DF Kickstarter Funding Goals and Costs
One thing that I’ve seen a few times here and there is surprise that the goal for the project is set so high. One commenter even likened it to exortion – buy our stuff or GURPS will get it’s throat cut, mwa ha ha!
Maybe I would have thought that, too, once. But my recent examination of pricing for just the books for my own kickstarter and RPG project has changed my mind. I actually expect my own Kickstarter to require more than the DF one, because while +Sean Punch has estimated about 250,000 words for the GURPS DF compilation, mine is 400,000 words (roughly 100,000 of which are monsters – the SRD5.1 has a lot of monsters in it, and I’ve not finished culling them out).
Anyway, the final books come in at 408 pages. That’s 612 words per page, smearing it out over every page. As an interesting note, that’s almost exactly the wordcount per page of The Book of Heroes. So I feel like I’m not in crazy town.
But I digress. These things are expensive to put together, because very clearly, SJG is working off of their experience on “how not to get utterly floored by your own Kickstarter.”
They have limited stretch goals, zero commits to “out of the box extras,” and have given the shipping costs to Backerkit to manage as an extra. They have not done the project KS until the writing was done, and maybe the layout too. Art is still being worked.
This is all fantastic news. It drastically limits the risks for the vendor, and that means the risks to the customer are also minimized.
And I’ll say it again, though +Phil Reed has said it frequently and well: International shipping sucks. It’s terrifying and terrifyingly expensive. Sending individual books overseas can easily be multiples of the cost per book. The only way around that is either to to have them printed and distributed from within the target market zone, or to ship pallets of books to try and average out the shipping. Both require perfect knowledge of who’s ordering your product, and are not predictable ahead of time.
But let’s get back to it. In a KS, or any business, you should seek to cover all of your costs – including “sunk” costs like staff writing and editing, because if Sean isn’t writing DF, he’s writing something else. Also, writing and editing are two different jobs, best handled by two different people. There’s a reason I’m going to outsource editing to an industry pro and pay him, in his own words “an adult wage.”
Anyway, let’s do this:
Note: I’m making lots of very specific assumptions here about quality, quantity, and form factor. Can a game be published for less than what my numbers suggest? Sure! But read on, and you’ll see what I’ve done is provide “middle of the road” estimates for things.
- Writing and editing each range from 3-8 cents per word. Lets book 5 cents each.
- Indexing is ballparked at $10 per 1,000 words.
- Art is ballparked at $250 per full-page, but could be much more, for full color. You want 1 piece of art every 2-4 pages. Or at 625 words per page, about 1 piece of art every 1,800 words. Each piece in my experience tends to average about 1/3 page: $80.
- Layout is harder to find benchmarks for – let’s say a penny per 200 words. That may be wrong.
So for a 250/400K project, you’re looking at
$25,000 and $40,000 in writing and editing
$2500 or $4000 in indexing
$1250 or $2,000 in layout
$14,000 or $20,000 in artwork – oh, add another flat grand or two for cover art, which is more expensive.
That means that for first order, costs to make a 250,000-word PDF ready to send to a printer is about $43,000, and for my project it might be $66,000. Roughly a dollar for every 6-7 words of the project!
And that’s not including printing costs. But my reading of things is that to cover taxes, Kickstarter fees, and backerkit, plus incidentals that come up during the project, you’d best raise at least 1.5x your projected costs. Maybe double.
Note this gets the smaller project – with no extras, to about $65,000 with no printing costs. Price breaks for this sorta stuff don’t even start until you hit 1,000 books. And this is not one book, but five, and smaller. But using the PrintNinja estimator, 1000 x 8×10 books at 128 pages, softcover perfect bound are $5 per book, and down to $3 per book if you order 2,000. Less then $2 for 5,000 copies. So let’s go with $10 to print all five books. So $10,000 just to get some scale for the books alone. Then there’s the adventurer screen and dice. No idea there. But based on the price point for the game and PDFs, I’m going to estimate $10-14 as total cost of materials, including the box. So cost of materials, including gross-up for fees and incidentals, will run $30,000-$55,000.
So look – $95K to $120K target for the DF boxed set, “just” to get 2,000 copies made in a fashion that the customers are demanding[1] – high production value, boxed set, all in.
