Start-up Costs: How Much & Where

[Lord Iron Wolf]

I'm trying to get an idea of the money necessary to start up a RPG company and the capitol needed to have the product look like a professional effort instead of a fanboy 'zine. If I could ask for a minute or two of your time and get some approximate figures for the various areas below. If I have forgotten anything--please include it.

Minimal means "You've got to have this amount for the bottom of the acceptable standards in this business." Optimal means "This is the standard cost in the industry or, alternately, what you are personally comfortable with."

Writing: Minimum/Optimal Costs
Copy Editing: Minimum/Optimal Costs
Interior Art, Black & White: Minimum/Optimal Costs
Computer Equipment: Minimum/Optimal Costs
Computer Software: Minimum/Optimal Costs
Publishing: Minimum/Optimal Costs
Cover Art: Minimum/Optimal Costs
Printing: Minimum/Optimal Costs
Binding:Minimum/Optimal Costs
Advertizing (over a 6 month period): Minimum/Optimal Costs
Convention Flyers: Minimum/Optimal Costs
Posters for Game Shops: Minimum/Optimal Costs
Review copies: How many to send out and timing before release?
Cash Reserves for the Unexpected: Mimimum/Optimal Costs
Accountant: Mimimum/Optimal Costs
Business Lawyer: Mimimum/Optimal Costs

I'm trying to get a realistic handle on these costs so I don't start an underfunded business and wind up in a cash-strapped panic in the early stages.

Thank You in Advance,
Lord Iron Wolf

[Gareth-Michael Skarka]

Well, that depends upon the size of the product that you're producing. Assuming that you're going to produce a core rulebook, color cover, black and white interior, 256 pages or so:

<b>Writing:</b> Minimum: Nothing, if you write it yourself. Optimal: 3 cents a word, or roughly $4000.

<b>Copy Editing:</b> Minimum: Nothing, if you get a family member or close friend to do it. Optimal: Assume 1/3 the cost of writing, or $1350.

<b>Interior Art, Black & White</b>: (Assume 1 picture every 4 pages) Minimum: $1300 Optimal: $6400

<b>Computer Equipment</b>: Minimum-- Computer, Scanner, CD Burner: I dunno, $1600? Optimal-- Better Computer, Large-format Scanner, CD Burner, Optical Mouse, Tablet: ~$3000

<b>Computer Software:</b> Page layout, image manipulation, illustration software (for example: Quark, Photoshop, Illustrator) Minimum: Bootleg copies--hard to lecture about this, since many game companies start this way (Vampire 1st edition was layed out with a bootleg copy of Pagemaker). Optimal: Brand-new copies of each, $1500 or so.

<b>Publishing</b>: Depends entirely upon how many copies you print. Minimum should be around 1K copies, and average would be 3K. Minimum: ~$3000 Optimal: ~$8000

<b>Cover Art</b>: Minimum: $300 Optimal: $2500

<b>Printing:</b> see "publishing"
<b>Binding:</b> see "publishing"

<b>Advertising (over a 6 month period):</b> Minimum-- (web ads, banners, etc.) ~$600 Optimal-- (as above, plus print ads in various mags) ~$5000

<b>Convention Flyers:</b> included in Advertising.
<b>Posters for Game Shops:</b> included in Advertising

<b>Review copies:</b> Send copies to various websites and magazines, approximately 2 dozen, at release.

<b>Cash Reserves for the Unexpected:</b> Mimimum: None (sadly, most companies operate this way) Optimal: 6 months of operating expenses with ZERO sales.

<b>Accountant:</b> Mimimum: A copy of Quicken, and do it yourself ~$200 Optimal: depends on the going rates in your area of the country.

<b>Business Lawyer:</b> Mimimum: Don't have one. Optimal: Again, depends upon the going rates in your area of the country.

So, assume a minimum start-up cost of around $8K, and optimal of approximately $35,000.

Of course, this also assumes that you have the ability to find artists and writers, to price printers, negotiate advertising, secure accountants and lawyers, in the first place. If not, then you're going to have to hire a consultant (*cough* like myself *cough*) to do those things for you. :)

Hope that helps.

