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275647 Posts in 27717 Topics by 4285 Members Latest Member: - Jason DAngelo Most online today: 160 - most online ever: 429 (November 03, 2007, 04:35:43 AM)
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Author Topic: The Price was Right (Come on...er... Up?)  (Read 7736 times)
Luke
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« on: May 17, 2004, 10:18:02 PM »

My aim for this thread is to chronicle some interesting developments in the "product" that is Burning Wheel. Not the game, but the thing sold from websites and stores. The entity that costs money to produce, and generates revenues based on sales.

I hope that this information might help better guide decisions of an independent or small press game designer in the future.

First off, I have a confession/admission: Ralph is and was right. ::gnashes teeth and tears at hair::

Ralph was right to lambast me about the price of Burning Wheel. Ralph was right to say it was underpriced.

For those of you who don't know, BW sells for $15. It's 472 pages of game material in two digest-sized books. It is, in fact, pretty darn cheap.

The price point was set low quite deliberately. My reasoning: 1) The BW was a hobby/fun-thing-to-do. 2) I hate the high price of rpgs.

The hobby part meant that I wasn't "paying myself" and I only intended to make back what I invested. The hate part meant that I was going to price this as low as I could get away with.

So I simply doubled the full cost of the game to get the retail price. Seemed like plenty of profit margin to me at the time.

In the last year and a half I sold most of my copies via direct sales -- either from conventions or from the website. Thus I actually made a profit and put all earnings into savings for a possible reprint. The remainder of the copies went to retailers. For those, I simply split the retail price so I would just break even. Seemed fine to me, and I only had a handful of retailers willing to carry the game, so I wasn't dealing in large volumes.

Now things have changed. The game has been picked up by Alliance for distribution. This is a good thing for the game overall. But it doesn't feel so good for the product/fiscal side of the game.

Through distribution I only make 28% of the cover price for each set. In order to break even, according to my pricing model, I need to make 50% of cover. So I take a loss on all sets sold through distro at the $15 price point.

That's ok. In fact, I anticipated this. I figured it was essentially like paying for advertising for the game. Alliance is going to get far more saturation than I could, even with an ad in Dragon. So at the outset, I banked on selling a couple of hundred through distro and taking a little hit. No big deal; the game gets "out there."

But matters have changed subtley. I figured the distro thing would come in the 500s (middle of the run), it would pass, and I would sell the remaining sets off via direct sales to waning interest. This is not the case.

I'm down to my last 200 copies and the Alliance orders haven't even come in yet. Let's just say, for argument's sake, that those remaining copies are going to leave via distribution channels and I take the hit as anticipated.

Fine, right? Sort of. This is where it gets sticky. What happens if demand continues at its current level? What happens if distributor demand eclipses direct sales demand? This is a possibility at this point. And it would mean that, at $15 a set, I go from taking a little hit, to bleeding money. I would be paying roughly $3 to everyone who bought my game. More importantly, I would not make enough money to do another print run. That stings. The whole goal of this hobby was to break even -- make it pay for itself -- and that is obviously short of the goal!

Suddenly, we have a possible situation where the game gets more popular, but far less profitable.

I'm sure, by now, a few of you are screaming the obvious answer at your screen: "Just raise the damn price, jackass!" And let me tell you, that stings, too.

Raising the price of BW takes us from the hard ground of costs and retail into the infirm territory of philosophy, inward perception and outward perception.

What does it look like if I raise the price? Does it damage the fragile image of the game? And, is this next step one I want to take?

I do worry about the outward perception of the game. I cringe at the thought of sneering rpgers whispering, "BW sold out." Ridiculous, I know.

But I suspect, and I could be wrong, that I've built small reputation around providing a solid game for dirt cheap. Will a price change damage that reputation? Will that damage have deeper ramifications? Buzz is a very fickle thing -- I feel very nervous about changing any part of the formula that has brought me this tiny sliver of success.

But this leads to the next question: Do I want to take this from hobby to business?

Yes and no. More than business or hobby, what I really need is to lighten the load on me a bit. The cost of the game doesn't factor in: days off from work, cost of conventions, website expenses, lunch and drinks for the guys who help me out, the marginal advertising and promotions I do and the other myriad incidental costs (like stressing my relationship with my patient and understanding girlfriend).

It's funny how all of that can be ameliorated with a little more money.