So don’t be surprised by requests for $100-200,000 for getting a game launched in a way that emulates the Big Dogs. If I were to be selling a 304-page hardback with 188,000 words in it, expect costs on the order of $41,000, and a Kickstarter ask of $60-80K per book.
Note I expect long-time industry pros with go-to contacts in the industry – and especially in China – might be able to do better. But my point here is that there’s nothing extortionate about the funding level here, and in fact is likely just the bare requirement to make money on the project. Note how I left off “profit” from the equation? That’s not a valid business model. So whatever savings a set of experienced pros can do off of my numbers, that goes into “yes, this is a viable investment we should repeat.”
Edited to Add: Now, consider what happens when you add shipping into the mix. Media mail for a single book is the only well-known quantity. If your package is a book that weighs 4lbs or less, you can get anywhere in the USA for $5. If it’s more, you can do some sort of flat-rate box.
Internationally, it’s a total crapshoot, and ranges from $20-90 per package. so let’s take a lower-end but not unrealistic value. $30. For 1,500 backers, you would have to add on another $45,000 x fees and taxes (KS revenue is taxed as income) – probably another $60K, because you don’t want to take a bath on shipping. That turns an average requirement for print-only from about $65 to about $105 pretty fast. If you didn’t account for it, it can take your notional profit, or your salary for writing and editing your own work, to zero pretty fast, and it’s easy to see how a run-away successful kickstarter from the revenue perspective can bankrupt a company.
[1] Buy in for D&D5 is something like over $100 for PHB, DMG, and Monster Manual. The Dracula Dossier and Delta Green Agent’s Handbook are ful-color, high value books. All are going like gangbusters in their market. The market demands high quality books.
There's another reason why $100,000 is a good target: it's wholly achievable.
http://www.kicktraq.com/projects/847271320/car-wars-classic-arenas/
We have the same company with a Kickstarter over the same length of time and pitched to many of the same folks, and it got $100,000 almost on the nose. It asked for $50,000, since the product needed less in the way of production costs, and got $100,000.
If I take the first two days of the DF Kickstarter, and assume that the ratio of the money for the DF Kickstarter ($48,815) over those two days to the money for the first two days of the Car Wars Kickstarter ($35,110) holds, and I multiply it by the total for the Car Wars Kickstarter ($100,434), I get $139,638. That means the main goal and the first stretch goal will be achieved, and there will be a push for the second stretch goal (a PDF that Kromm would write anyways, so there isn't much skin off his back).
I think this is a good article but I have some minor quibbles. I'd be shocked if the KS isn't going to fund far more than the 2,000 orders needed to fund the Kickstarter (assuming a $50 buy in). I'm assuming a Chinese printing based on the estimated delivery date and based on average printing costs they should be able to go to market beyond the customers that buy into Kickstarter. But as +Phil Reed has said this is an experiment to see the demand for GURPS physical product.
As an aside I'm into the Kickstarter for $250 and I hope yours launches in October or November so I can time to recover!
Based on prior levels for Car Wars, as Charles notes, I would expect $140,000 from 1,750 backers when all is said and done. There's a lot of add-ons available and they're all PDFs, which makes the KS have higher funding. This is good for GURPS, not terribly relevant for the viability of the box as stand-alone, but also shows that there are significant knock-on effects that simply aren't present with conventional commerce or e-Commerce. So that does give credence to the KS model.
Second – Print Ninja is Asian printing. So my numbers are good there.
And yes, they will almost certainly over-order on the print run because (unlike me) they have pre-existing distribution channels they can use. I would expect that the retail cost for the game will be $50-70 based on rules of thumb. We shall see.
As for Dragon Heresy, I am aiming for October, and maybe into early November but later than that is bad – Nov/Dec are terrible for KS funding.
(and based on my own numbers, fully-funded with hardcopy will probably take about $150,000!)
Isn't it possible that the Dragon Heresy KS is going to be aiming for nearly the same people that Dungeon Fantasy is? I know that whatever I end up able to afford spending on the DF Kickstarter is going to deplete whatever I would have given you. Which is unfortunate, and I would really like to be able to afford all the games, but I can't.
