ORX, Sales Numbers, and Retail
Valamir:
I'm not sure I really agree with you on what's affordable. Oh don't get me wrong...I completely accept that you can't afford more than $200 TODAY. That's cool. Open a business savings account, put the $200 there and start by selling your game as a PDF.
As the PDF orders roll in use the proceeds to pay yourself back for your sunk costs (art, layout, whatever). Anything beyond that add to your business savings account.
Eventually, you'll find, "hey I have another $100 in my budget I can put towards printing costs". Add it to the savings account. You might be 6 months into your PDF sales at this point and fast at work on another game.
You may wind up publishing that other game as a PDF even before you print the first game. Fine, repay your sunk costs as before, put the proceeds into your savings account, along with another $50-$200 you scrounged from your budget over the course of the next 6 months.
At some point you'll have accumulated enough cash in the business savings account to pay for your print run. Since you'll be able to do 300, 400, 500, 750 copies you'll get a hella better cost. Balance the reduced unit price for higher quantities against your sales expectations. Having 1 year of PDF sales, reviews, discussions, and accompanying buzz should give you a pretty good idea on whether your game is saleable in quantity as a book...especially if you've spent the last year doing solid support and on-line marketing. You may find that its your second game that has the most sales potential and decide to print that one instead.
Either way, put all of your sales proceeds back into that savings account. Plan to pay your taxes from that account. Once you've sold half your copies (likely well before 1/2 if you have substantial direct sales as well as retail) you'll have enough in that account to pay yourself back for the money you scrounged out of the budget. Everything else that hits that account is pure money you would never have had before. By the time you sell out of your first print run, even if you paid yourself back (instead of keeping it "invested") you'll be able to pay for your next print run of that or another game purely out of the profits of your sales.
Your publishing effort will be free from the limitations of real life budgetary concerns and completely self supporting.
Honestly, limiting yourself to just 30-60 copies at a time because that's all you can afford IMO is just plain bad business. If you can't afford to "go-in" to a level that has the potential to be profitable...then hold off, delay until you can. Stick with PDFs, keep designing, keep marketing, and wait until you a) can afford a more sizeable print run and b) have a game you've developed that you think can support one.
To do otherwise is to pretty much doom yourself to perpetual frustration and unprofitability. Its basically the death-by-1000-cuts version of the guys who go print 10,000 copies destined for mulching.
To return to your specific question of "what's up with the drive to enter retail"...its beau coup dollars if you do it right. I can double the number of books I sell by adding retail distribution to the channel. Doubling the number of sales means I can double my print run size and still break even in the same amount of time. Doubling my print run size means I can cut $2 per book out of my variable costs.
Consider:
Print and sell 250 books at $20/book (keeping 85%) with a cost of $4/book means I make $13/book for a total of $3250 revenue on an investment of $1000 or a return of 225% (not including sunk costs)
Print and sell 500 books at $20/book; (250 keeping 85% and 250 keeping only 40%) with a cost of $2/book means I make $15/book on my direct sales and $6/book on my retailer sales for a total of $5250 revenue on an investment of $1000 or a return of 425%
Since the retailer sales are happening simultaneously with and not cannibalizing my direct sales...I make a bunch more money in the same amount of time.
Lot's of people complain about the cut retailers take...but man, those extra sales even at low profitability can really slash your variable costs a tremendous amount. But to capture that you have to be able to operate at the level of 500-1000 copy print runs. My first print run with uni was 100 copies, my second was 500 copies, my third 750. The cost of the third run was paid entirely with profits from the second. 6 years in I'm almost out of stock selling 200-300 copies per year.
Yes, I realize that I'm in a pretty good place financially where I can write a check for a $1000 print run without needing to even plan for it in the budget. And I realize that many game publishers aren't.
So what. Wait till you are. There's no law that says you have to go to print with whatever you can scrape together today. Start with a PDF, save the profits, add where you can from the budget and print when you CAN afford a $1000 print run.
I guess my advice is 1) do it in a manner that is sensibly profitable, 2) if you can't afford that now, wait till you can and build and promote in the meantime, 3) if you don't want to wait...accept that you're essentially then operating as a vanity press barely able to cover costs, or 4) just forgo money altogether and publish for free.
Its not illogical and its not useless advice. Its really really simple. And its not at all out of touch with the common indie publisher. Anyone can afford to print 1000 units (if you think you have a game that will sell that many)...eventually. Its only the impatient who think that its beyond their budget. So yes...STAY OUT OF RETAIL...until you've accumulated enough capital to get your cost structure down where going into retail is profitable.
If you can sell 100-200 copies per year, you can make good money in the retail channel. If you can't sell that many copies per year...then its really not worth the bother.
I don't mean to come across as unsympathetic, but there is a difference between operating as a business and operating as a vanity press. Operating as a business requires seed money. Not the $250,000 in seed money I've heard a certain optimistic independent publisher raised through venture capital for their hard cover heartbreaker...but geeze...having $1000 to start a small business is not exactly asking for Donald Trump levels of investment.
If you don't have that much today, then arrange your business model to build you to that point, and when you get there THEN go do the print run and retail thing. Or...choose instead to operate as a vanity press and just look to break even. Or...just publish for free.
Oh, and Lulu prices are great for selling 1-2 copies at a time. They're ass for any higher quantities. "lower costs by shopping around" doesn't even cover it. Shop around and be flexible with your deadlines and you can cut those prices at the 500+ tiers in HALF. Lulu is a good option IMO for 2 and only 2 types of game publishers. 1) Those who are really PDF publishers but want to make an option available for those folks who really really really want to own a hardcopy. 2) people who only expect to sell 50 books ever and half of those will be to friends and family.
Ben Lehman:
Jesus Christ, Ralph, that's fantastic.
Moreno R.:
Hi Ralph!
Great analysis, but you make an assumption that I am not sure it's true: "Since the retailer sales are happening simultaneously with and not cannibalizing my direct sales...". Do you have some data that support this assumption?
I am not talking as a game publisher (I never published anything) but as someone who brought Universalis in a retail outlet. Why? For the discount. I orderered it from a comic shop (the time it was solicited in the game section of the previews catalog) where I had a 15% discount on cover price and no postal expenses. Ordering it direct from IPR would have cost me much more.
Living in Europe, my situation about prices is probably different from the one people living in the USA have: postal expenses is a very big part of the price for a indie rpg here (compounded by import taxes), so the very best deal (and the one I opt to usually) it's the pdf edition. If you offer a cheap pdf solution this should counter the lure of a "no-postal-expenses retail copy at a discount", but if there isn't a pdf, and I still want to buy a game, ordering it retail is usually the cheapest solution.
By the other hand, if I can't buy it retail, it could be that ordering directly from IPR would cost so much to make me rethink about buying the game, and wait for a pdf in the future, so in that sense maybe yes, it would not cannibalize a direct sale that would not exist...
Valamir:
Well, sure, I expect there are examples of that. But, aside from the expected spikes (initial release, Cons, etc) my direct sales have in no way declined relative to my retailer sales. In fact, as IPR ramped up their retailer presence this year, my retailer sales spiked so much that I'm running out of stock about 6 months earlier than expected.
Graham W:
Lulu was good when I started selling Play Unsafe, because I had no idea whether I'd sell 3 copies or 300. Putting it on Lulu let me test the market without too much investment.
Next time, though, I'll do a print run.
Graham
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