You ask questions, I find answers.
Really…I want this topic to be that simple. My purpose for this blog has always been to share about my experiences in the game industry. Beyond just my experiences, what interests you about the game industry, freelancing, Gen Con, or other game-related topics? From your questions, I will find topics to research and then share my findings with you.
This inaugural Fact-Finding has resulted from a question posted in The Tavern (the InnRoads Ministries‘ Facebook group). Zach Lorton submitted a business question which had me reaching out to publishers I knew. I received some great responses.
Question from Zach Lorton:
I’m designing a couple games (1 tabletop, 2 RPG systems), and I’m always curious to find out what kind of profit margin a designer/publisher needs to see in order to maintain viability (e.g. fund publication of the next title, see the venture as a legitimate 2nd source of income, etc.).
From Mike Mason of Chaosium
There is no simple answer to the question. It all comes down to personal circumstances. The majority of game writers/designers work freelance in conjunction with their day job and if their game work takes off, then they have the decision whether they can afford to leave the day job. That decision has to be solely based upon their own circumstances, which for each person will be wildly different. The same applies if, rather than attempting to go full time games design, they simply wish to channel profit into a new project. That comes down to having a realistic business plan, knowing how much profit you need to make to plow into the new project. Understanding cost vs. perceived value vs. sale price is key.
From Brian Berg of Total Party Kill Games
Wow, tough question. That has a ton of variables, including your level of financial need and stability. On top of that, a lot of the “average Joe” roleplaying game designers only worry about a product being profitable, let alone keeping them fed.
RPGs also have what is known as a “long tail” of sales, meaning while they might sell really well for a month, the next month and each month thereafter, that product is going to diminish in sales. Rarely will you make a product that is a cash crop for years.
I would focus on writing/designing to the best of your ability and then using some sort of crowdfunding platform to help you create an audience (assuming you don’t already have one). Then, use that money to fund art and layout. Mind you, you’ll need some sort of investment on your own end prior, because these days people really need to see a little art and layout to have trust in the project.
Use any profits from project 1 on project two as seed money, rinse, repeat. With any luck you’ll be building your fanbase and releasing good-looking products. Real, sustainable profits might be a long ways off even still. This all depends the publication routes you choose and your profit margins.
Look at your costs per book and make sure your MSRP mirrors others in the industry. If someone else is doing it better for a lot less, you need to reduce your price or you won’t see much in sales. Many new publishers are so in love with their own products they forget the basic laws of demand. That being said though, if you can’t compete, don’t. Charge what you need to in order to make some profit, but try to differentiate from the competition. Offer something cooler.
All that being said, if you want to get “wealthy” making RPGs, you need to be able to sell your product at 40% of its MSRP to the distribution companies. You likely cannot do that printing on demand, so you’d need a large capital expenditure up front.
All of those topics above are really complex, filled with variables and different for every person and product. You’ll need to do a lot of projecting and math. Luckily gaming has prepared us all for math. :D
From Chris Birch of Modiphius Entertainment
I always aim for at least 100% return (for every $1 I spend I want $2 return). Another way of looking at it, is if you get typically 40% off RRP selling to distributors, lets say you have a $40 game, youíre getting $8 from a distributor, you want the total development and production cost to be no more than $4. So you recoup the cost and make another $4 on top. Youíll make more margin selling direct to retailers (if you go that route), and more online direct to fans. The extra margin you make online helps to cover the running costs of the business, new product development etc. Sometimes we accept lower margin on distribution because we know weíll make a bit more online and it kind of balances out. The biggest mistake I see people make is they cost the product out such that they can only afford to sell it online, and canít make money selling to distributors. Distributors are where the bigger numbers are but you have to work out your costings so you can produce for effectively 20% of the RRP if you want to make money. If you want to be serious about publishing you have to be able to sell to distributors as you cannot rely on kickstarters or online sales to keep you going.
From Stephen Buonocore of Stronghold Games
I can answer solely from the tabletop publisher perspective, and specifically not from a designer or RPG perspective. A publisher of a table top board game really needs to sell at least 1/2 the print run before there is really a “cash flow” that can fund the next printing or other operations of the company. And 1/2 the print run is still not good, so selling MOST of the print run is actually important to be viable. Now, for a larger publisher, having a “flop” is offset by having a “hit”, so there are some safe guards in there. For a small publisher, you can be in real trouble cashflow-wise if you don’t move inventory.
If I receive further responses to this question, I will post them in the comments below, so you might want to check back later on this post.