It is a definite possibility, and something that's on my mind. Ideally, I would have a month or so for people to recover between this particular Kickstarter and the next, but honestly November and December are terrible for kickstarters and if I don't do it in October I really shouldn't do it until January. That would mess up some scheduling with some of the resources that I have lined up.
I expect retail on the box will be what it is for the Kickstarter. It was for Car Wars, and it's consistent with the way they do pricing on Warehouse 23. They sell at MSRP, so that they don't undercut the FLGS'.
In regards to International Shipping I wonder if they should have just done EU at least as a separate Kick Starter with postage somewhat collectivised. I make no claims to knowledge of the intricacies of customs, shipping costs, market size etc though.
That sounds like it would be highly complex. For a game like dungeon fantasy box set, it might actually work since the entire point of that is to print a game. For my own case, I am only going to do a hard copy print run if all of the other goals find First. In that case, what I would wind up doing is stopping me Kickstarter at print run for us customers, but if I find all of the girls up until then, launch a second Kickstarter for strictly European customers. Or something like that. Course that leaves the customers in Asia out of luck, but perhaps that could be handled since some of the printing is done there as well. At least for me, I will look into it.
The thing that most smart companies are now doing is a drop-shipping process: bulk-ship everything to a hub in the target customs area, and send out individual packages from there. This way there's no messing with customs for individual packages, and the overall cost becomes much lower.
(I've done this for boardgames recently – by accepting a bulk shipment from the US that I then sent out to people around the UK I was about to cut about 30% off the total cost.)
SJGames did this very effectively for ODE, but I'm guessing it cost them rather too much as they haven't repeated the process. Also the vast bulk of their market is in the USA so it may not be worth the administrative resources to seek out a way of doing this affordable.
In the UK in particular, "books" do not attract VAT while "games" do – so DFRPG, with its dice and miniatures, would get 20%+ more expensive (one copy shipped to the UK comes out about twice the shipped cost to the USA, which is why I'm backing PDF-only). For DH I assume you'll be shipping just the books, which means UK backers only have the shipping cost to pay for, not tax as well.
So almost at the home mark and what's happening:
Likely to be over $155k.
Likely to be over 1350 backers and I guess a few extra copies ordered.
A lot of extra money spent on W23 or on PDFs and other extras. These are likely much closer to 100% profit given the costs are much lower or have already been paid off (eg giving away DF1 to DF3 in a $250 pack when they've sold literally thousands already and don't have to pay royalties).
I have no idea how many copies will be sold at conventions, given away as comps, sold at cost, made for replacements etc
I could guess another 1000 given there are a lot of conventions internationally.
Then there's stocking retailers and distributors.
Then there's year on year sales for the next few years.
Certainly some of us might pick up an additional copy especially if it's discounted or as Xmas gifts etc
Purely guessing a 5000 unit print run seems conservative. With maybe a few hundred extra copies each book.
Then they will sell the PDFs on W23 which will once again be close to 100% profit as most of the costs.
I guess I'm happy if an eventual 5000 people buy DFRPG it's not a huge number though.
I'm not even sure if it runs a real profit but I don't think SJ Games cares as long as it IS profitable.
And it ended up over $177k
A hypothetical calculation:
So taking off KS fees, royalties and incidentals that's likely to leave a little over 150k. Probably less if you write off the costs for GURPS zombies and various PDFs in the $250 option. But you've made or lost your money on those already (except author royalties for the various PDFs).
So another $50,000 for the work already done or soon to be done (artwork layout etc)
That leaves $100,000 to actually buy the product and get it to SJ Games (or where it needs to be before shipping actually happens)
Then that's enough to do a printing of 5000 with some excess money to cover marketing, give aways and other costs.
Then you've got to send the copies you owe out. Probably by the time backer kit is over 1800 copies (but you might get some extra money there or not sell anymore at all).
So you're left with just over 3000 copies to sell. You haven't made a single cent yet, but now whatever you can sell them for is pretty much 100% profit minus the tax you will eventually have to pay.
If you're lucky you end up with $100,000 before tax.
Not sure if 5000 is a realistic print run. It seems reasonable to me to imagine supplying distribution will take thousands of copies (even to cover Australian game stores and mail order catalogues would IMHO take more than 100 copies).