Anyway, if I factored all that in, the price of the game would rise dramatically.

I spoke to Jason and Jason of Key20 today. They advised me on a little pricing: Retail price should be either 6-8 times the cost to print, or 4-5 times the full cost (includes printing, art and editing).

$7.50 is my full cost, which means BW should retail for $30 minimum.

Hm, that's ugly. That's what all the other games retail for. Where's all that money going? According my deal with Key20, $18 of that theoretical $30 would be split between the distributor and the retailer. If they both make 30% of msrp, that's a good cut.

Key20 takes another 10% for their services, which I do not begrudge them. They've done quite a bit for me over the past few months. I can't remember it's gross or net though, but let's price it on the outside: $3 for them.

That leaves me with $9 in my hand. $1.50 over the amount it cost to put the book together. Multiplied times one thousand... $1500 is a tidy sum, but not nearly enough to cover the list of expenses I mentioned above. Still, it is far more attractive than taking a $3000 loss.

But $30 is just beyond my ability to stomach. I know it's "what the market will bear", but I just can't charge that much money for a luxury item I personally produce.

Hm. That puts me in an interesting position -- giving a discount on a luxury item that others are willing to purchase... there's got to be an economic term for this (I mean one aside from "idealistic jack-ass makes no money").

Ok, even if I price the books at $27 -- which nets me exactly my cost -- I am still in the difficult position of not actually making any money. And as I've mentioned, additional capital allows me to go to more conventions, further spread the word and to write more books.

Another direction to take, of course, is to somehow lower the cost per unit and thus increase my margin. There are a couple of ways I could do that: Combine the books into a single volume, trim material from the books, or print in larger amounts. The last option seems the most savory to me. The first two go counter to my design aesthetics for the books.

Ordering more copies from the printer means I need more warehouse space, more money up front and I am taking a bigger risk. What if interest wanes as suddenly as it waxed?  

The final difficult position is that of the reprint. I have enough material to offer a revised edition. However, if I simply reprint the game, my cost per unit drops dramatically. But, of course, I feel morally obliged to release a better, faster, stronger product -- not the same old model T. This, of course, puts me right back up in a high unit cost due to the price of doing a new print run.

That's a lot of numbers -- quite a bit to chew on. And it fairly outlines my current position. The big variable here, of course, is I really have no idea how much Alliance is going to order. None. This puts me in a very difficult position -- I don't know if I even should do a reprint/revision. But waiting until the last minute could be disastrous.

Anyway, there is my cautionary tale.

Also, Let it be known that I give credit where credit is due: Ralph, I shall have my revenge.

Just kidding.

===

Addendum: There are no definitive answers to the conundrums I've posed -- if only because I have muddled simple business sense with a design aethetic, a wierd sense of ethics and an obligation to my fans.

However, I would be interested in hearing details of inward and outward perception of the game  (in this case, I refer solely to price, design and store presence -- not mechanics). Also, if I've made any mistakes in my assumptions, feel free to correct me. And, of course, advice is always welcome.

thanks all,
-Luke
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Trevis Martin
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Posts: 499


« Reply #1 on: May 18, 2004, 12:25:45 AM »

Luke,

I recently bought BW myself (#600 and something according to the flyleaf which I don't have on hand.)  I was wowed by the quality of the product and I thought to myself "Luke is crazy not to be selling this for more."  I know about luxury items bucko, I'm a painter.  I can't do it for a living because the production level would kill me to even break even and I have a family to support.  One of the absolute hardest things I've had to learn to do is price my own work.  They're my babies and I'm happy if each one gets a home.  

 I would have gladly paid $30 for the set.  It's a value at that price.  Its a steal at the current one.  I would have paid 15 for the pdf's.  You have a quality product that you've put a lot of sweat into.  I think your price point is so low as to actually indicate a lack of self value. Hell you buy DVD's which you'll only watch a few times for $20, sometimes more.  I'm only projecting sure, but that's what I faced up against as a painter.  Asking myself 'Well, dammit, why isn't my work worth this much?" (and I'm having to price individual items in the several hundreds to thousands of dollars.)  I think the game is excellent quality, solid, well packaged and professionally presented and there is no external reason why it shouldn't sell for more.  