GMS

[BiggusGeekus]

Lord Iron Wolf,

I don't know about Wisconsin, but in Virginia you don't really need a lawyer if you keep your buisness to a general partnership or sole proprietership (which I probably spelled wrong). It's basically just treated as an extra source of income. Also, if you gross under 10,000 the taxes are minimal.

[RpmQ]

That extra income is your personal gain.
It also means that if litigation against the 'company' ever occurs, you are personally liable. At a minimum one should get business insurance...
-r

[Loc]

While this plan hasn't worked yet, this has been my approach.

Writing cost: lots of evenings and sundays

Color artwork: GMing with a bunch of guys with fine art degrees and a lifetime of doodling.

Publishing software: $200 (scary huh?) Nothing pirated.

Website: $200 for the first year, $75 every year after that.

Total $400 plus

This is an "indie" project that has all the chances of failure, but what the hey I'm in this because I love world building.:confused:

[Guildofblades]

I lot of these numbers, and others not covered here, will largely depend on the type of operation you are looking to run. As a general rule, you have better be able to roll out 3-4 products in a fairly timely manner if you hope to have your RPG carve a survivable and profitable niche on the market. To br frank, most retailers and a whole lot of consumers do not look at a new RPG from a new publisher upon release. So many are released and die so quickly, that most people wait for the publisher to get the 2nd, 3rd, or 4th products our before they start to take the project seriously. Hence, a truly optimal release, unless you already have a company history, would be to roll books 1-4 out on a one-a-month schedule.

>>Writing: Minimum/Optimal Costs <<

Do it yourself, at least for the first game. Or, if you lack the professional writing skills (and get an opinion other than your own in that subject), get a partner that does who you can work closely with. Its extremely important that the core rules get written the way you intend them to be, and that they are written to meet all of the game play and marketability targets you set for the game. If you don't know what those targets should be, then don't publish it. You need to know what those should be. Get the first 3 to 4 books written before moving foward to publish the first. So, start up writing costs: Zero (or half the company, depending).

>Copy Editing: Minimum/Optimal Costs<

Find a solid person to do this in house. You can probably find an editor willing to work on royalties. But if you have tons and tons of start up capital and can really afford to spend money on this, then you can probably get it doen for $1 to $2 per page. Anything more than that and your paying too much.

>>Interior Art, Black & White: Minimum/Optimal Costs <<

This will completely depend on the page count of the book and the art to writing content ratio you are looking for, which will depend on your overall art direction. A minimal amount you should have would be 1/4 page of art per 3 full pages of of content, or 1/6th the book. However, a well designed table or chart can replace a piece of art and achieve the goal of breaking up the text into managable sections. Between tables and actual artwork, I would suggest a 1/4 art to text ratio for your standard book and 2/5th for an art heavy book. Anything more than that and it'll seem you are packing art in instead of game content. As a start up company you should look hard a wide for some new art talents that you can pay between $10 to $15 per piece. Ignore the different pay rates for different page sized artwork, except being willing to pay a bit more for a piece that'll be a full page art piece and needs to have that little extra care put into it. If you have a very talented artist working with you on the books, you might try building in an additional royalty payment based on number of books sold. 112 page book = $300-600. 224 page book = $600-$1,200.

>>Computer Equipment: Minimum/Optimal Costs <<

Get you system put together piecemail. You'll probably get a better system. Minimum that you should have:

PC (Overall more compatible) Pentium II, with at least 500megs ram. Buy additional Ram chips if you need to. $400

Zip drive or CD Rom Burner. $100 to $150.

Scanner. Look around for a deal. $75.

Additional Zip Disks and/or CD for archiving your works. $30-$80

>Computer Software: Minimum/Optimal Costs <

At minimum I would suggest: Pagemaker, Illustrator, & Photoshop. You can get free barcode rending software. Get Qucken or Qucik Books for your accounting. Push come to shove, you can get buy without Illustrator if you get *very* good at Photoshop. $1,500 to $2,500. But as other have suggested, there are, um, cheaper options get to get started. N'nuf said.

>>Publishing: Minimum/Optimal Costs <<

Have enough capital to print your first 4 books, before sending the first to the printer. Figure on 1,000 print runs to start with. If you first game has more than 800 units pre sold prior to release, only then dip into your starting capital set aside for book #4 to up your print run of the first book to 2,000, or if pre orders warrant (1500+) 3,000. 112 page book at 1,000 quantity $2,200. So, $8,800. Double that for a book twice that page count or a bit larger.

