There's a world of difference between buying on XBLA and buying on an independent website, so the comparison doesn't necessarily hold. On XBLA, you have that one channel, not hundreds and thousands of site, and (correct me if I'm wrong) but I believe you can load money into your account and then buy items at another time, so the payment process isn't as tedious either.
When it comes to selling 10,000 at £2.50 versus 500 at £5.00, it's true of course, but you're missing out the most important factor. In order to get 500 sales at any price, you have to get 500 people to try and enjoy your game. IE: you need to advertise or somehow get the word out. Now exactly how many people that equates to is unknown, but it's likely to be a five figure number, and could even be a six figure number. Even if your conversion ratio increases massively, you're going to need to get even more eyeballs to get 10,000 buyers, except that you've now got half as much to spend on advertising, because your profit per sale is halved.
Leaving aside the big numbers, let's say shifting just twice as many copies at half the price, which is the least number you can sell without being worse off. It's hard to do when getting eyeballs is difficult and expensive in the first place, and even more so when your advertising budget is halved. Unless your conversion ratio is sky high (and if it is, are you really sure you couldn't be selling it for more?) you could easily be selling lots of copies and losing money because you're paying out more in advertising than you're making in profits.
That doesn't mean it's not worth exploring, but there are some big downsides to weigh against the possible benefits.
When it comes to selling 10,000 at £2.50 versus 500 at £5.00, it's true of course, but you're missing out the most important factor. In order to get 500 sales at any price, you have to get 500 people to try and enjoy your game. IE: you need to advertise or somehow get the word out. Now exactly how many people that equates to is unknown, but it's likely to be a five figure number, and could even be a six figure number. Even if your conversion ratio increases massively, you're going to need to get even more eyeballs to get 10,000 buyers, except that you've now got half as much to spend on advertising, because your profit per sale is halved.
Leaving aside the big numbers, let's say shifting just twice as many copies at half the price, which is the least number you can sell without being worse off. It's hard to do when getting eyeballs is difficult and expensive in the first place, and even more so when your advertising budget is halved. Unless your conversion ratio is sky high (and if it is, are you really sure you couldn't be selling it for more?) you could easily be selling lots of copies and losing money because you're paying out more in advertising than you're making in profits.
That doesn't mean it's not worth exploring, but there are some big downsides to weigh against the possible benefits.