Luke, the heart and sweat you and your mates are putting into your game is worth more than you're charging, there isn't any shame in balancing that out.  You owe it to your fans, to me, not to deprive them of your work by cutting yourself off at the knees. That's your obligation IMO. Just to back my point, if you do raise the price, I'll give my copy to a freind and I'll buy it again!

regards,

Trevis

p.s.  Have you thought about selling at least your supplements in PDF form?  Even if its both PDF and finished version? That would have a very high return and might help in your balancing act.
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DevP
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« Reply #2 on: May 18, 2004, 02:03:56 AM »

You have to take care of yourself, so price up the new run so that you can Not Lose Money! If people start crying "sell out!", just give me a call and they'll soon start crying "Dev that's illegal!" because, y'know, I'm driving over them with my car.

It's worth $30. It's probably best to add *some* new stuff if possible (even just various letters from you, designer, and various anecodotes about how cool the book plays out, or something easy really), but pragmatism seems key.
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Jack Aidley
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« Reply #3 on: May 18, 2004, 02:17:47 AM »

$30? That's er.... (damn you Americans with your freaky foreign currencies) 18? That seems a fair price for your game - it's a lot better than other drivel I've paid that or more for.

Having said that, I might not have bought The Burning Wheel at that price - I'm kind of reluctant to speculatively purchase from beyond the pond at that kind of point. In upping to $30 you'd be moving your game out of the speculative purchase/impulse buy 'cos it's so cheap bracket, and into the serious product band. Which, if you ask me, is a good thing - The Burning Wheel is a serious product - it has a growing groundswell of support, folks talk about it, folks are playing it and folks are liking it. And most of all, it deserves it.
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- Jack Aidley, Great Ork Gods, Iron Game Chef (Fantasy): Chanter
Michael S. Miller
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« Reply #4 on: May 18, 2004, 03:20:13 AM »

Hi, Luke.

I have to echo Jack here. Raising the bar to $30 will lose you 2 kind of sales: 1) the impulse buy and 2) the folks who grumbled about it being too expensive at $15  If your fans were all impulse buys, they wouldn't be clamouring for the Monster Burner. They wouldn't be clamoring for your con games. I think a year and a half of impulse buys have gotten you enough. Raise the price to where it shoulda been to begin with!
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Matt Machell
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« Reply #5 on: May 18, 2004, 03:37:28 AM »

Quote from: Jack Aidley
$30? That's er....  18?


Closer to 16 quid with exchange rates as they are...

Anyway, back at the point. The lower price built BW a diehard following of fans. I reckon those fans will still pass on word of mouth recommendations even at a higher pricepoint. Because you have brand loyalty.

-Matt
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Valamir
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« Reply #6 on: May 18, 2004, 04:14:32 AM »

Quote
First off, I have a confession/admission: Ralph is and was right. ::gnashes teeth and tears at hair::

Ralph was right to lambast me about the price of Burning Wheel. Ralph was right to say it was underpriced.


I'm just shallow enough to really enjoy reading things like that ;-)  Heh.


Seriously, though, you'll go through your 200 copies no problem.  Then you'll need another print run.  The first thing I'd try is shopping around printers again and see if you can't shave $1 or 2 off of that printing cost.

The second thing I'd try, to get you over the last little hurdle of guilt at doubling the price of the book is running over the manuscript again.

You've got a ton more history of actual play of your self and others behind you.  You've got a ton of feedback from a variety of sources.  More than just an errata update, is there anything you've learned about the play of Burning Wheel that might be worth revising portions.

I don't know when the last time you read BW cover to cover (if you're anything like me probably a long time) but you might just find entire sections of text that at one time you thought was important that now...due to changes in philosophy or more play experience...have become superfluous.  There might be other parts that could be trimmed down, worded more succinctly, etc.  One of my own bugaboos is duplication where I explain the same concept in multiple places.  You may also decide that the voice you used when writing BW the first time isn't the voice you'd use today.  That something easy to change.

Point being there probably is a relatively painless dozen maybe two pages of stuff you could reduce.  But instead of saving money (that amount wouldn't save much) you could replace it with updated stuff.

I know we've had some philosophical discussions about the role of mechanics and interpreting dice in the game.  From some of your recent play posts it appears that you've really crystalized your philosophy of the role of dice in BW and the specific practiced technique of you use with them in BW.  Putting that in the game in a more direct fashion would be a great use of some of that freed up space.

