ICE - Marketing & Distribution Thoughts (Long Post)

[Tom B]

ICEBruce posted this over on the Official ICE Forum. It was prompted by a discussion on how ICE was planning to market and distribute HARP (their new RPG scheduled for release this month - compatible with Rolemaster, but more streamlined).

I thought it was interesting, especially as I know little about such matters. I was curious as to what some of the folks on RPGnet might think about it. There had been a comment about ICE taking a different approach to marketing their products.

Reposted with permission from ICEBruce:
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Posted - 12 Nov 2003 : 14:21:12
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This is going to be a long post so be warned. I have been debating for some time whether or not to explicitly state what I am about to post. Obviously I decided to or I would not be writing this. This has been such an awesome thread that I felt comfortable spilling this out there.

Thinking differently is exactly what we are doing. However, the major difference in our thinking is not exactly on the product side. In a way it is, but the primary difference is in the way we intend to distribute our products. This gets a bit convoluted so please read carefully.

Back when the first ICE started, the main way to sell your product was through distributors. A good product could be expected to sell a decent amount in the first month and keep selling steadily for years. Companies carefully chose their products and designed for lasting appeal and sales. Backlist was where the mfg's made money as did the distributors and retailers.

Slowly, that changed. For many reasons, which would be a very long post in and of itself, the distribution system started to favor front list over backlist. By the early 90's the way to have lots of distribution sales was by producing a huge number of new products. The distributors and retailers made more money on frontlist then backlist so it slowly became the predominant mode as manufacturers followed the sales. Unfortunately, mfg's still made much more net profit on backlist. The interests of the distribution system and the mfg's started to diverge.

Then came collectibles. The ultimate frontlist experience. A product type that is basically custom made for a frontlist distribution system. This completed the changeover to a frontlist bias on the part of the distribution system. There were many other effects as well, but I am tying to keep the length down.

Everyone can observe the effects now. People lament that a product lifecycle is 90 days and they are sold like periodicals. The number of products flooding the system is immense and still growing. Prices are increasing steadily and overall quality is declining.

The driving force behind this is that manufacturer's of non-collectible goods still make more money on backlist and the distrbution system makes their money on frontlist. Manufacturer's are trying to adjust by putting out endless numbers of higher MSRP products produced as cheaply and quickly as they can. Manufacturer's have accomplished marvels, but it is eventually a doomed cycle as it is not in the customer's best interest.

Games are not periodicals. Good games are not played for 90 days and then tossed. Games are not capable of being endlessly expanded upon and still remain playable. Players can not digest and use endless backgrounds, systems, and licenses. But all of these things are what is being forced upon the industry's fan base due to the current realities in the industry.

This is not an attack on distribution, manufacturers, or retailers. It is just a statement of fact. The old ICE participated in the whole problem and helped perpetuate it.

The new ICE did not chose to operate with those current realities as they do not serve the manufacturer's best interest or the fan's best interests. We want backlist to matter and to be able to produce a sustainable flow of quality products that matter in the long term.

The products done in the first 18 months of the new ICE's existence were largely the result of the old ICE's product paradigm. The real changes started with Powers of Light & Darkness, Construct Companion and HARP and will continue with Cyradon and other HARP and RM products next year. Shadow World was brought back as it is a fun world even if the distribution system was not going to support it heavily.

When we started the new ICE we intended to have 50% of our sales to come from our website, 25% from international distribution and 25% from domestic distribution. That has not worked out. We have far more websales then planned and far lower domestic distribution then planned. This is not really upsetting us as $1 sale on the web is worth the same to us as a $5 sale to a distributor, but....

It is frustrating nonetheless as it means our exposure in the marketplace is lower then it should be and the retailers who do want to carry our products have a hard time getting them. We get constant complaints from stores due to the fact that Alliance does not carry our products. Further, stores constantly complain about the lousy fill rate on our products from those distributors who do carry our stuff.

This is normal for the industry though. The distributors do not make money on the backlist and its a huge inventory cost to them if they try to do it right. So, what is a manufacturer to do if they want to avoid the frontlist treadmill?

Basically that remains to be seen and explored. What we are doing is increasing our fan base and web community. We are also in the early stages of getting a retailer portal up on the website early next yeat to make it painless and easy for retailer's to order direct. Many still won't, but we intend to make it easy for any legitimate retailer or distributor to order from us.

We are not barring anyone from buying and selling our product if they are a legitimate part of the three tier system. We just do not view it as the only way to sell our products. By all means support your LGS- they are a valued part of the gaming community, but if you can't get our products from them order direct. Slowly, as the demand grows we can rebuild the backlist through the distribution net. Make the LGS aware of this demand even if you order direct.

A huge reason the frontlist bias was allowed to happen is a classic economic observation called the Tragedy of the Commons. Basically the common land in villages was always poorly cared for and overgrazed as it belonged to everyone and thus belonged to no one.

I would view the total distribution and industry sales as the common lands and the mfgs were overgrazing by sending out an endless stream of product to try and maintain market share. The distribution system was just a facilitator of this as they reworked themselves to make more money on frontlist.

In many ways, Games Workshop was the first company to really take note of this situation. They are heavily frontlist oriented, but they fenced off their own little bunch of pasture called "the Games Workshop hobby." That isolation did not survive contact with the reality of WizKids, but it has protected their sales and profits a lot over the years. Personally I think they still overgraze, but they only overgraze their own pastures.

The new ICE is creating our own little pasture by establishing a close knit web-based fan community. We have a very strong and fanatic fan base and its growing again. This fanbase is why we kept the ICE name and the fanbase is our most important "asset.". This is why we try to maintain an excellent customer service and communications level with our fans. We are not perfect and we are occasionally too overworked to communicate fully, but we are trying.

This is also an experiment for this industry. Many other industries have seen strategies like this succeed and fail. We are feeling our way and we have to do it as an underfunded startup so its slow and hard work. I do not expect to change the way the industry operates. Too many people have too much invested in the status quo to change. What I do expect to happen is for our little pasture to grow big enough to force the distribution system to take us seriously and give our products the attention they deserve.

If people want to help the process they should bug their LGS and try to get them to order the goods. If they do we are both happy. If they don't then don't sweat it and order direct and make sure the LGS knows this. In the short term and long term this will make ICE healthier and grow the pasture for the company, the fanbase, and distribution.
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[Tom B]

*bump*


Nobody, huh?

I thought it was interesting because it verbalized something I've noticed over the last decade. At that time, you had the core rule book, and then occasionally another book would come out. There were only a handful of hardbacks for AD&D for years. However, you could buy modules, settings, etc. on a fairly regular basis.

Now, at the other extreme you have games like Exalted...where you almost need a subscription. Core books come out on a regular basis, each fully as substantial as the main book. You have fewer inexpensive supplements, but expect hardbacks at a regular pace. More and more game lines seem to be shifting to this mode.

I was hoping someone more familiar with the industry than myself would confirm if that's what ICEBruce was talking about. It's making it a lot more expensive to use a system like Exalted if you want to keep up-to-date with what's available.

If this is the case, is it a sustainable trend? Or might we see a transition to a new phase? What might it be?

[HinterWelt]

O.K. You have incited me to respond. ICEBruce might think he is unveiling some awesome master plan but to be truthful Columbia and any number of small publishers are doing likewise and have for the past couple of years. The advantage ICE has is that thay still have a number of fans from past incarnations. This might just make it possible.

As for his observations, yes, for the most part. Distribution is difficult to manage but to be brutal, they are sales driven. If a game sells well most distributors will carry it. If it does not it will fall by the side. I would love a return to the days of backlist products selling strong but I do not see it happening soon. The game market is more like a race car in the red than common land. You have the retailers trying to milk a few more miles out of an engine that is red hot. A flood of product, great for the consumer, is in stores now. Manufacturers, for the most part, are thinking about the next release because...guess what? The consumer is also thinking about the next big release. The fact that gets pushed up the chain from the retailer to the fulfillment houses does not help but they are reacting to the consumer. Retailers/distributors/manufacturers do not control the market, the consumer does. Does it make it their "fault"? No. Demographics and purchasing trends change and manufacturers change with them or perish.

To answer your question, are such trends sustainable? By some yes. By others, no. Reissuing your core rules every year is bad. Will it be so in the future, who knows? The trend right now is much more a case of multiple releases, no matter what, in a single year. I would say the days of single book companies is gone or possibly tranaslated to PDF sales. Is the distribution model changing? Yes. New elements are coming in and many distributors are dying off. The trend is towards fewer distributors making it more difficult to enter the market. Smaller publishers are looking more and more to places like RPGMall and direct sales. Retailers are not very interested in direct sales. They do not want to handle thousands of manufacturer accounts.

