Comment Re:Publicity worked for Humble Bundle (Score 2) 133
There is an important distinction between "cost", which you're talking about, and "marginal cost", which the GP is talking about. Marginal cost is the increased cost of producing one additional unit, and for digital goods marginal cost is very nearly zero. The only marginal costs you mention are support and payment processing, the rest are more or less fixed costs. The marginal costs for selling a digital good with minimal support are very, very low. Once the fixed costs are covered, selling an additional unit for $5 will be very close to $5 profit.
There's definitely a matter of balancing opportunity costs. It would be silly for a company with a highly anticipated title to offer that game at a name-your-own-price rate. But once sales have started to taper off, it makes sense to lower the price and get something, rather than keeping prices up and get nothing. This can serve to get people talking about the game again, and may lead to sales at regular price once the sale ends.
I don't believe that pay-what-you-want is a sustainable business model, but I think it's a great way to milk some extra cash out of a title that isn't selling much and it can help bring hype to a game.