nonessentials.

OT: I also will not buy games with DRM schemes. Matrix's scheme is as much as I will stand for, but just barely.

I get to read more that way.

Amen Sabre. Look at how much(LITTLE) WitE cost. Yet more than a handful must have been sold.

It's up to any company to maximize profit by finding the maximum price point the market will bear.

Panzer Corps is a sweet point as far as I am concerned and the DLC is even better.

DLC ........ugh......
Never would have believed Matrix would enter the realms of DLC....

[jomni]

I see DLCs as little donations to the developers we love. [:D]

[Phatguy]

What about the ones that are full of overkill? Train simulator 2012 perhaps?....LOL, I think they are up to 700+ DLC's , or so it seems

Do we have to love them?