I wish ICE the best. I have a shelf full of the old ICE's MERPS. I still play it and love the game today. Even though some of what ICEBruce says is Candyland fantasy, if he has the fanbase still he has a chance.

Hope that helps or at least was entertaining,
Bill

[madelf]

I don't know from frontloaded and backlist sales figures, I haven't been looking closely at the industry for that long to tell. But I have been looking at it enough to decide that the traditional distribution system is broken. Or maybe not entirely broken, but certainly not a healthy well-oiled machine.

So I'm actually very interested in the idea of taking an end-run around the distributors.
And if that means eliminating the retailers too, so be it. They'll do fine selling D&D and Exalted, just like they do now.

For my future product, I'd like to think that the 60% of retail price eaten up by just getting the book to the stores (and only a relative handfull of stores at that as many don't carry much beyond WotC and White Wolf) could be more effectively spent in promotion to get people to know the game exists and where to find it by web or mail-order.
I'd like to think this for the most part because at the price I feel would be reasonable to sell my upcoming game, I'd be literally loosing money on every copy to sell through fullfillment and distribution. While I could make a nice tidy profit on each book by selling directly at the same price.
So I face a choice. Try (and probably fail) to sell my game for more than I'd pay for a book of the same size and type myself, so I can make a few cents a copy. Or thumb my nose at the traditional way of selling rpgs and try something different.

So hopefully the "candyland fantasy" has a least a little merit to it.
I'll be keeping my fingers crossed.
:D

[HinterWelt]

Calvin,
Believe me when I say that before GTS 2003 we were planning to go direct as well. We did not go to GTS witht he intention of selling through distribution but did not rule it out. I also currently sell through distribution, online, via Amazon, Barnes and Noble, RPGMall, and our own site. If you want to sell a single book and maybe a supplement then selling direct is acceptable. Some retailers will purchase directly but many will not. Allow me to say that a large part of how you sell should be dictated by your business plan. You and I do not have the name recognition of ICE or Columbia Games. That does not make it impossible for us to do it but will make it slightly more difficult.

As for the distribution chain being broken, this seems to be a mantra small publishers chant. I would really like to hear what you believe is wrong. Please, do not say small unknown publishers cannot get in. I did, other do. Also, the indie rhetoric of a 60% discount on books is weak. Other industries work with discounts.

Finally, let me say that if all you wish is to get you "baby" (FYI- my games are my babies also) out to a few people then no problem, sell direct. I just think to say any one distribution methods solves all problems or, alternatively, one distribution method is not acceptible you need to have proof. What is your break even? What are your total costs? Once you answer those questions you begin to now where you need to be in terms of sales. Price your book at $20 and Amazon (Amazon will usually only buy books at 55% discount) will sell it at $14. Sell only direct, i.e. off your site and you need to be prepared for very small numbers, prepared to handle orders as they come in, prepared to purchase shipping materials. Sell through RPGMall (don't expect a huge boost in sales there) and you will give them 20%. Please note, I do all of the above. Also, do not read it as snarky or sour grapes. I like you Calvin, we work well together. I just want you to have a realistic view of the market.

In the end, do what makes sense to you.

Bill

[madelf]

I like you too, Bill. And I respect (as well as appreciate) your knowledge and opinions.
And your post didn't come off snarky at all.


But, I still think a system that eats up as so much profit that I can't sell my book at what I consider a reasonable price has something fundamentally wrong with it. (The concept of needing a middle man to get to the middle man also bothers me a bit, but they're really a small piece of the pie, so I won‘t rant over that beyond suggesting that it's a sign of a system that's not working like it should) I'm not saying it's any one element of the system that causes the problem, but I think the overall system could work better. And a lot of other people do to, apparently.
I also think the system is geared to big books. Maybe the stores in my area are a poor example, I don't know, but there is nothing on the shelves anymore but 300 page (give or take) books. With the exception of WotC and White Wolf selling a few smaller supplements for almost as much as some core books, there are no modules, no small setting supplements, no small pick-up games, none of the stuff I used to see. (And I really miss that too) Retail today seems to have become the source for what some are calling "coffee table" game books.
My proposed product doesn't fit that mold. So I'm going to have a tough time if I try to shove it through a system that's not geared for it. Now to be fair, I'm not saying distribution can't work for anyone. Just that the deck is stacked against the smaller companies., and against certain types of product.
I also think it would be beyond foolish to rely solely on the tier system to move product. And honestly, if I’m going to spend time and money advertising then I’m going to send customers to me, not to the local store that probably won’t carry my book anyway.
In my particular case, it’s my opinion that distribution would kill any chance I have of getting my game company off the ground (at least at start up). And if I could make it work, I don't think it would help me that much. The profit margin is just too small.

For instance...
If I bump my retail price up enough that (after expenses) I can make a dollar a copy through distribution, then I could make a little bit of money.
So let's say I sell 1000 copies. (And I'd think that's probably not underestimating the potential for the first book from a total unknown, and it might be rather optimistic) I'll make $1000 (for hundreds of hours of work on the project, naturally).
That's money in my pocket, sure. But if I skip distribution and sell direct, then at the same retail price I could make a $1000 selling only 100 copies (and possibly more, I'm rounding numbers mercilessly here). And 100 copies apparently isn’t out of the ballpark for PDFs, so it should be more than reasonable for a print product, even out of distribution. (I may offer a pdf version as well, but I’m still debating the merits of that)
Now if I can manage to sell 1000 copies direct (which will take some serious legwork I grant you) then I'll be making $10,000.
Okay, so that will never actually happen since I'd have to spend extra money on advertising, but you get the idea.

I think we're looking at a difference in product too, between yours and mine. You're putting out substantial 300 page 8-1/2x11 books. I'm looking at a 200 to 250 page digest.
I can't charge $30 for that so I can make what? 4 or 5 bucks a copy? Less? I was shooting for a retail price of around $15 a copy and I flat can't do it going through distribution.
Think about it, what would you pay for something like that? Not $30. Probably not $25. Maybe $20? I could actually break even and maybe even have a few cents a copy left over at that price. But only because I've wheeled and dealed and traded art for writing, and I'm doing a lot of my own writing, all my own art, and even my own layout. I could never pull that off for the supplements. Coming out with a book a year isn’t going to generate a huge following, so I'll have to hire people at some point. There goes my few cents, and then some.
So I am looking at it realistically. And I'm seeing that distribution is probably not the best answer. At least not for someone in my position.While I may not have proof, I have done the homework to provide a valid basis for my opinion.

Of course it could be I’m wrong. I’ll be the first to admit I could be misreading all the signs and my plan won’t work. My grand scheme may blow up in my face. Wouldn’t surprise me a bit. But I’m in the unique position where that won’t hurt me.
Because I’m doing the first book on my own, and through traded services, I have no out of pocket expenses to pay for except printing and shipping the finished books to me (If it came to it, I could go to PDF for absolutely nothing out of pocket). I’ve got lots of empty storage space, so no warehousing expenses. And possibly the biggest thing in my favor, I don’t have to get the money coming in quickly to pay the up-front costs. I can take it slow without feeling the pinch. Online advertising is cheap, or even free if you’re willing to work for it, so I’ll just work the free methods till I get a little cash in before buying too many ads. And really advertising is a given whether I go through distribution or direct, because even if my book is in distribution, no one is going to buy it if they've never heard of it. I'll look into offering it through other places of course, RPGnow probably (I can take a 20% hit, if it moves some merchandise) and I'll look into Amazon.com & such, to see if that's viable, but my advertising will be geared to send people to me directly.
With my plan...I figure if I sell a whopping 40 to 50 books direct (using free or very cheap advertising), I’ve passed break even and I’m starting on profit. So I figure if I’ve got the opportunity, and the ability to give it a try without distribution, why not experiment?

And if it doesn’t work, it’s no big thing. I’m still not out of the game. If all else fails, I can always fall back on PDF. Or better, all I have to do is take my core book, add in extra content (from what would have been a supplement or two) to beef up the package to a 300 or 400 page full size book and hit distribution with a $30 or $40 a copy special edition. And see if that works better.

And before anyone else says it, yes...the smart money would be on going with my backup plan to start with and do it like it's supposed to be done. But that's not the product I want to produce.
And honestly, I think my way might just work. It may not be easy, but where would the fun be in that?



