Agree if you're going to charge fractions of a dollar, you have to have a change machine.

Sometimes this is about the price of A game. For people who hang out and play, it's about the price of SEVERAL games or more. As a regular player who understands the up front costs, $1.50 for a premium or LE is probably reasonable. But why a 50% price increase instead of 25% (you're forcing quarter use on me either way) A casual player will probably balk at $1.50 because the game may last 2 minutes and because WTF is a premium/LE?

If you're the only game in town, maybe. If you have competition nearby and players identify your business, good luck.

Um, isn't Next Level, in addition to being in a relatively cheap spot in terms of real estate, made possible by someone's rich dad?

People play Crank It in bars???

You are right in a very concrete sense. But this probably ain't quite how the average consumer thinks about this. Ever hear of pennywise and pound foolish? People CAN pay, of course. But the kernel of this whole issue how people WILL behave. It's NOT always strictly logical, perhaps particularly in terms of how they think about continuing to feed money for more game play. We can probably all think of examples from our own lives. It's all about how you assign value, especially relative to other items. To the point above about the business role of casual players (which varies a lot across venues), they likely think about this differently than almost anyone here on this thread.

I'm not against raising prices on games. I just think it's very questionable if that's the best move. Above is the implicit point that new games often sit next to older ones that are cheaper and/or have been earning for a long time past paying for themselves.