Epic Games, the developer of Fortnite, exemplifies how companies can use different pricing models – rather than different price points – to differentiate themselves across customer segments. Developers that use Epic’s tools to create games for sale to end-customers pay Epic a 5% royalty on all game revenues above $1 million. But what about companies that don’t sell games and benefit from using Epic’s Unreal Engine and other tools to create animations, graphics, and immersive content (such as film studios, graphic artists, architects, and theme parks)? To tap that potential revenue stream outside of game development, Epic will introduce a seat-based enterprise pricing model at $1,850 per seat per year, effective next month. Its traditional royalty model will still apply to game developers. Students, educators, hobbyists, and companies with annual gross revenue of less than $1 million can continue to use the tools for free. Epic has said that the new complementary pricing model will help them “make long-term Unreal Engine development sustainable, so that we can continue to provide the very best, most advanced creator tools to all industries—big companies, small studios, individuals, and everyone in between.” By aligning its pricing models with the ways that its customers create and derive value from its tools, Epic shows a high level of pricing maturity.
Epic games shows how to differentiate with pricing models
By