I am curious about your reference to "the indie rhetoric of a 60% discount " though.
Every single thing that I've come across (short of calling a distributor, which I don't think I'm quite at the right stage for yet) says that 60% off is just about dead on. That, along with the 16% of wholesale figure I've been running across for fulfillment, is what I'm basing my numbers on. If those figures are incorrect it could make a huge impact on my calculations.
And if you're seeing it as rhetoric simply because all industries have discounts, then keep in mind that other industries tend to generate a whole lot more sales, allowing for a smaller per unit profit margin without eliminating profit to the point that the product is no longer viable. Of course that's just the nature of the gaming biz, not the fault of the distributors, but it is a factor in the overall problem.

[HinterWelt]

It is good you have a plan, Calvin. A few things:

1) If you are only making $4-5 gross on a $30 book something is wrong. We make $10.08 on a $30 book.

2) We have 2 - 64 page $15 books out and an 84 page supplement to Neb at $17.95 coming out in a month or so.

3) By Indie Rhetoric I meant reactionary comments about the Distribution tier being evil because they wont pick up a one-off book. They then tend to say that they do not wish to be a part of the industry anyway due to the huge discounts. I believe this to be narrow minded.

4) HinterWelt is an indie company.

5) I hope I have come across as in favor of alternate distribution methods and media forms. I am.

6) I do most of our writing, all of our layout and would not inflict my stick drawing on my worst enemy thus I buy our art. To print 1000 - 240 page book (B&W, hardcover,8x10) it is roughly $3000. Art can range between $1000-2000. Shipping is about $250-500. Priced at $35 your break even is, best case, 360 books. Alternatively, 120 direct. A release through distribution of a hard cover core rules will garner approc 400-500 in sales. I do not know if you could make 120 sales in direct sales. Maybe. We have sold about 20 of our books online. Is it our main focus? No. Do we ignore it? Hell, no. I do not have reliable numbers on what direct sales can do but I am more likely to here about how an indie publisher is excited about selling one copy online.

7) Your strengths is much like our strengths. We have a lot of talent in house. I wrote the CHARGen, the books, the website and do most of the marketing/advertising stuff. Linda does the finances, some of the advertising, the editing (with an external editor) and most of our communications with businesses.

8) Remember to hire an editor.

9) If there is ANYTHING we can help you with let me know. I would be glad to work on joint advertising or knocking ideas around.

10) I hope I do not come of as a smarmy know-it-all. I am still learnign like every one else. I am not trying to say anyone is wrong or right just bringing my experience to the table so hopefully we can all benefit from it.

11) I appreciate your info in the same way as I stated our info above. Thanks Calvin.

Thanks,
Bill

Edited because my editor is not here!

[Chris Aylott]

If I may be nosy, Calvin -- roughly what sum of money do you want to make from the release you're discussing above?

(The obvious answer is "as much as possible", but I'm looking for a target figure after expenses.)

cheers,

[Hippopotamus Rex]

I know you aren't planning on useing the traditional three tier system for your upcoming product, but if you do have questions about the distribution system please feel free to call me or drop an e-mail.

I'll be happy to answer any questions for you.

Bradm@acdd.com

559-276-7290 ext 107

Good luck on your upcoming release!

[HinterWelt]

Brad,
Whatever you feel you can share here would be appreciated. I understand some things you cannot discuss but if you could explain the why of small publishers having so much trouble getting into distribution it might help.

Of course, any corrections to my statements above would be handy too. :)

I know ACD has a fairly liberal view of indie releases (you or another ACD rep might have mentioned it on another forum) but many companies seem to be reluctant. Is it:

1) a flood of product that no one distributor could hope to carry it all

2) quality of product is too low to be considered

3) somethign else I am not mentioning

4) all of the above

5) none of the above (I am obviously deluded :D)

Thanks,
Bill

[madelf]

Bill:

It’s good I have a plan. But is it a good plan? That is the question!

1) If you are only making $4-5 gross on a $30 book something is wrong. We make $10.08 on a $30 book.
Surprising. Intriguingly so.
I had only run the numbers on my own price target, so I was primarily guessing at that one, but that's a higher margin than I would have expected. This leads me to believe that either the discounts I've been hearing about are wrong or you've managed to keep your total per copy overhead to under something like $2.00 a book?

2) We have 2 - 64 page $15 books out and an 84 page supplement to Neb at $17.95 coming out in a month or so.
I don't doubt such product exists, I just haven't seen anything like it for sale in my area for a long, long time. I'll acknowledge that it may not be a universal trend.

3) By Indie Rhetoric I meant reactionary comments about the Distribution tier being evil because they wont pick up a one-off book. They then tend to say that they do not wish to be a part of the industry anyway due to the huge discounts. I believe this to be narrow minded.
I believe I agree.
Simply because the system may not work for every type of product, or for every person, doesn't make it evil. And if they really didn't wish to be part of the industry they'd do something else to make money and release free PDFs as a hobby.
My current opinions of the distribution system aren't particularly flattering, but they are thought out, rather than reactionary, and aer based on the best information I've been able to find so far. They're certainly open to reinterpretation if other information comes to light.


4) HinterWelt is an indie company.
Yes. I knew that. And a fine one it is too.
:)

5) I hope I have come across as in favor of alternate distribution methods and media forms. I am.
I don't think you come across against them, particularly since you're using them.
You certainly seem more in favor of the distribution system than most I've come across, but perhaps you know something they don't. Obviously you seem to be making it work. That's beginning to make me think the option requires some more investigation on my part before I finalize my plans.


6) I do most of our writing, all of our layout and would not inflict my stick drawing on my worst enemy thus I buy our art. To print 1000 - 240 page book (B&W, hardcover,8x10) it is roughly $3000. Art can range between $1000-2000. Shipping is about $250-500. Priced at $35 your break even is, best case, 360 books. Alternatively, 120 direct. A release through distribution of a hard cover core rules will garner approc 400-500 in sales. I do not know if you could make 120 sales in direct sales. Maybe. We have sold about 20 of our books online. Is it our main focus? No. Do we ignore it? Hell, no. I do not have reliable numbers on what direct sales can do but I am more likely to here about how an indie publisher is excited about selling one copy online.
I'm probably heading into dangerous territory here...but let me see if I can crunch your numbers.
You're looking at $3 a book for printing.
Let's go with the average of $1.50 per book for art.
And an average of 38 cents for shipping (a bit less than I was figuring as well).
So you've got an investment of $4.88 a book to get it into your hands. (that's with no inclusion for soft costs like company overhead, a decent wage, or advertising)
Using what I have to work with, the distributor will buy your book for $14 and the fulfillment company will hit you for about $2.25, leaving you with $11.75 per book.
That's actually not bad. Until you come up with a grand total of $4700 to $5875 for the total income of the book to cover advertising, overhead, salary, etc. You're going to have to crank out a lot of product to have a sustainable company at that rate, which leads back to what the thread started with.
Right or wrong, the system does seem to encourage quick turnaround of books. Lots of books.

I believe I could make 120 direct sales. Probably not in the first month or two, as the product visibility will take longer to build. (That’s one advantage of the traditional distribution system, the pay-off is certainly quicker) But from what I understand a good PDF product can get 120 sales without being an industry phenomenon. I would think a print product could do it too.
20 copies direct does sound discouraging, but as you say, you’re not pushing all your efforts for only that type of sale. It would probably make a difference.

As far as being excited over selling one book on-line...yeah, the first one would probably have me dancing around the house. After that, I can’t see it having quite the same effect.
:)

7) Your strengths is much like our strengths. We have a lot of talent in house. I wrote the CHARGen, the books, the website and do most of the marketing/advertising stuff. Linda does the finances, some of the advertising, the editing (with an external editor) and most of our communications with businesses.
I don’t know how much talent I have in-house, but I guess we’ll find out. If I manage to get this past the first book or two, I’ll be hiring out the writing. I’m just too erratic and undisciplined at it to try and get by on my own for the long run. I’m better off being the art and idea man.
I’m finding layout to be a blast though. I even got my real dtp program in the mail today (well semi-real, got a deal I couldn’t refuse on Serif PagePlus), as I actually exceeded the capabilities of Open Office. I’m so proud.
:D

8) Remember to hire an editor.
I’m hoping to convince my wife to work for royalties.
:)
Actually she’s got a very good eye for that sort of thing. She’ll make a great proof-reader at the least.

9) If there is ANYTHING we can help you with let me know. I would be glad to work on joint advertising or knocking ideas around.
Thanks.
If its still working out for you by the time I get this thing done, I’ll certainly get in on the co-op advertising idea you’re trying out. It’ll be a while though. I’ll be ready to go into play-testing soon, but there’s still a lot to do before it’s time to advertise.
And don’t be surprised when you get an email from me trying to pick your brain one of these days.

