Production rentability

Hi dr_edge69,

I've been in your position and also talked with a number of other publishers about their experiences with their first game and I cannot emphasize enough that the 3000-5000 units that a printer will try to convince you to publish is TOO MUCH for your first game.

Most first games seem to sell well under a thousand copies. If the publisher puts out a second and even third game, then a few more copies of the first game might go out if these other games are successful, but most often your first game is the one where you make a bunch of mistakes and you first introduce your company to the boardgaming public.

I've got lots of advice that doesn't necessarily reflect the exact question you're asking but that any first-time publisher should know anyway (and that really need to be taken into account when coming up with an answer to that first question!) (I should really keep a copy of this on my desktop, because I end up writing it about once a month to someone :lol: )

The printing cost will, as SiskNY said, be inversely proportional to the number of copies you print, in an almost hyperbolic curve. The first time I got a quote for a board game (that I ended up turning into a card game, by the way) the quote for 1000 copies was $15 per game, for 2000 $13 per game, for 3000 $10 per game, for 5000 $6.00 per game. In other words, it would only cost twice as much to print five times as many games. Sound tempting? Don't be tempted. Unless you are Richard Garfield lucky, you will have between 4200 and 4600 games in your garage forever. I can't tell you how many companies I know have one game that they've been trying to sell for AGES because they printed 5000 copies of their first game, and they can't afford to print another game til they sell out of the first one. And these aren't all bad games - it's just really hard to get a game "noticed" the first go round - especially when most of these folks didn't really feel out the market effectively before they printed and they find their game doesn't really fit well in one of the niches.

That said, you have to print with a unit printing cost that will allow you to charge a price for the game that people will be willing to pay. If you plan to sell through distributors (which you really should, although some companies like Hangman Games do well with a non-distributor oriented model), you should expect they will pay you 40% of the retail price of the game. If you are lucky enough to be picked up by a consolidator, you will have a far better chance of being represented in distribution BUT you will pay between 6-8% extra for that advantage. So then you could assume you will be paid 33% of the retail price for each game that goes through distribution. So you just take 33% of the retail price for the game and multiply it by the # of copies you print and subtract what you're paying and that's your profit, right?

Wrong. You will need a marketing plan. Since there are very few good traditional advertising venues for the boardgame market, conventions will likely be your best method of generating grassroots support. That and visiting retail stores and giving demos there. Both will cost you money in booth fees, transportation and lodging (not to mention time, which if you are bootstrapping while keeping your day job like many first-time publishers are!) You also have incidental expenses like membership in the UCC if you plan to have UPC bar codes on your product, business licenses, office supplies, software etc. I've found that the production cost of the game is really only about 60% (at most!) of the cost that I end up spending on the game when I account for conventions, trade shows, advertising and incidentals.

So back to pricing the game. You need to add all those estimated expenses to the production cost to find out what your real cost is, and see from that where your 'breakeven' point is (i.e. how many copies you'd have to sell at various prices to break even.) You generally want your break even to be no more than half of your print run, but this will be exceptionally difficult to do the first time around (because as I said, most 'first games' don't do really well unless they have a lot going for them - a lot usually meaning designed by a known designer, top notch production values, excellent art, etc. Days of Wonder is the best example I have of a company that 'did it right' from the get-go, and my hat is off to them. They also probably had more money to invest in the venture than most of us do. I don't say that to belittle their accomplishment in any way, it is simply a statement of fact.)

So going back to the initial question - you will likely get quotes from your printer for various quantities. 1000, 2000, 3000, 5000. Ignore the 3000 and 5000 for the reasons I just mentioned and look most closely at the 2000. Let's say for sake of example that the printer quotes you $4.00 per unit for 2000 games for a printing cost of 8000. Add to that $1200 to attend the GAMA Trade Show (an absolute must!) and $1200 for Origins and $1400 for GenCon (hotel and booth more expensive there) and $1000 for assorted other smaller regional conventions (at these you are better off letting a local retailer sell your games on consignment and spending your time demoing. I would also argue this is a good approach for Origins as well but we can discuss this later :wink: ). If you joined the UCC you paid $750 for the privilege and $250 per year(but it will help you sell to larger stores if the game becomes popular, so some advise doing this from the start). Add another $1000 for incidental expenses I can't completely predict here and then you have a more realistic cost of roughly $15000 if I did my math right.

Then look at your game and the components that it has and compare it to other games with similar components on the market. How much do they sell for? Let's say a similar game to yours sells for $25.00 retail. Remember you will only get 33-40% of that for the games that go through distribution (or $9-11). Games you sell to retailers directly can usually be sold for between 50-55% of the retail price (we'll assume $12.50 here) but you risk alienating your distributors if you actively pursue this, so assume that most sales go through distribution. And of course anything you sell at a convention is for full retail of $25. Discounting makes retailers very mad, I don't recommend it (however if you have more than one game it is ok to have a discount if they buy both!)

Then you pull out Excel and start running the calculations. First start with the conservative estimates - if all games sold through distribution, how much money would you get.
2000 x $10 (average of $9-11 above) = $20000 with a break-even of 1500 games. (1500 x $10 = $15000)

If you sell 10% of your games through retail, your numbers start looking a little better, as well when you start factoring in convention sales. But do not forget what I said at the beginning, which is that most first games sell under a thousand units. So these breakevens are going to be hard to achieve.

