How much of a discount do big distributors want in the gaming industry?
In other industries they'd want to buy at 40% of retail, but do they ask for even deeper discounts in the gaming industry?
Thanks
Costs of using a big distributor
Fri, 11/19/2004 - 09:44
Fri, 11/19/2004 - 17:25
#1
Re: Costs of using a big distributor
VeritasGames wrote:
How much of a discount do big distributors want in the gaming industry?
In other industries they'd want to buy at 40% of retail, but do they ask for even deeper discounts in the gaming industry?
Thanks
The major distributors will typically want to buy at 60% off retail, with you paying for shipping. They then sell at 50% off retail. They are also typically quite sloooow to pay. :)
Best,
Chad
Sat, 11/20/2004 - 17:02
#2
Re: Costs of using a big distributor
Chad_Ellis wrote:
VeritasGames wrote:How much of a discount do big distributors want in the gaming industry?
In other industries they'd want to buy at 40% of retail, but do they ask for even deeper discounts in the gaming industry?
Thanks
The major distributors will typically want to buy at 60% off retail, with you paying for shipping. They then sell at 50% off retail. They are also typically quite sloooow to pay. :)
Best,
Chad
***While I agree that 60% is the norm, the "slow-to-pay" remark is not so accurate. (Or I should quote correctly and say" sloooow to pay" :)
Most distirbutors get temrs - prepay, net 10, net 30. That means paying before product is shipped, paying within 10 days or paying within 30 days. I will say that what actually happens with, say, net 10, is that they cut a check on the 10th day and you get it a few days later. So it's really net 15 and net 35. But very rarely do I get payment beyond net 30 (or beyond the terms agreed upon by the distributor).
As for shipping - you can specify a minimum amount that must be ordered to qualify for free shipping. Typical minimums are about $200-$250 an order or 24 units of a particular game. But it depends on your product.
Hope this helps.
Sun, 11/21/2004 - 14:02
#3
Costs of using a big distributor
Hi Zev,
I'll defer to your expertise. I'm still new to publishing and was speaking mostly from the horror stories I've heard from other publishers. I look forward to being proved wrong! :)
Hugs,
Chad
Tue, 11/30/2004 - 20:19
#5
Costs of using a big distributor
paleogeoff wrote:
I'm not very familiar with the game industry designers, however I do have experience in the book industry.
[snip]
Again, this is just for the book industry. The game distribution industry may be different, but from seeing the other posts it sounds like things are similar between the two.
****What you describe _is_ typical of the book industry but it is NOT similar to the game industry. Firstly, and most importantly, there are no returns to worry about (unless you made a special deal).
Secondly, as I mentioned, discounts are around 60%, though you could make it 55% - but better have a product the distributors want in order to accept that discount. The more incentive you give them to order your product the more chance they will carry it.
Thirdly, you can set minimum quantities. Again, if you make minimums too high, distributors might say forget it. I suggest making 6 or 12 your minimum - depending on your game. I have a free shipping minimum of $250 and a min quantity of 6 per game (I used to not have a min. but only a few of the smaller distribs would order less than 6). In some cases I ask for a min. of 12 cause that is some of my case counts.
Those three things really set the game industry apart from the book industry.
Wed, 12/01/2004 - 10:03
#6
Costs of using a big distributor
Depending on your game, mainstream stores like Wal-Mart may indeed demand a return clause. Most indy game manufacturers don't try to market through major book stores, Wal-Mart, etc. So this may not be a concern.
Wed, 12/01/2004 - 12:40
#7
Chiming in late...
I've been so busy lately that I've only been able to skim over here at BGDF. However, this is something that I have some relevant experience with, so here's what I've found to be the typical pricing:
Selling to Retailers: 50% off MSRP
Selling to Distributors: 60% off MSRP
Selling to Consolidator: 65% off MSRP
The consolidator % is pretty variable, but I've not found a retailer or a distributor who didn't insist on the percentages listed above. Some will try to squeeze you for more, but they're doing just that: "squeezing". You really don't want to let them get away with it, or you've little hope of ever protecting your profit margin.
Wed, 12/01/2004 - 17:34
#8
Costs of using a big distributor
Z-Man wrote:
****What you describe _is_ typical of the book industry but it is NOT similar to the game industry. Firstly, and most importantly, there are no returns to worry about (unless you made a special deal).
It's good to know that there is a difference between the two industries. I do find it difficult to believe that a distributor would not have a return clause, but that's just my own opinion.
One other point I'd like to make that is used in the book industry and can probably be applied to the game industry is the use of a STOP order. In the book industry STOP refers to Single Title Order Plan. If you set up your terms for your products on your website so that stores can buy directly from you you can set up a STOP discount. In the book industry a STOP discount is usually never more than 20% since this is a title that is definately being bought (basically the customer made a special request for it) and it is being sold directly to the retailer, and for them a 20% margin on any item is really good.
I'm not very familiar with the game industry designers, however I do have experience in the book industry.
Distributors in the book industry typically ask for 55% discount on books (the publisher only gets 45% of the cover price). The publisher is responsible for shipping.
Terms are set in the contract and are usually set to benefit the distributor. Payment in 90 days (or 120 days typically for first payments). Publisher must also pay for returns. If you are trying to sell to a distributor you need to plan on returns. Also, a distributor may not buy more than they need at a time. For our first book (shameless plug coming: Rainbows from Heaven, www.apbooks.net) our distributor has ordered books from us in quantities as low as 1 unit to as many as 50 at a time. Basically, plan on a good storage for your product in between receiving orders. Unless you have a known order coming in the distributor will probably only order what they need. If you have 5K units on hand and they only order 5 units from you you better have storage for the other 4995 units.
Again, this is just for the book industry. The game distribution industry may be different, but from seeing the other posts it sounds like things are similar between the two.
Geoff
Tangent Games