10) I hope I do not come of as a smarmy know-it-all. I am still learnign like every one else. I am not trying to say anyone is wrong or right just bringing my experience to the table so hopefully we can all benefit from it.
Heck, you’ve got a head start on me, so as far as I’m concerned you’re the voice of wisdom. I’ll willingly listen to anything you have to say.
I might be too bullheaded to go along with it, but I’ll listen.
:)


Chris:
If I may be nosy, Calvin -- roughly what sum of money do you want to make from the release you're discussing above?

(The obvious answer is "as much as possible", but I'm looking for a target figure after expenses.)

Nosy is fine. I don’t mind.
I want to make a much as possi... oh. Never mind.

Actually, that’s a little tricky to pin down. Let me try to explain as best I can.

I plan to make nothing. Nada. Zip. The big zero. I plan to not sell a single copy, ever, and eat the total cost of my initial print run and to have boxes of books sitting in my attic for years.
This is the pessimist in me speaking. I like to plan for the worst. If I have a plan that will get me through that, then anything else is all good.

My hopes are a little different.

At a minimum...
I want to make something in the neighborhood of $1500 on the core book. That will pay for the printing on the first run of the initial book, and cover expenses of the first supplement, leaving me some pizza money. If it doesn’t make more than that, I’ll still be satisfied. I’ll release the supplement for whatever that can get me (and thereby providing a very playable package for whoever finds it appealing) and call it a done deal, professionally speaking. I’ll continue to promote it in my spare time using free methods online and just see what develops down the road. Maybe do some PDF support when the mood takes me. Basically take it the hobby route.

Ideally...
I’d like to build this into a sustainable part-time business generating something like $8000 to $10,000 a year, a little more might be nice. I’ve currently got a dozen or so setting expansion supplement ideas and a few other odds and ends up my sleeve to support the first core book. After that I’ve got a couple of ideas for alternate genre spin-offs. So if it did well, I think I could keep it going for a while.
What would it take to do that? I’m estimating at least 4 books a year (at my $15 target price), selling an average of 300 copies per book.

Does it make any sense? I can only hope.



Brad:
I know you aren't planning on useing the traditional three tier system for your upcoming product, but if you do have questions about the distribution system please feel free to call me or drop an e-mail.

I'll be happy to answer any questions for you.
Thank you.
Although I’m not planning on going through the tiers, I wouldn’t be opposed to the possibility if it proved to be more viable than I had thought.
Once I get my thoughts in order, I’ll be in touch.



And now that I’ve thoroughly hijacked the thread and written a short novel, I must go and play with my new dtp program.

Thanks everyone, for all the interest and advice.

[Hippopotamus Rex]

I'll do my best to answer here, but the written word has never been my stong suit. Please excuse me if any of this comes off as snippy or short. It's not intended that way.

There is really only one main reason that small press companies have trouble getting into distribution.

Lack of demand. I know, that's a pretty broad definition. I'll try to expand on it.

If we, at the distribution level, see little to no demand at the retail level, chances are good that it won't be picked up. This lack of demand(or buzz if you will) could be caused by several things. No marketing done by the manufacturer, no interest on the part of the retailer/consumer, poor production quailty, all of the above. This could actually be a topic all by it self, so I'll just leave it at that for now. Let's just say that we need a minimum number of turns a year for each product in order to break even on it, let alone make money. If we don't think that a product will meet that number we won't pick it up.

There are a few ways to hedge your bet. Marketing, marketing, and marketing come to mind. You might have the best game out there but you won't get the sales if no one knows about it.

I think that this is where a lot of companies start to run into problems beacuse they are undercapitolized. They plan for the writing, art, printing and shipping costs, but leave nothing to go into the marketing budget. We are much more likely to take a chance on a new company if we see that they are committed as well. If you are spending money to advertise your product then it makes us more likey to do so as well. If you are just looking to print a book so you can say that you did, well, we probably aren't going to be too interested.

Too sum up this long rambling post. If a company produces a new product, that they are committed to bringing to the market, then we will probably take a chance on you. But if someone is publishing a vanity press book with little to no support, or poor production quality, then probably not.

I hope this helps, instead of confusing the issue :)

[Hippopotamus Rex]

I just wanted to add that if we see a product that we believe has potential, we WILL take a chance on it.

I wasn't too clear about that in my last post.

[HinterWelt]

Brad,
Thanks. I had suspected as much. We actually had a major part of our business plan devoted to advertising but I have seen what you mention, the idea that advertising does not do anything. Marketing is more than advertising but it is a required component.

Bill

[HinterWelt]

Calvin,
I am a bit concerned about the comparison of PDF sales to in print sales. A few of the factors here are turly different dynamics in both market and pricing. A $15 price tag on a PDF would get you lynched. Most people are buying PDFs at the $5-10 range.

A second point would be the market. The PDF market is an instant gratification kind of thing. People pay the money, buy the product and it is downloaded onto their harddrive. I have seen whole threads devoted to downloads being slow. I question such a buyer would jump on a mail order model.

Finally, although there is a healthy mail order business, I here a lot of "I went in to my LGS and thumbed through the book. It looked good so I went and bought it on line" kind of threads. People like to thumb through books then buy them.

All that said, screw me and press on! :D I can't tell you who many people told me not to open a publishing company. Told me it has all been done. Told me the market is flooded. Told me that online content and an online character genrator were a waste of time since it did not generate sales. This last statement from a medium sized publisher. The CHARGen just passed its 200th user. Do it your way. Share with other, listen to what they have to say (which you seem to be doing just fine) and learn.

Oh, and was not sure if you knew but online retailers such as Warehouse 23 and Do or Dice order through distribution. I was not sure if you knew it or not. They are fairly big retailers is all. As you had said though, you want to send customers directly to your site. I hope you will share if you figure that one out.

Thanks,
Bill

[madelf]

I am a bit concerned about the comparison of PDF sales to in print sales. A few of the factors here are turly different dynamics in both market and pricing. A $15 price tag on a PDF would get you lynched. Most people are buying PDFs at the $5-10 range.

I'm only comparing PDFs and print in terms of sales figures (numbers of product sold), not pricing. Everything seems to indicate that PDFs are about the lowest sales group. They also have the common factor of being internet based. From what I understand 400 sales of a PDF product would be pretty impressive. 100 seems to be common. If print thru distribution sells 400 routinely, then I'm hypothesizing that I could realistically expect to move at least 150 copies thru direct internet sales (albeit slowly) without a tremendous amount of trouble. (Especially since I'll be offering a print product for not a heck of a lot more than some of the bigger PDFs) If I can pull off just that few, then that'll make my minimum expectation, and keep me from loosing money. After that, anything else is gravy.
I know it's probably a pretty shaky rationalization. But I'm not planning to bet the house on it either.

And yes, I agree I'd have to have a pretty impressive offering to sell a PDF for $15. If I bother with PDF at all, I'll certainly be discounting it substantially from the print book price.

A second point would be the market. The PDF market is an instant gratification kind of thing. People pay the money, buy the product and it is downloaded onto their harddrive. I have seen whole threads devoted to downloads being slow. I question such a buyer would jump on a mail order model.
Such a buyer might not.
Which might be a good argument for offering a PDF version. I've also considered the idea of offering a free PDF for immediate download with the purchase of a print book. I haven't looked into the logistics of how I'd handle that yet, but I'm sure it could be built into a shopping cart system.

Finally, although there is a healthy mail order business, I here a lot of "I went in to my LGS and thumbed through the book. It looked good so I went and bought it on line" kind of threads. People like to thumb through books then buy them.
It's a point. I've actually seen more "I couldn't find it anywhere and my LGS had it back-ordered for 6 months, so I went and bought it on line" comments myself, but I'm sure I won't make a sale to everybody. I'm sure there are people who won't buy a book until they've held it in their hands. But the success of places like Amazon.com says there are those who will.
And to take a cue from them, it's not difficult to have a preview on line that someone can look through either, a virtual thumbing through the book to help the potential customer decide.

All that said, screw me and press on! :D I can't tell you who many people told me not to open a publishing company. Told me it has all been done. Told me the market is flooded. Told me that online content and an online character genrator were a waste of time since it did not generate sales. This last statement from a medium sized publisher. The CHARGen just passed its 200th user. Do it your way. Share with other, listen to what they have to say (which you seem to be doing just fine) and learn.
Oh, I'll learn. Probably the hard way, but I'll learn.
And I think web support for your game is a great idea. I think it would be an even better idea for me to plan on something similar, since I'll be relying more heavily on the web. So the more there is to wow them and suck them in to a purchase the better.
How did you go about doing the character generator? Is that something you created yourself, or did you have it done? If you had it done, what did that entail? I'd be interested in something like that if it wouldn't break the budget.