If you've got the room left, you can add some of the support material you've developed on the web site, as a teaser or tie in to your web site (here's a sample of what you'll find there).

Lots of things you could do on that front.  Not necessarily BW revised.  But BW updated and brought up to your current standards.  



In the meantime.  There's no rule that says you can't up the price $5-10 for your last $200 copies.  It won't completely help you avoid loss on the distibutor sales, but if you raised the price on the direct sales also (cuz retailers generally hate it if you're offering the book cheaper direct than their cover price) you'll make up for that a bit on that side too.  Avoid taking a big hit on those last copies while gearing up for the next print run.
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ethan_greer
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« Reply #7 on: May 18, 2004, 05:03:19 AM »

Couldn't you just skip the whole distribution step? If what you want is a hobby that covers its own expenses, why get into distribution at all? It seems as though the game is fulfilling all of your original goals without distribution, and distribution is what's screwing everything up. I say distribution be damned.

Or is it not that simple?
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quozl
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« Reply #8 on: May 18, 2004, 05:46:01 AM »

Here's my advice:

Sell it at $30.  (Remember, it's still only $15 for each book, which reminds me, can they be sold separately?) Reprint it exactly the same.  Then put out another book with all the updates and new material you've collected over the past year and sell it too.

Oh, and put your last post up on your website and on rpg.net and anywhere else that people might be interested.
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Sean
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« Reply #9 on: May 18, 2004, 05:52:11 AM »

Totally subjective, but that's what you're asking for: not having been exposed to it at all firsthand, I would have struck at BW for $20, but not for $30.

Based on a hobby store readthrough that would have gone up to $22.95.

I do think the game is worth $30 (maybe even $35) relative to the market, but I wouldn't have paid that for it. Unless I had a friend who was actually running it, of course.

Like everyone else when I got it in the mail I thought: "I want some of what Luke's smoking to be selling this for $15." That's just way undervalued by any reckoning, and I'm a notorious cheapass.

The revised Artha rules and the free-form magic system on your website were actually what made me click the paypal button to buy it - I loved those instantly. For what it's worth.
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Andrew Morris
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« Reply #10 on: May 18, 2004, 05:57:23 AM »

Yeah, I have to agree with the others here who've stated that $30 is a reasonable price for your game. When I decided to buy a copy and check it out, I assumed that the $15 price was for one of the two books. When I found out that it for both, I actually felt like I was stealing. Not like, "Oh, what a steal," but more like, "I gave him a $10 bill and he handed me a $20 with the change."

I wouldn't have blinked if the price was $30 for the two. I've recently identified my impulse-purchase-cutoff point to be $40 exactly. Anything under that, I'll still buy on a whim. At $40 and higher, I have to think about it. Of course, there's no saying that I'm the average RPG consumer, but I don't think a $30 price point will hurt you much. Hell, I don't think a $30 price point on your remaining stock will hurt you much, let alone if you update the game.
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Luke
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« Reply #11 on: May 18, 2004, 06:00:29 AM »

First off, thank you everyone for your honest feedback.

Second: Ralph, you and I are due for a very emotional reunion at GenCon this year. Two friends who trained at the same temple, one joined the provinicial militia, one joined the rebellion...at their tearful reunion they have no choice but to fight! ;)


Quote from: ethan_greer
Couldn't you just skip the whole distribution step? If what you want is a hobby that covers its own expenses, why get into distribution at all? It seems as though the game is fulfilling all of your original goals without distribution, and distribution is what's screwing everything up. I say distribution be damned.

Or is it not that simple?


This really seems like crazy talk to me. Why wouldn't I want to use all available channels to "get the game out there?" Why would I want to hamstring the game by refusing this risk?

Even if distribution only moves a hundred copies, that's a hundred more than I would have sold. Even if my time in the sun only lasts a few months, I really believe  that the exposure will be highly beneficial.

I honestly feel it would be irresponsible of me not to attempt to get the game out to as many players as possible. Irresponsible to me as a design, and irresponsible to the 700 other kids who play Burning Wheel.

So I am going to try to make this work and move forward.
-L
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ethan_greer
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« Reply #12 on: May 18, 2004, 07:42:17 AM »

Quote from: abzu
This really seems like crazy talk to me.