How can you get around this? You can print cheaper in China than in the U.S. or Germany. The quality won't be as good, but with some you can get acceptable quality if you are careful and specific with what you ask for. I do *not* recommend the printers in India, the quality I have seen from them is not acceptable.

Even so, you might find that the numbers you get back, once you run them, tell you that you are going to lose money on the game. Should you print then?

It depends -- if you have enough money to print 3-5 games without relying much on money from the previous ones, it might be worth taking a loss on the first couple to build a brand name. Frankly, this was my own strategy. I started with enough money to do three games. The first did not do well at all, but luckily was cheap to print. It's not a bad game, but I made a lot of mistakes in the packaging and art that hurt it when it comes to getting it in stores. The second game has done pretty well - it had a bit of buzz after it came out and people still play it, and it still gets restocked. I've very close to breaking even with it, but not quite there yet. The third game just came out in June so it's too soon to tell. In another year I'll re-evaluate how well each has done to plan for the future. But I'm a little different than a lot of people on this list in that after the first game I stopped self-publishing - I only publish other people's games now. People who are self-publishing often do it because they want to get a particular game out there and think it can do well, and don't necessarily have a plan for additional games (or the money to print them). If that is your situation, then if the numbers don't look favorable you should really consider finding a publisher to take the game on. It reduces your risk to almost nothing, and even though the potential returns are lower, it accomplishes the goal of getting your name and your game out there. If you're in this solely to make a lot of money on your one game, you're in the wrong business :) I've talked to a lot of people in that situation, and are in serious trouble when I talk to them a year or so later.

There are so many other things you should do when deciding whether or not to print your game -- lots and lots of playtests, especially by people who are not your friends and won't be afraid to tell you about the problems in the game. There are people in the industry who really have their finger on the "pulse" and if they tell you a game is good, you're in good shape and if they tell you it is bad, you don't want to print. Seriously. This is part of the reason I stopped printing my own games - I find it easier to make business decisions based on other peoples games than my own designs :) Show your packaging designs to retailers to see how they think it will do on their shelves. Use standard box sizes and shapes and make sure your box design "stands out" from far away. Some of this seems like common sense but it's very easy to make mistakes (believe me, I've made some of them!)

Anyway, I've been very long winded here and I hope I didn't scare you too much but I feel like it's my duty to share what I've learned as a publisher with others to hopefully help them make the most informed decisions possible.

Ralph Mazza of Ram's Head Publishing has a fairly simple criteria, which makes a lot of sense, for anyone doing small press publishing: Take your total costs of production (including whatever Cons you feel you must attend, more on that later), double them so that by selling half your stock you have payed for your costs. Then divide that price by 0.4 in order to account for the distributors discount. The result (rounded up to the nearest dollar if you wish) is a good target for your Retail Cost.

Why do things this way? Any small press (this includes self publishers) company can not really afford to make no money from a game. By setting your price point so that even if you sell purely through distribution you only have to sell half your stock to break even you set yourself up so that you only have to sell half your stock. Then you also have the advantage of every sale after that being profit.

Now, a couple of notes on Conventions. It was mentioned that GAMA was a must, and i am not sure that i agree. I would strongly recommend GAMA for those who plan on doing the bulk of their sales through distribution, but there are a number of other ways to promote sales. (Quick note: Distribution is the least time consuming way for the producer, you do not have to do all that much once you finish production and get your game into the retail pipeline). Other options include direct sales to retail and direct sales. Selling to retail yourself lets you make more money, but it requires more time and effort since you will essentially be doing what you normally pay a distributor to do except that you do not have the existing resources of the distributor. The advantage is cost savings, the disadvantage is that it takes more time. Another option is direct sales, this generally is done over the internet. The major advantage here is that you get 100% of the money from sales, the major disadvantage is that it takes a lot more time than either selling to retail or distribution. For a look at a company selling boardgame directly check out Ad Astra Games.

Direct sale tends to take a while to get fully together and sales come in three distinct waves:

1. Those strongly taken by the concept. Ad Astra did not actually print any copies of their first game until they had sold enough pre-order copies to pay for printing. Some people will buy a game as soon as it comes out (or before) simply because the idea is too cool for them to miss.

2. Building momentum. Once that initial rush is over sales tend to trickle in at a fairly steady rate, assuming that you are able to get the word out. This is the critical stage for direct sales. You end up spending a lot of your time promoting your game. You go out to Cons and demo your game, you go to retail stores and you demo your game, you do whatever you have to in order to get people to take a look at your game. If you are unable to maintain a fairly heavy level of highly personal promotion (i.e. spending a bunch of money on advertising rarely allows you to get through this stage) then it is likely that your game will not reach stage 3.

3. Critical mass. A game (assuming that it is a good one, and if it is not why are you publishing anyway?) will eventually develop a large enough customer base that your customers will begin promoting the game for you. This allows the publisher to step back and take a deep breath, relax a little, before stepping back in to personal promotion mode. A game that has hit critical mass will pretty much sell itself, but you need to be there to maintain and increase that feeling of community (i.e. there is something special about people who play this game).

The direct sales mode is definately not for everyone. If you do not have a lot of time that you are able and willing to commit, do not go this route. Some people just want to design games and make some money from their investment of time and resources. That is fine, those people probably want to go through distribution.

There are also people who want to design a game and want to be involved in getting people to play it. For those people, with the time required to make it happen, should probably go for a direct sales model. It takes a lot of time, but you are directly involved in every aspect of your game, and some people find that very valuable....

So, yeah, that is my take on things.

Thomas