Oh, and was not sure if you knew but online retailers such as Warehouse 23 and Do or Dice order through distribution. I was not sure if you knew it or not. They are fairly big retailers is all. As you had said though, you want to send customers directly to your site. I hope you will share if you figure that one out.
I didn't know it particularly, but I pretty much assumed that most if not all retailers, on-line or otherwise, would be going through distribution.
I will let you know if I come up with the magic answer for getting people to my site to buy the book.
But my theory is that it's primarily a matter of letting people know in the ads that they have to get it from my website. And no, they won't remember the site adress long enough to get there, but that's ok. Because all you have to do, even now, is go to Google and type in "Tales of Angor" and it'll give you a link right to my site.
The web is a wonderful thing.

[HinterWelt]

Ahh, the CHARGen. It is a combination of my 15 years in the IT industry doing Distributed Data Management. I currently run it on my own servers (a separate web, application and database server). It uses a server side Java application server and SQL Server 7 back end. It uses JavaBeans and JSP to render an HTML presentation layer. It generates PDFs server side. Enough techno-blah blah.

I spent about six months (part time) getting the framework up and it took me about two weeks to add the Shades of Earth Generator (the first one was the Tales of Gaea Gen). This is a case of leveraging what I know, software development. I offered to build one for another small publisher, she gave me a weird look and said it is a free system, do whatever you like. I lost interest at that point. :)

I am pretty taxed out right now but If your system is not too complex (the Iridium System is somewhere between RoleMaster and D20) I would be glad to help you out.

As for the PDF sales as an indicator for on line sales, I believe your reasoning is flawed. You are reasoning by analogy, often dangerous in business. By the logic you are using, you could also say Amazon does x millions and therefore, since I am selling books online, I should do .y of Amazon's sales. To use your analogy, PDFs are a separate media type and business model from mail order. Mail order is really what you are talking about and that is probably where you should be looking, IMO. If you could get online book sales numbers at places like Warehouse 23 and Do or Dice that would be a good start. But even there, you have to remember that it is not a direct comparison. Online Retailers have several hundred products to draw a person to their site. You will have one (initially). IF you have a person who knows about your product you then have to get them to your site and then get them to buy your product. Sort of tough. I am not trying to discourage you just trying to help move towards a realistic plan. Go to a few manufacturers site and see how they sell. Research a little on selling through RPGMall. See what people have sold through there. Feel free to look at my product offerings there. That set up garnered us exactly one sale of Tales of Gaea. I could not tell you what I did wrong except possibly not selling the PDFs on RPGNow. I had high hopes on RPGMall for Shades. A truly cool book with a lot of appeal.

Anyway, I guess I am saying compare apples to apples.

Bill

[Chris Aylott]

madelf wrote:I want to make something in the neighborhood of $1500 on the core book. (snip)

I’d like to build this into a sustainable part-time business generating something like $8000 to $10,000 a year, a little more might be nice. (snip)

What would it take to do that? I’m estimating at least 4 books a year (at my $15 target price), selling an average of 300 copies per book.

Does it make any sense?
Not really, no.

$1500 gross on the core book? Fine. Easy. Sell a hundred copies at $15 and you've achieved your goal. You should have enough supportive friends and family to cover most of that; you're a good writer and can probably find enough interested folks to buy the rest.

But what you're telling me above is that you're expecting to sell between zero and 100 copies of your core book and then hope to sell 300 copies of each supplement, 4 times a year. You've got two sets of expectations above, and they don't reconcile with each other.

Either way, you don't need to worry about distribution or any other "industry issues". 1200 books over a year isn't worth selling through a middle-man -- you're better off keeping them in your spare bedroom and running whatever's sold through your website down to the post office once or twice a week. It has nothing to do with whether distributors and retailers are good or bad, it's just that the pie you're baking is too small to cut into that many pieces.

A annual gross of $10K or less isn't a business. It's a hobby with tax deductions. The best thing you can do with it is to relax, have fun and avoid frustrating yourself by trying to run your hobby like a real business.

yours,

[HinterWelt]

Oh, yeah, as Chris pointed out. What ever you sell of your core rules expect to sell 1/2 of that number for supplements, worse if it is a GM only supplement. For instance, 100 for a core rules means about 50 in the Book of Big Weapons for that line.

Strangely enough we seem to beat that average on our supplements. I believe it has to do with format, art and price.

Going back to the original post, that is also one of the reasons you see so many core rules out there.

Bill

[madelf]

Bill:
On the character generator possiblities, I'd like to discuss it. When I get the play-test version put together, I'll send you a copy to take a look at. Then you can decide if a character generator is something you wanted to tackle or not. Then we can talk it over and see what sort of arrangement we might be able to make.
At least from my point of view, my system is fairly simple, far easier than d20 for character generation. I haven't played rolemaster, so I couldn't say how it compares there.

You're probably right about my reasoning regarding PDFs.
The problem is that, to my knowledge, there are almost no cases of anyone making a concerted effort to sell in the manner I have in mind. I think I've run across all of one guy claiming he was making something like this work. So there really aren't any other apples to compare to. (And I freely admit there may be a very good reason for that)
So even more dangerous than working from analogies, I'm working from a hunch. I'm basing my plan on the idea that I would be more inclined to buy a product like mine than I would a PDF, so naturally everyone will agree with me.
:D
Just kidding, there. But I do honestly believe there are enough people out there who would buy it.
I just have to figure out how to reach them. That'll be the toughest part.




Chris:
I'm afraid you're misunderstanding some parts of my information, and making some invalid assumptions about others.

To begin with, close friends and family will get the books at cost at the highest price, and the handful of closest and most supportive will get them for free. Friends and family are not included in my hoped for projections under any scenario.

I'm not hoping to sell 100 copies of my core book and 300 copies of my supplements.
You're looking at two separate scenarios and trying to combine them. There's a reason they don't reconcile. They are mutually exclusive.

Plan A:
With the freebies out of the way, if my first book sells only 100 copies, then the professional endeavor is over. The supplement comes out in print as a break-even offering to the people kind enough to buy the first book, and anything after that becomes PDF released hobby work. That's the first scenario. Complete in and of itself.

Plan B:
The second scenario assumes an average of 4 books per year at an average of 300 copies per book. This includes the initial book. Whether this plan is even potentially feasible will depend on the initial book substantially exceeding the numbers in the first scenario.
I also don't really expect to sell more supplements than core books (although I just might as some of my supplements will probably be geared to multi-system use) and I don't expect to sell nothing but supplements after the first book.
I'm thinking it will more likely be a mix of one "core" book (the alternate genre spin-offs I mentioned) selling somewhat more than 300 copies, as well as several supplements selling somewhat fewer. I haven't tried to extrapolate the exact mix of core book sales to supplement sales as I really don't care. As long as the mix works out in the end, all is good.
Anything in between the two scenarios, and I'll have to play it by ear.

I tend to agree that industry issues are not a major concern for me, for the very reasons you state. At this stage, this is a hobby (that may, just possibly, grow into a business if I play my cards right and get lucky). So I don't have to make money on this. It would just be nice.
Now what boggles my mind is how a company survives selling a book through a middle man and only getting 400 to 500 copies in sales, but 1200 copies (which could potentially make up to twice the money by selling direct) isn't worth going through a middle man. How many dozen separate books a year does it take to be a viable company in the three-tier system? Frankly, I'm not sure I'd want to try and find out.

As far as the $10,000 in annual sales goes, that figure wasn't intended to be gross. That's what I'd like to net, after expenses.
(Actually I believe the correct term for tax purposes is "adjusted gross", but since things like "office use of home" deductions are really just paper expenses -since I have the home either way, it's close enough to net for my purposes)

In my personal opinion, hobbies don't make money. It’s nice if they break even or let you buy a dinner out once in while. My first scenario is a hobby. My second is a part time business.

