Monetization’s Next Level: The Step-Up Gacha Framework Built on Value

Challenging the Monetization Myth: Sunk Cost vs. Reward

It’s common in our business to hear that various psychological mechanisms drive monetization: Loss aversion, FOMO, and the Sunk Cost Fallacy are frequently cited. While systems based on these emotions do monetize, I argue they are not the most effective.

The biggest recent innovations in F2P monetization – from the Battle Pass to Clash Royale‘s Chest system – focus fundamentally on rewarding players and providing positive, increasing value, rather than simply removing friction or capitalizing on negative psychological pressure.

The Step-Up Gacha is a perfect system to test this hypothesis.

The Status Quo: The Flawed Sunk Cost Gacha

I have an actual case study where changing the step up gacha system to something that gradually became more rewarding was the better solution for the game I was working on. 

When I first joined the team, the step up gacha format was pretty much locked down. During an event, a new character was released (that character provided a boost to event points). That character could be obtained in the step-up gacha. Below is what the step up gacha looked like

Now if you look at each step individually, 2 things appear. 1) step 2 is 3x the price of step 1. For the same probability of getting the prize character. So that might be good to get players to purchase the first step, but it’s clearly not good to get players to continue purchasing the step-up gacha. 2) the cost of the gacha step gradually increases, but step 2 onwards the actual cost/card decreases at each step. See the math below:

The main issue with this format doesn’t come from looking at each step individually. The main issue is when you are looking at the cumulative spend. Basically when you look at cumulative spend – and the cumulative probability of getting the prize card – the deal doesn’t gradually become more valuable. In fact, if you haven’t gotten the prize card at a given step, the cost of the prize card would gradually increase each step.

Note: here to calculate the cumulative probability at each step, you need to calculate the probability users don’t pull 0 prize cards

In this design, every purchase unlocks a more expensive next step with a higher chance of getting the main prize. The core idea was that the more a player spent (the sunk cost), the harder it would be for them to stop spending before getting the final prize. This approach relies on player pain and a fear of “wasting” previous spend.

We decided to flip that script.

Defining Success: OKRs for Value-Driven Monetization

Before we redesigned the mechanic, we defined success clearly. Our OKRs were deliberately oriented toward positive reinforcement, aiming for maximum perceived value instead of maximum psychological pressure:

Objective: Increase the overall value and appeal of the Step-Up Gacha.

• Key Result 1 (KR1): Ensure the first step is a clearly superior deal compared to the default Gacha in the store.
• Key Result 2 (KR2): Design the system so that every subsequent step offers a better cumulative deal than the last.

Critically, KR2 established a guideline that is the exact opposite of the “sunk cost fallacy”: Every step, the cumulative value increases.

Case Study: Re-Engineering the Step-Up Gacha

To achieve this, we completely overhauled the system’s mathematics, focusing the escalating cost on justifying the escalating reward, rather than intimidating the player, as the previous system had done.

This is what the new Step-Up Gacha looked like:

And when you look into the detail of the value progression, here is what it looked like:

I put together a formula to generate the different steps and probabilities, ensuring a compelling curve of increasing value. You can access and use my Step-Up Gacha Modeling Calculator here to apply this framework to your own game.

Measuring Success: Beyond Revenue

In addition to standard KPIs (overall revenue, ARPDAU, ARPPU, etc.), the three primary metrics we focused on when analyzing the performance of the Step-Up Gacha were:

1. Unique users purchasing each step: Tracks engagement and reach across the mechanic’s entire lifecycle.
2. The drop-off rate per step: This is the most crucial metric to validate the “Value” hypothesis. If the perceived value increases at each step, the drop-off rate must decrease or flatten compared to the “Sunk Cost” model.
3. Revenue per step: Tracks the financial contribution of each step and ensures the model is financially viable, even if the last step is “cheaper.”

The Data: Sunk Cost vs. Increasing Value Performance

When comparing the performance of the new “Increased Value” Step-Up Gacha against the traditional “Sunk Cost” format (detailed in our Status Quo section), the results were definitive.

Although the new gacha started at a higher price point (leading to slightly fewer initial buyers), the way the steps progressed meant that significantly more players converted to the next step.

• The first step generated a larger portion of overall revenue, immediately validating the superior value we offered at the start (KR1).
• The last step, while cheaper in the “Increased Value” model, generated larger revenue levels because so many more players were compelled to reach that highly valuable and high-probability endpoint.

The results were clear: value was the definitive winner. By shifting the focus from the backward-looking pain of sunk cost to the forward-looking gain of increasing value, we not only improved conversion through the steps but fundamentally increased the lifetime value of the gacha mechanic. Building better monetization is about rewarding engagement, not punishing drop-off.