Royalties

From what I understand, royalties are typically a percentage of the wholesale cost of the game, which is the price that the publisher sells the game to a distributor for. This is commonly about 40% of the retail price, so in your example, the trival pursuit makers would get 14% x 40% = 5.6% of the retail cost. Note also that a 14% royalty is very high; I think that 5% is more typical, though higher royalties may be attainable for a well-known designer or an exceptional game.

-Jeff

I believe the figures Jeff has (the same ones I do, I think) are from the hobby games market. There, 3-6% of the wholesale price (which, again, is usually 40% of retail) is not unusual.

I don't think either of us know about the usual royalties for mass-market games. They could be considerably higher or lower. And a wholesale cost of 40% of retail for Wal-Mart is probably high, as they squeeze their suppliers down very, very hard -- having the biggest retail channel (by quite a lot) allows you to simply say, "You need to give us those games at $5 a piece or we'll just sell your competitor's game instead," and more importantly, the following quarter say, "You need to give us those games at $4.75 a piece," ad nauseum, until you can't go any lower and you are replaced with one of your competitors who will go lower.

In that kind of market, it's hard to imagine how anyone could get a 14% royalty on the wholesale price (though as Jeff points out, that's probably 14% of retail, making it 5.6% of wholesale, which is much more "reasonable," it seems). But because the figures I (and I think Jeff) are working with are from the hobby games market, I don't know that my knowledge can really apply.

-- Matthew

I'm certainly not swallowing. Even with what Nando wrote above, just within "board games for my family to play" you've got a ton of competition. If I created a game about cow tipping, I could certainly say that "for people looking for a game about cow tipping, I have no competition," but the statement would be meaningless. When your game is sitting on a shelf in Wal-Mart, it is competing with every other game sitting on the shelf at Wal-Mart. And the buyers at Wal-Mart, when considering whether to stock your competitor instead will not be looking at whatever niche you've targeted, but instead at "board games that might sell at Wal-Mart."

You have competition at the retail level. There's no getting out of it. Even when the groundbreaking game Magic: The Gathering came out and it was the only collectible card game in existence, it was competing with all other other games (and comics) someone might buy in that store.

Well... who's the publisher? And how much is the retail cost? And what is the discount? These things will have a huge effect.

Going by "standard" markups, your $5 game will retail for $50, and with a "standard" discount, your game will wholesale for $20. If you ask for 5%, that's $1 per game. If you do indeed sell millions, it seems like a pretty good deal to me.

That said, there's a fair chance that $50 is too much for the game, that a $39.95 price point is probably the absolute max retail for a mass-market game(obviously I don't know anything about the components, but even that is really high). As such odds are that something will have to give. If the cost can't be brought below $5, your royalty will be squeezed.

Hopefully one of the members here who has sold into the mass market can give you a better idea of what the standard royalty is in that space.

-- Matthew

How about as a starting point, ask what seems fair to you. If the game sells a million copies, and you made 10 cents per game, you'd make $100,000. Is that fair? Is that acceptable?

To be candid though, your story doesn't have much believability for me. I'm not saying at all that you're being dishonest, but I'm pretty sure that at the moment there are less than 10 games that are million sellers, and most are household names like Scrabble and Monopoly.

We hear from time to time, claims to have developed the latest and greatest game, a publisher promising big sales, etc. But such claims are rarely fleshed out with details. What makes the game great? What is it about? Who is the publisher? What other million-sellers have they had? What TV shows has the game been on? What network is developing the sitcom?

I don't mind people not providing details to protect their intellectual property, but in your case, if the game has been on TV, the cat is already out of the bag.

On the other hand, there's no particular need for you to substantiate your story to us. I guess my preference would just be for people who didn't want to do so to refrain from making claims of this sort in the first place, even if true, and just stick to questions like "what kind of royalties are customary?"

To get that question answered, you might also look in the web links section. I believe that organizations like Discover games and Rehtmayer games probably have more experience working with mass market games than we do.

Best of luck!

-Jeff

My agent asks the publisher for a 5-7% royalty and guaranteed min performance per annum. Up front royalty payment, min first quarter.

of the wholesale price, sorry.

You said:

What do you mean by art licence?

John.

We are licensing characters and art from another company. We are doing a licensed product. If our license goes through then we are either publishing in December of this year or March of next (our two best windows to go to market).

Indeed, get a good agent who knows this road, or you'll shoot yourself in the foot.

I DO hear "5% of wholesaale" a lot, and with more companies pursuing direct to public marketing on the web, this aces you out of more income. Valuable tip, Lee. Sales is sales.

You'll also hear the game company come back at you with "5% gross sales receipts less returns." They don't want to pay if they've sold but retailers send unsold units back-- they have to give retailers credit for those. I worry about it but it makes sense.

I just want a buck a box.