>Cover Art: Minimum/Optimal Costs<

Depends. $100 is rock bottom, but that's rare to get good art at that price. $300 will get you a pretty good piece. An Elmore will run you about $1,500 for newly commissioned stuff. A smaller up front fee and royalty is better for a capital strapped start up operation.

>Printing: Minimum/Optimal Costs <

I figured that was what you meant by "Publishing". How are you defining the difference?

>Binding:Minimum/Optimal Costs <

Should be included in your printing price.

>Advertizing (over a 6 month period): Minimum/Optimal Costs <

Minimum costs: $250 for mailings and phone calls. $100 for your website for the first year, including your own domain (yes, you NEED your own domain). Maximum costs? $1,000,000. But never more than 5-8% of the total projected revenues (conservative estimates) of the book/product being advertised. Unless you have money to burn to help jump start your market. But you'll literarlly be burning it, given the return on investment you'll recieve. Few magazines are worth it for a new publisher, as you'll lake the retail presence to convert the ad exposures into sales. Find alternative means to market and advertise you product until such a time that you have the product in 25%+ of all core hobby stores. Or be willing to write off magazine advertising costs as a loss in order to gain a tad bit more exposure with a few retail shops and win a percentage or two or stores over to stocking the product.

>Convention Flyers: Minimum/Optimal Costs <

Only distribute fliers where your company set up a booth. In my opinion, you'll get a small percentage of fliers 1-5% returned to your booth for people scoping out the "new" product. But you'll get less than 1" who keep the flier to look for the product later at their store or your website. I would set aside $250 at most for this initially.

>Posters for Game Shops: Minimum/Optimal Costs <

Don't. It won't prove cost justified. You need a broader product line (10+ products) before this is likely to prove wise. Use the money on other promotions (take it from a company that dumped too much its limited start up capital on posters. A great many got tossed out at the distribution warehouses).

>>Review copies: How many to send out and timing before release? <<

Tough call. We've never got much milage from this method of promotion. I would say 2-5 and that's it.

>>Cash Reserves for the Unexpected: Mimimum/Optimal Costs <<

This would depend if you plan on going full time from the get go (not recommended) or starting small. If you go at it full time, better have the salaries for all employees for a good solid year *after* the release of your first product. Otherwise, having enough to print the first 4 books gives you a cushion in cash some printer rips you off on the first production. Otherwise, a good $1,000 for misc can serve as a cushion.

>Accountant: Mimimum/Optimal Costs <

Do the ledgers yourself with the above mentioedn software. If need be, get an accountant to close out your year end books for tax purposes. As a small business, your books should be pretty darn simple if you kept you ledgers clean. $250.

>Business Lawyer: Mimimum/Optimal Costs<

Learn the copyright and trademark issues yourself. $100 for a couple very large legal text books on the issue. Maybe $250 for consulting when it comes times to incorporate your business. If you really learn your copyright, trademark, and business liability laws yourself (and I mean REALLY leanr them), then you can avoid additional legal fees. Read *every* contract or work agreement you put together and make DARN sure there are no "hidden" fees or unwarranted conditional fees. Sign "nothing" that assigns your business unjustified liability or places restriction or any sort of control of your production or your intellectual properties into the hands of another.

>>I'm trying to get a realistic handle on these costs so I don't start an underfunded business and wind up in a cash-strapped panic in the early stages. <<

Some expenses you haven't listed here:

1) Shiiping. Budget as much as 10% of your projected invoices for shipping, shipping labor, and supplies. Assume as much as 3-5% invetory loss due to damaged shipments. Hopefully UPS won't screw up lots of your shipments and this will be a non issue. They started screwing up so many for us, and fighting each claim, that we now ship with the USPS. Had to.

2) Phone marketing expenses. You'll obviously want to get distributors to service your products and retailers to stock them. This will require a whole lot of phone calls. Service calls to those who do stock you, solicitation calls to hopefulls, and information calls to your distributors and better retailers. $1,500 for your first year of business.