Fair enough. Allow me to clarify my thoughts by responding to your reactions in turn. If, after that, you still think I'm crazy, then cool. :)

Quote
Why wouldn't I want to use all available channels to "get the game out there?" Why would I want to hamstring the game by refusing this risk?

Because you don't want to have to raise your price.

Quote
Even if distribution only moves a hundred copies, that's a hundred more than I would have sold.

No it isn't. You'll sell the hundred copies. What's really at issue here is the timing. When do you want to sell those hundred copies? Right now in a big chunk, or in little pieces over time?

Quote
I honestly feel it would be irresponsible of me not to attempt to get the game out to as many players as possible. Irresponsible to me as a design, and irresponsible to the 700 other kids who play Burning Wheel.

I don't see it that way. You're already selling the game.  Anyone with an internet connection and a credit card can get it. Which, if you ask me, is already more "out there" than Alliance will get your game. And can't Alliance send your product back to you later and demand a refund? That sort of thing can kill a hobby-based business like yours in a heartbeat. Opening yourself up to that possiblity seems risky to me. Is going under because Alliance poorly markets your product irresponsible? Is selling at a loss that prevents or significantly delays the next print run irresponsible?

Quote
So I am going to try to make this work and move forward.

Then you're going to have to raise the price to 30 bucks. Don't compromise and take a loss under any circumstances.

So, do you take the blue pill, or the red pill?
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Luke
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« Reply #13 on: May 18, 2004, 08:11:33 AM »

Quote
No it isn't. You'll sell the hundred copies. What's really at issue here is the timing. When do you want to sell those hundred copies? Right now in a big chunk, or in little pieces over time?


This isn't  true. Yes, of course I will sell those hundred copies. But I will sell them to people that I already would have sold them to. I've got my beat covered, I'm going to sell those hundred copies to kids at conventions, kids who frequent game websites and kids who frequent local game stores. There are thousands of these kids, each one is a potential customer.

However, distribution is going take the books and put them in a place where they can be purchased by the tens of thousands of gamers who are not a part of my beat. The forums, cons and local stores are a fraction of my potential audience. Correct me if I am wrong, but most gamers don't go to cons, haunt this website or purchase all their games from my particular game store.

Therefore, I feel compelled to attempt to reach them with my game. I like it, and I think they will, too.

I am trying hard not to idealize distro; I know it is full of pitfalls. I am also trying hard to not idealize this website and a few others (mine included) in their ability to take a game from cool local phenomena to the "next step." But I think a dose of the real world helps a bit here. Alliance simply has resources that I don't. Already they've put a full color ad out for my game in an international catalog -- on my own, I simply couldn't afford to do that.

thanks for your thoughts,
-L
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ethan_greer
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« Reply #14 on: May 18, 2004, 08:37:07 AM »

Quote from: abzu
However, distribution is going take the books and put them in a place where they can be purchased by the tens of thousands of gamers who are not a part of my beat. The forums, cons and local stores are a fraction of my potential audience.

I agree with this concept. However, I don't know that you aren't already reaching that wider market without distribution.

Quote
Correct me if I am wrong, but most gamers don't go to cons, haunt this website or purchase all their games from my particular game store.

You're probably right about that. However, I would counter that most gamers know at least one person who does at least one of the following things:

> Goes to cons
> Reads the Forge, RPGnet, ENWorld, or similar RPG support sites
> Reads GamingReport.com
> Regularly visits one or more of the RPGHost sites (RPGNow, RPGShop, RPGNews, RPGKitchenSink, etc.)

All I'm saying is, I'm betting more people are aware of your game than you might think.

Quote
Therefore, I feel compelled to attempt to reach them with my game. I like it, and I think they will, too.

Your pragmatic enthusiasm all but ensures your continued success.

Quote
Alliance simply has resources that I don't. Already they've put a full color ad out for my game in an international catalog -- on my own, I simply couldn't afford to do that.

And there's no getting around that, is there? In the end, I think you're right - getting into the distribution channels will expose your game to a wider audience and increase your sales. But choosing to take that next step makes an increase in price not an option but a requirement.  Sounds like you've already made that choice.

Edit: Oh, and finally, the disclaimer: I know nothing about your business, your sales, or anything like that, and my own business sense is roughly equivalent to that of a mushroom omelette. I'm just providing an alternative viewpoint based on limited knowledge. If I'm coming across as an arrogant know-it-all, chalk it up to not enough sleep on my part.
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