If you are the proud owner of a game that features a game economy (virtual economy), try to consider your players as employees who play your game as their job.
Learning on the job
Like newbies on the job in real life, they will start off with a low level of skill and corresponding low expectations regarding their monetary compensation, i.e. they will have low expectations regarding the amount of virtual currency they earn in return for their "work." As time passes, they will get better at what they do (playing your game). This doesn't only mean that they will explore your game more, including the possibility to convert themselves into paying users (via in-app purchases, or IAP). It also means that their expectations regarding their (in-game) compensation for the work they put in (playing the game) rises simultaneously.
More Experience + More Skill = More Salary
Like in a real economy, the formula "More Experience + More Skill = More Salary" should apply here as well. The more time a player spends on playing a game, the further he dives into a game, the more money he expects to earn. At the same time, if you pay players too much, their motivation will suffer. And while only very few players could ever pinpoint that their frustration with a game was caused by insufficient compensation, a good analytics tool will undoubtedly show how increased player churn "coincides" with plateauing or even decreasing organic earning capabilities. Eventually, like in a real economy, it's all about balance.
Virtual Currency Shortage = Frustration
On the one hand, a shortage of virtual currency inevitably leads to frustration. Players feel that they are wasting their time, that their efforts remain unnoticed and that their improving skills are not appreciated. They feel underpaid, possibly even exploited. Sometimes you hear that "the virtual currency shortage is intentional so users start buying IAPs." Fair enough, but this strategy (of essentially implementing a paywall) only works if you have a highly addicting game. And even if your game possesses these sticky qualities, it will be off to a pretty bad start if you start choking your players for money right from the beginning, way before they even have a chance to get addicted to your game.
Virtual Currency Abundance = Boredom
On the other hand, an abundance of virtual currency will lead to spoilt users. Overcompensation means they can afford a wide array of virtual goods way too early in their (playing) career. They will be under the impression of playing a game that's not challenging, that doesn't reward superior skills, where everything feels numb, too easy, the same. Like in real life, a spoilt user's motivation to put in extra effort to receive additional rewards will suffer, possibly to the point where any kind of "work" (playing) will be subject to rejection. People get bored, and that's the killer for any kind of game.
Whether you are dealing with a frustrated or a bored player, both will inevitably quit playing your game, and they will do so very quickly if the game they are playing was free in the first place. We all know that the cost of customer acquisition is a multiple of the cost of customer retention. Generally, mobile marketing costs are still rising. So once a player is gone, all the work that was put in on the developer's side to onboard him in the first place was futile. Yet, this kind of churn is completely unnecessary and fairly easy to correct, even in a live game. Changing the number of available coins, rings, nuts, emeralds, or whatever your virtual currency happens to be, is a whole lot easier than changing game mechanics, storyline, graphics or other content.
5 Rules on How To Pay Your Players
First and foremost, balance is the key. Always. Abundance is bad, shortage is even worse. Your game, and especially your game's economy, is a highly specialized environment. Take an honest look and ask yourself if it is balanced in the way you envisioned it to be. Are your players truly rewarded and therefore happy? Are they starving? Or are they spoiled?
2. Growing Bankroll
Always ensure an increasing bankroll. While this sounds trivial, game developers often miscalculate the earnings capacity and/or the "game maintenance cost" (ammunition, energy, fuel) the player is confronted with right away. The result is that players barely scrape by after restocking for the next mission and are therefore unable to accumulate any wealth. They feel notoriously "broke" and all those shiny swords and shields in your virtual store will seem completely out of reach.
3. More Money Per Level
Always ensure an increasing earnings potential. Once again, it seems obvious that players should be able to earn more virtual currency when playing level 21 than they were able to earn while playing level 3. Yet, this is often not the case. Carefully measure your players income while he/she progresses through your game. Ask yourself how much virtual currency the player should have a certain points in the game, for example after 2 minutes, at the end of level 3, at the end of World One, once they reach the rank of "Lieutenant" etc. Then ask yourself if the virtual currency available to the average player (or whichever group you want to target) at this point in the game matches the prices (i.e. availability) of the virtual goods you want the player to use/have access to at that time. For example, if you wanted your players to approach the end boss in level 3 with the shotgun, then make sure at least 75% of your players can organically afford that shotgun before level 3.
4. Consider Difficulty
What is also often miscalculated is how increasing difficulty or the lack thereof can affect the virtual currency earning capabilities of players. If a player gets stuck in a certain level for several attempts, his earnings over time will decrease dramatically because he never gets to earn the full amount of virtual currency the level provides (depending on the setup of the game, he might even earn nothing at all if the level is not completed).
Similarly, if a level is very easy and/or rich in virtual currency, a player might replay that level countless time, thereby causing the opposite effect. Usually it's very difficult for game developers to change the amount of virtual currency available in certain levels, mainly because the result will be that all other levels will be out of sync and will therefore need to be adjusted as well. You should therefore consider tweaking the other cornerstones of your economy.
Example: If you determine that players earn 10,000 coins during the first 5 minutes of gameplay, but your first 5 virtual goods are priced in the range of 1,000 to 5,000, you could consider doubling or even tripling the prices of the virtual goods, thereby reestablishing the virtual currency/price ratio you originally intended. Definitely make sure to still have something of great value available after 2 minutes or one round of play. Getting players to buy something in your store very early on is crucial.
5. Gimme More!
When in doubt, always throw in more virtual currency for the player to earn. Collecting 100 coins is always more fun than collecting 10. There is just something very satisfying about flying through a field of coins and listening to the sound of an increasing bankroll. If you don't know what I mean, play a round of Jetpack Joyride or ask yourself why the guys from Orca created Pot of Legend.