3) Warehouse storage. For your first product or two, your garage or basement, spare bedroom, etc, can work fine. But you find yourself with a booming success of a game and are selling 2000+ of new release, but printing 3,000 or more, with new product being released each month, you'll find 10,000 to 15,000 books in invetory can gobble room quickly. Some floors in some houses, even if there is room, could not handle the weight. So have an expansion plan set for this possibility. If you are doing that good, your running cash flow will likely cover the costs of this storage problem, but have a cost effective solution that you can implement.

Just some tips. You can obviously spend a great deal more on start up that what I have suggested, but there are a LOT of artifical barriers to creating your market that have little to do with your games marketability, so start small and safe, and increase print run sizes and marketing budgets as you break down those barriers. Don't be afraid to explore alternative ways of doing things. What works for a company with 2-10 employees and 20-50+ product SKUs in print will likely NOT work for you.

Plan conservatively, strive for great success.

[Erick Wujcik]

Originally posted by Lord Iron Wolf
I'm trying to get an idea of the money necessary to start up a RPG company and the capitol needed to have the product look like a professional effort instead of a fanboy 'zine. If I could ask for a minute or two of your time and get some approximate figures for the various areas below. If I have forgotten anything--please include it.

Minimal means "You've got to have this amount for the bottom of the acceptable standards in this business." Optimal means "This is the standard cost in the industry or, alternately, what you are personally comfortable with."

Lord Iron Wolf

While I appreciate that you are trying to get a complete handle on things, I'm just going to address the most important, most expensive items.

Here they are, most expensive first:

1. Printing. This is what is always going to cost the most. The more copies you print, the cheaper the per-copy price (and the most you'll get stuck with if you go bust). This is the place where you should spend the most effort, do the most research, and generally where you need to be the most knowledgeble. it ain't glamorous, but knowing about printing is the greatest key to success. And remember, it's going to come into play with every product, from first to last.

2. Cover Art. If your game doesn't create a 'WOW!' from forty feet away, you aren't doing your job. My cover art is always the most expensive item in my budget, right after printing.

3. Conventions. Not a per-product expense, but essential for a start-up company. If you don't go to the big conventions, you (1.) won't get the necessary give and take from the fans, and (2.) you won't be around to meet and grett the distributors. Count it all up, and something like Gencon can cost you a couple of grand... and worth every dime.

As for all the other stuff, you need better research than I can provide here. However, I can tell you to go buy a copy of "Complete Guide to Self Publishing: Everything You Need to Know to Write, Publish, Promote, and Sell Your Own Book (4th Edition)" by Tom and Marilyn Ross:

http://www.amazon.com/exec/obidos/ASIN/1582970912/qid=1017703957/sr=2-1/ref=sr_2_1/102-2017914-9060907

Now, for the grand total, in my opinion, of what it takes for a good, non-fanboy-looking game start-up:

$25,000

Good Luck!

Erick

[Lord Iron Wolf]

I just wanted to say "Thank You" before this thread descends to oblivion. The people who took the time to look at my question and try to give dollars and cents figures to each phase of the process of getting a game out, I appreciate the time and effort.

There will be many parts of this game I will try to do myself--hands-on is an effective, if occasionally mortifying, method of learning.

One last Question: the 3-4 products ready to go, is that just a corebook and some modules or splatbooks--or a couple of different games? (I have a total of 3 games long beyond the "cool idea" and a few pages of notes.)

Once Again Thanks:D

Lord Iron Wolf

[Gold Rush Games]

It seems as though all of the estiamtes you are asking for are for the producton of a product. Some other folks added a few items to consider and Gareth gave a great overview of the costs of production.

However, there are a number of things that seem to have been overlooked. This is stuff that needs to happen first, before the production even begins.

Business license
Register fictitious business name (company name or "DBA")
Obtain publisher's prefix number (for ISBNs)
Salary (people involved are going to get paid, right?)
Tax preparation

There's a lot to it, and it costs a fair cent to get started. The returns, hwoever, are not great. That's why most RPG publishers are part-time affairs. Not all, but most.