What constitutes a business must take a lot of factors into consideration, the biggest being my particular situation. What works for me might not pay the rent for you. That doesn't make it less valid for me.
Incomes are low in this area anyway. There isn't a part-time job anywhere here that could make me ten grand a year. There aren't a whole lot of jobs laying around free in this area that would make much over that (net remember) working full time. (My wife is an Underwriting Assistant for a sizable insurance company and barely grosses $20,000, just for some perspective. Six years ago I was working full time as an Architectural draftsman for less than that) I have fewer expenses than many, in a multi-income household with no dependants, and I live in a low-cost area, where I could get by (and have) on even less than that. Sure, in many places ten grand wouldn't pay the rent. But, here...I bought a 1500sf house with a two-car attached garage, and a large two-story outbuilding, on an acre of land in the village for $12,000.
So I'd be okay on $10,000 a year
If I did nothing else.
Which isn't going to happen. I don't do just one thing.
I'm a freelance draftsman. I might cut it back, if the publishing thing does well, but I plan to keep doing it.
I'm also an artist. I'm not giving that up for anybody.
I’ve even worked sub-contract construction off and on. To be honest I wouldn’t miss that.
I'm also looking into some other possibilities for part-time business pursuits.
So maybe my numbers aren't huge for a business, but they're darn sure more than a hobby. And as one division of a home-based, one-man company...I think it would work just fine.

Your mileage may vary.

[Chris Aylott]

Sounds like you know everything you need to know, then. Good luck, I'm sure you'll do great.

best wishes,

[madelf]

Originally posted by Chris Aylott
Sounds like you know everything you need to know, then. Good luck, I'm sure you'll do great.

best wishes,

Oh, I'm sure there's a lot more I could stand to know.
And odds are I'll still fall flat on my face.
:)

But your good wishes are appreciated.
Thanks.

[philreed]

Originally posted by madelf

Ideally...
I’d like to build this into a sustainable part-time business generating something like $8000 to $10,000 a year, a little more might be nice.

Hell, my PDF sales for the first year came to over $10,000. If I was going to go through the suffering of printing books and dealing with distribution I'd want over $20,000 a year.

PDF, if done properly, can make more money than small press runs sent through distribution.

[madelf]

Originally posted by philreed
Hell, my PDF sales for the first year came to over $10,000. If I was going to go through the suffering of printing books and dealing with distribution I'd want over $20,000 a year.

PDF, if done properly, can make more money than small press runs sent through distribution.

That's quite impressive.
Even with a $10 price tag (pushing it for a PDF IMHO), that would be 2000 units just to gross that much before expenses, much less after art, editing, etc.
The average sales for PDFs seem to be in the 200 unit per book range (from what I hear, I haven't looked all that closely) so that's 10 books a year. (probably more since few PDFs seem to be priced that high).

I did look into PDFs, though as I said not too closely, and the general consensus seemed to be that there was next to no money at all in producing PDFs. (But then that's what many say about small press in distribution as well)
Since you obviously have a different perspective on PDFs, I would love to discuss the possiblities of the PDF industry with you. If you wouldn't mind, that is.
Perhaps marketing my stuff as a PDF with a direct sales print copy option would be more cost effective (and certainly less risky).

Drop me an email if you like.
calvin@madelf.net

[Guildofblades]

>>I would really like to hear what you believe is wrong. Please, do not say small unknown publishers cannot get in.

William<<

Its nearly 100% front list driven now. And due to the mass flood of products now flowing through the industry, "front list" sales times continue to shrink. It used to be a year. Then six months. then three months. Nowadays I hear reports from many publishers who say they'll sell 90% of the volume of a product within the first 30 days of its release. Thats just crazy. Our industry isn't publishing periodicals here. We all publish games...games that NEED time to grow into their full market potential. But due to the extreme front list nature of the industry at present, 99% of gaming products don't get the chance to grow into their market.

This isn't a flaw with the distribution tier. Its a flaw with the entire industry. Retailers buy and sell the products in the same cycles, hence why the distributors do. Distributors, largely, are just reacting to retailer demand. And manufacturer responses to the front list evolution has been to publish MORE FRONTLIST, simply accelerating the evolution. The problem is, its a market growing apart from the want and needs of its consumer base. The smallest, but most active, of consumers overly infuence the percieved wants of the overall market, while few to no companies have the funds to conduct true market research that would convincingly tell them their market is heading down a road it shouldn't be. I forsee an aweful lot of attrition coming in the manufacturer tier in the next couple of years, stagnation of growth in the retail tier (though probably not an overall decline), and further consolidation of the distribution tier; I hope not into a monopoly.

>>So I'm actually very interested in the idea of taking an end-run around the distributors.

But, I still think a system that eats up as so much profit that I can't sell my book at what I consider a reasonable price has something fundamentally wrong with it.

Calvin<<

Calvin. These days the Guild of Blades sells its products directly to the distribution tier, retail tier, and the end consumers. 5 to 6 years ago we sold almost everything exclusively through the game distributors, short convention sales and a brisk little mail order business on a minis game we had. Now our direct to consumer market is 3 to 4 times our direct to retail market, and that is probably (at a guess) at least 2 to 3 times larger than distribution sales. For the first 4 years of our business, we tried very hard to make our success happen through the traditional distribution system. Later we can to realize there were an aweful lot of roadblocks (fiscal, political, and pure market forces at work) in the way to making that happen. So we started expanding the ways our products could reach the end consumer. These days we still market to all three tiers, and to other specialty markets that our products can sell in, and let the product flow where there is the least resistence in the process of letting the product reach consumers. We're finding that its MUCH easier to sell gaming products outside what we all would define as "the industry" than it is within.

But the markets economic strucurting is not wrong. Most industries work on a similar discounts/markups over net. The flaw in the economic model you happen to be looking at is in the manufacturing of the products. You are looking at the price point for your product through the eyes of a hobbyist that is used to looking for a good price deal. But as a manufacturer, you will be producing extremely limited production run meant (realistically) for limited distribution. The simple fact is, the market is designed to function for the middle to larger manufacturers. As a small manufacturer, you won't be getting the economy of scale they recieve on things like printing and shipping. That means to function as a business, you either have to 1) produce a specialty product that can command a higher MSRP, or 2) Find alternative methods of production that would reduce your production costs and allow you to attain an acceptible profit margin on a lower priced produce such as what you invision. You simply CAN NOT compete with the big boys on their own terms. The math doesn't add up.

When looking at margin, the Guild rarely produces any product that we can't get at least a 350-400% markup on. That means that if a book costs (pre production, artwork, printing, estimated shipping) $1.50 to produce, we desire our wholesale to come in at $6 or better. Now, thats in a perfect world and we can't always manage our production side that efficiently and have a few items that are a bit under 300%, though on the flipside, we also have a few products up over 500% to 700%. Put into terms commonly expressed here, looking at the Heroes Forever Core Rules, the book has a per unit production cost of approximately $1.25 per book. With a MSRP of $11.95, wholesale is $4.78. A markup of 382%. Now, thats a tad low, but then we made the decision early on to keep the MSRP low on the core rule book to make getting people into the game a bit easier, where we could then get a fully acceptible margin (and more) on all the supplemental products. Now...you're probably wondering how we achieve such a low production cost. First, its only a 112 page book. Second, we produce most of it in house, including printing, binding, etc,. Knowing that as a small company we could not compete with the big boys using the same economic model they do, we changed the economic model by changing our methodology of production.

Anyway, to bring this conversation back full circle. Yes, what ICE is doing is not new. Its being done by any number of companies currently, including the Guild. And some of those companies are succeeding at it. We do hope that as our brands become more prolific via their current methods of reaching the market, that we'll force both the retail and distribution tiers to service our products better. But regardless how those tiers treat our products, as we grow more successful, we certainly won't be abandoning the distribution infrastructure that earned that success, just so we can place favor on core hobby channels.

[madelf]

Ryan,

I understand your points, and agree with them.
The small publisher cannot play the same game as the big company, not on the same terms. And that makes finding alternate methods of gaining sales outside of distribution that much more important.


However, (for those who might care)...
Based on Bill's comments I decided to do a little more in depth research. After talking more with Bill and also discussing some issues with Brad at ACD distributors, I've found that not all of the information I've been coming across in various places on-line is entirely accurate.

While I still believe that the distribution system is a serious challenge for the little guy (and I find it sad that the industry at large is bent enough, even if not broken, to cause even a sizable publisher to find alternate sales outlets more effective than distribution) I'm finding that the three-tier system may not actually be the unapproachable obstacle that it at first seems.
Working with accurate information and detailed cost breakdowns, I'm close to deciding that going through the tiers may be a viable option. While I'm not in a position to manage as large a mark-up as you are working with Ryan (and won't be for some time I suspect), it is seeming that I might be able to make the system work for me.
I don't think it will be satisfactory in itself, and I'll have to seek other means to get sales as well, but as one source of income among others, it may just work.

So I've been proven wrong, at least in part.
That should teach me to look to the source for my facts, and not fish through forums for bits and pieces of them.

