Edit: Tom is the "Axiom Verge dev", Dan is the PR guy for the game, if a mod can update the title to something appropriate that would be cool.
http://dan-adelman.com/post/112239049886/on-indie-game-pricing
A lot more at the post. It's a long post so you should go read it, it's a good read.
http://dan-adelman.com/post/112239049886/on-indie-game-pricing
Most of the feedback has been great, but there were a few people who questioned the $19.99 price point. The reason I’m writing this blog post is actually not to defend the price. Instead, my focus is going to be on discussing the thinking behind it, since a lot of developers have asked me for advice on how to approach pricing their games over the years.
Complication #1: Games are an experiential good
One of the biggest problems is that games are in a category referred to as experiential goods, meaning that people can’t attach a value to them until they’ve experienced them.
Complication #2: Self-interest vs. group-interest – the problem with price promotions
Imagine you’re at a baseball game. Something important is going on, so you stand up to get a better look. That’s a perfectly rational thing to do. It maximizes your own self-interest. Now the person behind you also has a choice: either stay seated and not see, or stand up to see better. If they’re going to maximize their own self-interest, they’re going to choose to stand. And so on. Eventually, everyone is standing, but no one is seeing any better than they did before. Everyone’s just uncomfortable.
The same goes with price promotions. (I’ll avoid calling them sales so as not to confuse the term with sales of the game.) When sales have slowed down, the rational thing to do is to reduce your price. Each game that does this makes a lot of money – in fact the majority of their money – doing this. Gabe Newell famously told the world in 2011 that when they reduced their price by 75% their revenue went up by 40x!
So What’s the Solution?
The first step in the real solution to the problem comes before even thinking about price. It’s about making a must-play game. Obviously this is something all developers aspire to and is much easier said than done. But let’s assume you’ve done that. What’s step two?
Step two is to make sure people know about the game and why it’s special.
[...]
The last step is two-fold. First, set a price that you feel is really worth it. If your game is better (for the people you think will be interested in buying your game!) than Titanfall, The Order: 1886, or Destiny – and you can convince people of this – then let those prices be your bar.
The second part is a bit counterintuitive. Let people know your plans for putting the game on sale.
Case Study: How Does Axiom Verge stack up on these steps?
[just read the article, it's pretty long]
A lot more at the post. It's a long post so you should go read it, it's a good read.