<p><a href="http://www.goldenpillarpublishing.com/"><img src="http://www.goldenpillarpublishing.com/images/gpp-le2.jpg" alt="Book design and publishing for the independent author"></a>

[jearle]

Originally posted by Guildofblades
>>Computer Equipment: Minimum/Optimal Costs <<
Get you system put together piecemail. You'll probably get a better system. Minimum that you should have:

PC (Overall more compatible) Pentium II, with at least 500megs ram. Buy additional Ram chips if you need to. $400
Zip drive or CD Rom Burner. $100 to $150.
Scanner. Look around for a deal. $75.
Additional Zip Disks and/or CD for archiving your works. $30-$80

>Computer Software: Minimum/Optimal Costs <
At minimum I would suggest: Pagemaker, Illustrator, & Photoshop. You can get free barcode rending software. Get Qucken or Qucik Books for your accounting. Push come to shove, you can get buy without Illustrator if you get *very* good at Photoshop. $1,500 to $2,500. But as other have suggested, there are, um, cheaper options get to get started. N'nuf said.

Just a minor addition: When creating a game, you absolutely, imperatively need a large monitor. A good large monitor. Something that runs at 1600x1200 resolution at a high refresh rate. Oh, and forget ZIP drives and get a CD writer: They're cheap and undeniably more useful than ZIPs.

Oh, get a printer. Screens don't proof books well. $100-200 will get you something as good as you'll ever need.

As for software, get the Adobe Design collection ($1000 for Photoshop, InDesign, Illustrator and Acrobat.) as it is the easiers to learn and ID2 kicks Quark's butt to the kerb.

If you don't have any design skills, get someone that does or get learning. Nothing says 'amateur' louder than shoddy layout with too many typefaces (because I have all these fonts, I should use 'em, right?).

Look at a book you think is professionally done and look at one you think is amateur and you'll see the difference. Ok, I'm not suggesting you go 4-colour throughout, but a well-laid out black and white book can still look as professional as the latest TSR/WotC hardbound glossy tome.

Having said that, the first RPG I laid out was done on an Atari ST with a 640x400 black and white screen with 4Mb of RAM...

[Eilfin]

Just thought I'd pipe in a bit here, as I have recently gone through what you are looking for.

The answers provided by both Gareth and GuildofBlades are spot on, so I don't think I really need to cover any more about that. I'll just run down a few numbers that I ran into as we printed our core rulebook of Undiscovered: The Quest for Adventure.

Computer System: (I have increased my system over several years, so had everything ready once I started the business, but I would estimate the cost to be about $5000 - including software such as PageMaker, Illustrator, Photoshop, and Acrobat)
Cover artwork: $3000
Cover design: $1500
Interior artwork: $3500 (approximately; for about 100 pictures)
Writing/Editing: $0 (written by myself and colleagues)
Printing: $13000 (800 casebound books at 368 pages and 800 softcover books at 278 pages; the difference in size is due to splitting the book up. Hard covers is the complete book to be used by both the players and game masters while the softcover does not include any game master information).
Advertising: $3000 (for 3000 copies of a Quickstart Guide which we gave away at conventions and stores). + $2000 (for other advertising costs as well for magazines and on-line.)
Review Copies: We've sent out only 6 or 7 review copies, and have received only 3 reviews that I am aware of so far... It's hard to know if it is really worth it, but it doesn't cost much to mail out only a few books, so I would say you might as well go for it. It is cheap advertising.

There are other things I can't recall off the top of my head, but I would average my start-up costs to be about $50,000

Hope that helps a bit.

[Adam]

Adam,

Are those costs Canadian or American? I know you're based out of Calgary [Saw your books in Treasure Chest in Lethbridge a few weeks ago] so you should probably want to clarify that, given the difference between the dollars.

[Eilfin]

Yes, we are based out of Canada, but with artists and printing all being done in the US, all our costs have been converted to US dollars. I wish it was all Canadian dollars - could have saved a lot of money :)

[Guildofblades]

Um Adam,

$50,000 start up to get a total of 1,600 books in invetory?

Even assuming your case bound books retailed for $40 each, meaning you get a wholesale of roughly $16, selling all 800 books only gets you $12,800. I'll assume the other book has a maximum MSRP of $30, giving you a wholesale of roughly $12. That would give you an additional $9,600 in revenues.

So, you have spent $50,000 to develop and print your game with a potential, best case scenario of selling out everything, you get $22,400 back. That assuming no additional costs like phone, warehousing, shipping, loses due to damage or lost shipments, etc, etc.