[philreed]

Originally posted by madelf
The average sales for PDFs seem to be in the 200 unit per book range (from what I hear, I haven't looked all that closely) so that's 10 books a year. (probably more since few PDFs seem to be priced that high).


I'm selling products that range in price from $1.85 to $59.95. And with the addition of Mystic Eye Games and Fiery Dragon Productions our combined catalog is over 70 products.

The key to success in PDF sales is the same as it is in print: A steady stream of new releases combined with a few evergreen products. I try to have at least three new releases each month and have had up to eight in a single month.

And products like the 101 Collection (and the three individual PDFs it is made from) sell between 10 and 20 copies a month, even though the initial work was done and released over a year ago.

Just like dealing with print it's a lot of work to maintain visibility and sales. What makes me happier to work with PDF is less risk and no inventory to store and ship. And working with RPGNow I don't even have to deal with individual orders.

Yes my expenses eat into that $10,000+ from the first year of sales but even after expenses I've brought in $8,000+ (and that doesn't even count the money from selling the rights to release print versions of my PDFs or the increase in freelance assignments due to people reading my PDFs).

While I could not currently survive on PDF sales alone they have been an excellent supplementary income and I am learning a lot about a new area of the hobby market.

[Guildofblades]

>>I don't think it will be satisfactory in itself, and I'll have to seek other means to get sales as well, but as one source of income among others, it may just work.<<

Oh, agreed. A manufacturer would be folly to ignore any potential distribution channel. Just because the distribution tier in our market can be a challenge to work with, doesn't mean you shouldn't try. Most certainly should. Just don't make the mistake of depending on it as so many manufacturers do.

Sell directy to retailers where you can. Generally whay we do is we work to garner the attention of retailers and set up direct communications with them. Once they get an interest in ordering our products, we point them at our current distributors and offer them the direct buy option. We let them chose what method works best for their store. We tried to balance our direct sales terms so that either ordering option is roughly equal. Buying direct from us a retailer can get a better discount, but usually has to pre pay or COD and gets the order in 1 to 2 weeks (we only batch out orders once or twice a week and utilize USPS for shipping). Comparatively, distributors can offer the retailer terms and usuallu have same day or next day turn around and will ship via UPS or Fed Ex.

Sell direct to the consumer over the Internet. But if you do, don't sell at discounts, excepting perhaps the rare sale here or there. For instance, we sell all of our products at MSRP plus shipping and handling. This makes it cheaper for a consumer to get it from a retailer establishment. That way most retailers won't feel like we are under cutting them. No matter what you do, as a manufacturer, if you sell direct to some retailers you will upset and possible not do business with some distributors. And the same goes for selling directly to consumers, you will upset some retailers and not get stocked and sold in their stores. Those companies seem to have developed a false sense of entitlement. They think just because you are a game manufacturer that they have an exclusive entitlement to sell it downstream, regardless of the service levels and efforts they wil put behind it. This is an attitude all too prevelent throughout the industry too. Listening to these people is a mistake, no matter how much you may want to make those "customers" happy. Because most little companies need devisified incomes and cashflow if they are to survive to become larger, more stable companies. And do you think White Wolf, WOTC, etc, sell only to hobby distributors and hobby retailers? No, they don't. Don't fall into the trap of believing your small company must bow to such pressures either. Its business suicide.

Sell to teachers and school districts too, if your product has some educational value to be used as teaching aids. Sell to the bargain store industry. Sell to bookstores, toy stores, etc, etc. Basically, sell your products into any channel that you are able to, and at acceptible sales terms. Someone wants to twist your arm into an untenable business arrangement just to do business with them, say screw them, then move onto the next potential customer. There are a LOT of places to sell games and most of us will never do more than reach the tip of the iceberg.

[HinterWelt]

Wise words Ryan, but I would have to stress that you should know the market, its upsides and downsides, that you are selling into. For instance, selling to the book trade usually means dealing with returns. Most bookstores insist on returnablilty. Does that mean you shoul dnot sell to them? No, just be aware of it and plan accordingly.

Just an FYI,
Bill

[Guildofblades]

>>Wise words Ryan, but I would have to stress that you should know the market, its upsides and downsides, that you are selling into. For instance, selling to the book trade usually means dealing with returns. Most bookstores insist on returnablilty. Does that mean you shoul dnot sell to them? No, just be aware of it and plan accordingly. <<

Oh agreed. You have to know the markets you are doing business in. Took me over 3 years to get a firm grasp on the computer gaming market and to identify the niche that our business could exist within, then build the business plan around. I've spent the last couple of months doing research on another market, getting a handle on its distribution processes and terms and an understanding of the major retail chains within it and scope shier mass of independent retailers in it. All that because I had an idea to produce a couple of games formatted to specifically sell to that market. Now that we have a base understanding of the market we're progressing with the actual game design for those products.

The book market. Thats a tough one. Yeah, the major players and distribution companies are set up to want returnability. But thats slowly changing. Its been a policy that was entirely too open to abuse by the retailers and distributors of the market. Its a dying practice, though I expect it'll be another 5 or 10 years before its truly uncommon within that market. The Guild does have a returnability policy that we extend to most of the markets we do business, but its less liberal than the standard business practice in the book industry. Thats one reason we don't do a lot of business to that market. We won't extend our risk by doing business on those terms. As a result, for the moment, we only sell products directly to a limited number of independent retailers within that market.

The prudent businessman knows his product and knows the markets they intend to do business in. Then finds the proper place to position their product within those markets. For us smaller businesses, that usually means finding the appropriate niche for the product. And have realistic expectations for the product. Probably safe to figure out what the upper potential for the product is, then establish your toe hold hoping to hit just 5 or 10 percent of that potential, then slowly grow into the rest. Too much expansion, too quickly, can cause a manufacturer to fail just a surely as no sales can.

[Gold Rush Games]

Originally posted by Guildofblades
Sell direct to the consumer over the Internet. But if you do, don't sell at discounts.
Hi, all.

I agree with much that has been posted here in the thread but the above comment is one I've been wrrestling with for some time. (I'm not picking on Ryan, it just so happens that it was his post in which I noted the comment.)

If the distribution sales channels are, indeed, so front driven and if sales of backlist are as slow as some indicate they are, what's wrong with a manufacturer selling older titles at a discount?

I mean, a retailer could get upset by it, true, but if that retailer can't or won't order the product from their distributor (or even direct from the manufacturer) then what's to get upset about?

[TimC.]

Sorry to jump into the thread so late (had a good Thanksgiving off) but I have a question for the more experienced indies. Have folks ever tried building active communities of gamers in a network of games to promote demand as opposed to advertising? If so what's the success rate and/or failures/hurdles to consider?

I'm not speaking of online forums and engaging the community for feedback, but creating an active structure of participation in the game kind of like the RPGA has. The more folks who particpate in that structure, the more the demand for the product from that group. As the structure grows the demand in theory grows.

I ask becuase that's the approach we're tinkering with for Dialectic's first release Gnostica, a LARP game sold PDF. I know: LARP AND a PDF, two kisses of doom. =)

But on the side I've started a company to run a network of LARP games called Gnostica MMLARP (website below) which uses (obviously) Gnostica as it's source material. My thoughts are as Gnostica MMLARP grows as an organization, that spurs demand for Gnostica and follow on supplements in addition to folks buying Gnostica and running games on their own in excess of what we'd get through advertising and demo games at cons.

I've heard the standard release figures for PDF's are around 100, is that over the life of the game or just at release? So far there's over 360 folks who have signed up for TEG to beta test the game and online functions of Gnostica MMLARP. I know that number means nothing right now becuase it costs nothing to beta test, proof is when we release to see who buys. However my hope is that some significant % of those beta testers at least buy the game book, and a subset % of that participate in the Gnostica MMLARP organizing local games and recruiting players who will in turn contribute to demand for Gnostica, move and start their own games etc.

So does anyone have experience with this type of model? Building demand through active networks as opposed to mass advertising. Any advice, thoughts or tips would be appreciated. Although we have an idea what we're doing it's the first time around doing it. =)

[Guildofblades]

>>Sorry to jump into the thread so late (had a good Thanksgiving off) but I have a question for the more experienced indies. Have folks ever tried building active communities of gamers in a network of games to promote demand as opposed to advertising? If so what's the success rate and/or failures/hurdles to consider? <<

Well, yes, we have. 1483 Online. http://www.guildofblades.com/interactive/1483.html

We have about 1500 current players for the PBEM/web supported version of the boardgame. We started it about 3 years ago to help generate some more interest in our Europe 1483 boardgame. Now we have a fully interactive computer game being made based off the online game and that business could actually end up dwarfing our boardgaming revenues in time. Who would have thunk? So it'll be our toehold into computer/internet gaming.

