What is "Marginal Cost"?

In game design, "marginal cost" refers to the incremental or additional cost incurred when purchasing or upgrading a game element for the next iteration. It specifically represents the actual face-value expense associated with obtaining or enhancing something once more. Marginal cost is a crucial consideration for game designers when designing in-game purchases, upgrades, or any content that involves repetitive acquisition.

For example, in a mobile strategy game, players might have the option to purchase additional in-game currency to acquire more resources for building structures or upgrading units. The marginal cost in this context would be the actual monetary value required for each subsequent purchase of the in-game currency. As players make successive transactions to enhance their in-game progress, the marginal cost remains constant for each incremental purchase.

Consider a scenario where the first purchase of in-game currency costs $5, allowing the player to acquire a certain amount of resources. The marginal cost comes into play when the player decides to make a subsequent purchase for additional resources. If the second purchase also costs $5, the marginal cost remains consistent, meaning the player is paying the same face-value cost for each iteration of the purchase.

Game designers often need to carefully balance marginal costs to create a fair and enticing in-game economy. If the marginal cost is too high, it may discourage players from making repeated purchases, impacting the game's revenue potential. Conversely, if the marginal cost is too low, it might undermine the value of in-game purchases and potentially disrupt the game's balance.