I would NOT recommend going that route. At the very least you want to get a 300% to 400% markup over costs (total costs) so that the costs for producing and printing 2000 books means (at 400% markup) means you could hit break even with 500 units sold. This is, of course, before itemization of salaries and such, or other investments into capital equipment or other infrastructure.

Paying the cost you have, it will be extremely challening to even hit break even. You "can't" hit break even until you sell out a second printing of both book formats that is nearly twice as large as your first one. Which means that combined you will have sold over 5,000 units of the game by that point.

In this business, 5,000 units in sales is a quantified major success for a start up company and easily fairly satisfactory sales for a mid tier company. If you achieve that number, you might have broken even.

In this business, much of the key to profitability (and hence survival as a company) lies on the production side of the business and your ability to manage the costs of production in relation to sales.

[Eilfin]

Guess I wasn't totally clear about that.

Adding everything together comes to roughly $50,000. That is the computer system (which I already had), the office rental space (which I claim for tax purposes - but is only a room in the house so would be paid for even if I didn't use it as an office), warehousing (which is also part of the house for what we have on hand) and other such things.

Of course, there were mistakes made that I have learned from, which will save me a lot of money in the future as well...

As such, I have already computed that we will break even by selling our stock. I realize that making a profit is the name of the game, and that won't happen through this book alone, but everything is a learning experience and I'm not overly concerned about that. That money is already spent and there's nothing that can be done about it. But the money that comes back from those books is going back into the business to take us along.


Edit: DOH!! Sorry again... I should have paid more attention to Adam, above, as well... I am living in Japan right now, and based the amount I quoted off of what I claimed for tax purposes... and of course I didn't convert that back to US dollars. Originally, everything was done in US dollars, but then converted to Japanese yen. So that brings us down to $40,000, which is a pretty good difference.

[Gold Rush Games]

Regarding the suggestion of getting a large monitor...
Bullocks. I do all my work on a 15" monitor at 500x600 PPI. Would I like to buy and use a huge 21" flatscreen monitor? Sure! But suggesting that one absolutely must have a large monitor is silly, IMO (no personal offense intended).

[Rhombus]

Originally posted by Gold Rush Games
Regarding the suggestion of getting a large monitor...
Bullocks. I do all my work on a 15" monitor at 500x600 PPI. Would I like to buy and use a huge 21" flatscreen monitor? Sure! But suggesting that one absolutely must have a large monitor is silly, IMO (no personal offense intended).


That's something a lot of people never really think about. If you've not much cash and some patience, all your computer really has to do is have the hardware to support whatever your most resource hungry piece of software is. Anything above that is a bonus in saved time and frustration.

Personally, I'd love dual 2Ghz CPUs, 2Gb of RAM, a pair of 120Gb 10000rpm HDDs, twin CD Burners, a DVD drive, a 21" monitor with 15" secondary monitor, an A3 (double page) size tablet with LCD screen build in underneath the pad so I can stop doing the 'draw here, see there' routine, a drum scanner and a 3D scanner... but not only won't I be able to afford this sort of set up any time in the near future, I don't need it.

[Charles Gray]

You won't make a lot, but there are two good reasons to think of this.
1. The market is littered with the corpses of games that the designer and playtesters liked, but for some reason didn't make it. PDF sales allow you to find this out without having to make a a graveyard for all the books you don't sell.
2. As has been mentioned, printing is your biggest cost, to the point that many new companies can be sunk by a single badly selling product. "Getting your feet wet" with a PDF allows you to have test runs without having to deal with the danger of a printer.
you won't sell nearly as many, of course, but you won't spend nearly as much.
In fact, you might consider a PDF product to be both product and advertising, since it gets your name out there.
One Caveat-- A PDF product needs the same amount of playtesting, proofing and love and care as a print product-- advertising goes both ways-- if people buy a shoddily done product, be it electronic or paper, it will have a negative impact on your future reputation.

[dalziel_86]

Actually having an original idea in the first place: Priceless*

For everything else, there's BastardCard :D

Sorry to drop that in on a very interesting thread, but the streams of costs were eating my brain :eek:



*but evidently too much for some :p