Cost of materials vs list price

[Seroster]

I get the impression the relationship between the price to physically make a game book and its price on the shelf is fairly tenuous. I think read something recently about a hardcover book costing a couple of bucks to produce, and most of the difference between that and the list price are various "cuts" taken by distributors et al.

Is that right? I just picked the new Frag expansion (Fire Zone) and was kind of pissed off to find out that for $10 Cdn I got:

- The light cardboard cover, with rules printed on the inside. This was good, in that I didn't expect so many new rules
- One double-sided map, which I did expect
- a 20 page Steve Jackson Games catalog

Most of the weight of the product was the catalog. Is this a rip-off, or not? If the price of the components is minimal compared with the list price, I guess it's not that bad.

Chris

[Chris Aylott]

AFAIK, catalogs are pretty darn cheap to produce. Well, they're not that cheap in themselves, but you run off thousands at a time so the unit cost sinks into the cellar.

I imagine the catalog isn't even figured into the price of the product -- they just had a bunch around and took a few extra seconds to toss one in every package. We do the same thing here with mail orders -- we just toss our newsletter and any other promotional material we have handy into the package.

yours,

[Gareth-Michael Skarka]

First of all, I'm pretty much 100% sure that the catalog wasn't produced as part of the expansion set, and hence didn't affect the price at all. I'm sure that it is the standard SJG catalog, which they included to increase the heft of the product on the shelf.

So, in other words, quit yer bitchin. You didn't get screwed. It didn't add to the cost.

To answer your question: In general, publishers set the retail cost at 10 times production cost. (Or should...too often, publishers set the price TOO LOW, and end up taking a bath)

The reason for this is that a publisher sells each copy to distributors at roughly 40 percent of retail (sometimes higher, sometimes lower, depending upon too many variables to go into here).

So, let's say a product cost you 3 bucks. You're probably going to set the price at 30 bucks. However, you're actually only getting 12 bucks from the distributor, which means you're profiting 9 bucks...which is actually not true, because after you figure in advertising, shipping, paying artists and writers, and all other associated costs (not including paying yourself, which sometimes doesn't even happen), you're probably adding another 2-3 bucks per copy to the production costs. So, now you're looking at 6 bucks left over. That's what you have left to expand and produce other products, at which point the whole mess starts all over again.

GMS

[Seroster]

Well, while I didn't assume the catalog was produced as part of the expansion, SJG has to recoup the cost of producing it somehow. (File under "advertising costs", I guess :-) ) Anyhow, I'm glad to realize that the material costs are a small part of the equation. Thanks for the info.

Between, say, the 12 bucks the publisher of a hypothetical product charges, and the 30 bucks someone pays at a store, how much goes to the distributor? Most of it?

Chris

[NPC Simon Craig]

These distributors cut varies depending on lots of factors but it would be about 20% - about $6.00 here. $12.00 going to the shop.

[Marc A. Vezina]

Originally posted by Gareth-Michael Skarka
To answer your question: In general, publishers set the retail cost at 10 times production cost. (Or should...too often, publishers set the price TOO LOW, and end up taking a bath)

Gaming products have historically been underpriced, but that's an old rant. :)

(Consider, folks, that it doesn't cost you much more to buy a RPG today than it did in 1980, once we adjust for inflation. And the products today are vastly more complex/better presented, which means they cost more to make.)

The reason for this is that a publisher sells each copy to distributors at roughly 40 percent of retail (sometimes higher, sometimes lower, depending upon too many variables to go into here).

Yep. Big guys can sometimes force a tougher discount structure (i.e., the rebate is lower, meaning there is less maneuver margin for the distributor and retailer).

So, let's say a product cost you 3 bucks.

That's just printing, folks.

You're probably going to set the price at 30 bucks. However, you're actually only getting 12 bucks from the distributor

...who gets 4.5 bucks to ship, store and distribute the product. The stores gets the remaining 13.5 bucks to store, promote, pay rent, pay the game room, and occasionally take a financial bath (no sales, five-finger discounts, freebies, demo copies, etc. -- they cost but bring in no revenue).

which means you're profiting 9 bucks...which is actually not true, because after you figure in advertising, shipping, paying artists and writers, and all other associated costs (not including paying yourself, which sometimes doesn't even happen), you're probably adding another 2-3 bucks per copy to the production costs. So, now you're looking at 6 bucks left over.

That's for a good print run. Often, your overhead will eat up most of that 9 bucks, leaving you with almost nothing.

[James Wallis]

Let me weigh in on the subject of printing costs. CCamfield says that he's heard that a hardcover book costs a couple of bucks to produce. Well, that can be the case -- either if it's a slim harcover, or you're printing a gazillion of them. Well, okay, not a gazillion, but substantially more than 90% of the companies in this industry could ever hope to sell.

Judging by our recent print costs, a typical 8.5" x 11" 128-page softcover game supplement probably costs a typical publisher a couple of bucks to print, assuming they're running 3-4000 copies at a time. A higher or lower print run will affect the price per unit, and so will the quality of the paper-stock, thickness of the cover, whether the cover uses varnish or lamination (it's an either-or), the quality of the binding, any fancy effects like the spot-varnish and bookmark in Nobilis, and so on. The invoice from the printer covers making the plates, correcting the plates, and running the job. You then have to pay:
Freight to your warehouse
Warehousing costs
Freight to the distributor

For hardcovers, add 25-50%. Depends on the printer. Going hardcover is expensive unless you're printing gazillions, but it seems to be where the market's headed.

Our rule of thumb is that the freelancer cost (writing and art) is usually the same as a book's print cost. We do all our layout and most of our editing in-house, so those are absorbed into the business's fixed costs. Some people use freelancers. Some people do it themselves. Hogshead's lucky: both the production editor and I have had specific training and a lot of professional experience in copy-editing and proof-reading.

Food for thought.