On the flip side, a recent study of our internet mail orders and comparison to our 1483 Online player database suggests nearly 25% of all mail orders are being derived from those people. So as it turns out, the game has really helped turn new players into consumers. And for a lot more than just the boardgame for which the game is based. I know, its not an RPGA-like structure, but its a community centered around the boardgame just the same.

[Guildofblades]

Hi Mark,

>>If the distribution sales channels are, indeed, so front driven and if sales of backlist are as slow as some indicate they are, what's wrong with a manufacturer selling older titles at a discount?

I mean, a retailer could get upset by it, true, but if that retailer can't or won't order the product from their distributor (or even direct from the manufacturer) then what's to get upset about?<<

I would say nothing, but you and I have both heard the rantings from retailers who would say different. Of course, I think those same retailers believe that every manufacturer should send them 2 to 3 free copies of every single thing they produce so that the retailer can evaluate it and decide if they make an initial order of 1-3 units. Lol. Just not seeing things from the manufacturer perspective; only their own.

On the flip side, I can see where a retailer would have cause to be upset if they just expanded their coverage of your product line (inlcuding some of the older products...perhaps they have new customers to your game in their store and those players are just now asking for more of the line) only to see you mark down some of the back stock as much as 50%, or something akin to that.

As a compromise, we guarantee retailers we won't blow out any "in print" products. In print products are those, at present, we fully intend to support, reprint where neccessary, or upgrade to a better edition whent he current edition sells out. Out of print products are products lines we have discountinues or remaining stock on a previous edition after we had released a newer edition. We generally post to our retailer list a month or two in advance when we know something will be going out of stock. I have no sympathy for any retailer who hasn't bothered to sign up to our retailer list and hence didn't get that message, since if our products are important enough to them then taking that small step to stay informed about them should be a no brainer. Once a product goes out of print, we'll sell it by any means possible. Fire sales, convention close outs, give aways as purchase incentives, of even liquidation sales.

Occassionally we'll host sales on in print products as promotional efforts, or even if we're just leaning a bit heavy on on-hand invetory. But whenever we host such a sale, we always offer retailers to be able to offer the same deal to their customers. So we'll give them a free bundled product when they buy product X, if thats what the consumer gets for the sale. or we'll offer them the same percentage discount off their standard wholesale price from us if we're offering that discount to consumers. Whatever it takes to give them a fair, economical, means of matching the same promotion we offer direct. Though for all the griping you'll get from some retailers if you don't offer that type of thing to them, you would be amazed at just how >few< retailers take us up on the offers to them that would allow them to match our promotions to the consumers. In short, sometimes people are just looking for an excuse to bitch but won't step up to the plate when its put up or shut up time.

[HinterWelt]

Ryan,
Short version of your point is if you discount your MSRP out the door then the message you are sending is that my product is not worth the MSRP I set. In a more verbose way, you said to discount after it goes out of print/after lifetime of the book.

Please correct me if I misunderstood.

Bill

[Guildofblades]

>>In a more verbose way, you said to discount after it goes out of print/after lifetime of the book.<<

Basically. But not always. If you only have say 50 copies left when the product gets discontinued and you don't mind sitting on that invetory, collectors and other people might still want the older product and be willing to pay MSRP (or even higher on ebay if the product becomes scarce) for it. So you can net a higher margin if you have the patience to sell it more slowly and if you have the storage space to maintain that discontinued invetory.

At present we are getting rather short of storage space for invetory, so we're more inclined to blow out out of print remainder invetory rather than milk it for all its worth. But whats best for other publishers may vary.

[Gold Rush Games]

So, in essence, your lengthy posts boil down to "Selling backstock at a discount is okay and I agree that retailers shouldn't get upset about it." ;)

[HinterWelt]

Originally posted by Gold Rush Games
So, in essence, your lengthy posts boil down to "Selling backstock at a discount is okay and I agree that retailers shouldn't get upset about it." ;)

Thanks Mark, that was what I was trying to say.

Bill

[Guildofblades]

>>So, in essence, your lengthy posts boil down to "Selling backstock at a discount is okay and I agree that retailers shouldn't get upset about it." <<

Well, no. Not quite. Backstock on discount, no. Because retailers should get upset. But discontinued products, on the other hand, sure. Fire sell it. Clear it out and convert that back into capital that can do your company some good. Retailers shouldn't get upset if a publisher discounts its discontinued products. But thats different than selling them your active (or maybe not so active) backstock, only to see you emmeidiately devalue it by deep discounting direct. Apples and oranges.

[HinterWelt]

As a previous retailer who owned two stores let me make it clear that if I were to buy a product and next week see it discounted by the manufacturer, I would be steamed. It would not happen twice. On the other hand, if it was a year or two down the road, I would probably be discounting it myself.

In essence it goes back to selling from your site at MSRP is o.k. Selling at a discount the newly released product is not o.k. Selling stock of a dead line at a discount would be o.k.

I think we are all fervantly agreeing at this point but I just wanted to check. :)

Bill

[Gold Rush Games]

Originally posted by Guildofblades
Well, no. Not quite. Backstock on discount, no. Because retailers should get upset. But discontinued products, on the other hand, sure. Fire sell it.
Explain to me the difference between backstock and "discontinued," as you define them. Because in today's RPG market, they are often practically the same thing.

Retailers shouldn't get upset if a publisher discounts its discontinued products. But thats different than selling them your active (or maybe not so active) backstock, only to see you emmeidiately devalue it by deep discounting direct.
I was referring to discounting backstock that wasn't otherwise selling, I think.

[TimC.]

We have about 1500 current players for the PBEM/web supported version of the boardgame. We started it about 3 years ago to help generate some more interest in our Europe 1483 boardgame. Now we have a fully interactive computer game being made based off the online game and that business could actually end up dwarfing our boardgaming revenues in time. Who would have thunk? So it'll be our toehold into computer/internet gaming.

Thanks for the reply Ryan. That's the type of community I was envisioning (even if not technically RPGA), 1500 players participating in organized gaming session with a three year retetion rate is far better than what I'm hearing of the 90-day cycle of most game releases. The mail-in order participation sounds like they continue to buy based on their interest and participation. I'll check out the website!

[Guildofblades]

>>explain to me the difference between backstock and "discontinued," as you define them. Because in today's RPG market, they are often practically the same thing.<<

Hi Mark,

There isn't a great deal of difference. And given the way our company operates, what we might consider "discontinued" might be different than what other publishers would. But for us, say, a game like The War to End All Wars Box Set is more than 2 1/2 years old now, but its part of our active in print product list. Most people would consider anything that old to be "back stock" in this industry. And we do too, since its obviously not front list still. But the game remains a very steady seller for us so we keep it on the "active" list, or what we call our in print list. Hence no sales or clearances. Products in that category are those retailers can count on not being devalued and we won't undercut them on price.

Now, the first edition of The War to End All Wars, which we still have invetory on, has been declared discontinued. We offer no such market protection on that. We'll get rid of any way we can. We define the distinction between the two product types on our website by listing "in print" and "out of print" status so our retailers can tell which products they have market protection on (and hece can more safely invest in) and which do not.

In short, we keep the two categories so we can stay semi politically correct with our retailers, and still provide us a means to blow out slow performing or dead stock. All other industries have methods for blowing out dead or overstocked invetories, but in the hobby game market a manufacturer can get crucified for doing so. Very few retailers pay any real attention to this information that we offer, but we maintain the practice for those who do and to largely keep those retailers who are inclined to complain off our backs. It kind of works.

[Guildofblades]

Hi Bill,

>>Selling stock of a dead line at a discount would be o.k. <<

Sure. It certainly should be. Though I would be careful about using that particular term to identify the older product you're looking to liquidate. Because what is dead? I would think a retailer would be equally pissed if they stocked up on that line due to a recent climb in local interest, only to find that its now been declared a dead line by you. I mean, sure, that retailer might be only one of en retailers left in the country selling it actively. Your sales data tells you that its dead. But its not to that retailer. But he/she will still get upset if they are trying to sell it at MSRP at your are now online hawking the 25-50% sale. That its a dog on your sales chart won't make a difference to that retailer.

Thats why we classify a product as either in print or out of print. We provide market protection on the in print stuff and try to provde at least a month or two advance notice when a product will be going out of print. Its sort of a matter of just keeping up appearances more than anything else. We're a small enough company that an upset retailer can easily drop our product line, so we try to give them less reasons to be upset with us.