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Should a feasibility plan be created before the game

Should a feasibility plan be created before the game?

If you are serious about selling your pride and joy, then yes, and no. It depends but in all cases, a feasibility plan will be needed if you plan to produce the product.

Let me explain:

Let's say you have plans to create a deck building game. You have a great idea and you're really excited about it. Okay, now what?

People invent so many things and then they never get it to market. They spend hundreds of thousands on prototyping and development and learn that they should never have started the project in the first place.

This isn't just about game designers, it's about all businesses. A good example is the mom and pop owned restaurant.

They love the idea of owning their own business and they find the perfect place they want. They build it, decorate it, staff it, have the best food and then open the doors and six months later, they're out of business.

So why?

The should have researched their idea before they spent one cent. If they had created a simple feasibility plan, they would have learned that previous owners failed because the customers in the city don't go to that area of town at night. There's a history of crime. There's a lot of car break ins and people just won't go there. A second problem is the previous restaurant there had an issue with cleanliness and people getting sick. The property has a bad reputation.

Third, the new restaurant is priced to high for the locals in the area. The restaurant is charging upscale rates for cuisine but the demographics clearly show the locals live at the barely above poverty level. In short, they didn't do their homework and they don't understand their customers. = EPIC FAILURE

So should you do a feasibility plan? Yes. Visit the age group you think would like your game and ask questions about what they think. Now, not just friends or on a forum like this, but go to conventions and comic book stores. Ask your questions and collect data.

If you think people will like the game, then create a prototype and play test it with several focus groups. Go back to your feasibility plan and update it with the new info, but don't delete your old info. That's financially valuable to you.

Continue this methodology until you feel comfortable that you have exactly what your customer wants. Sit down and have a reality check with yourself and your significant other. Pitch him or her on the business of your game just like you'd pitch it to a game company. Show stats, the demographics, what your idea customer's demographics and income are, how you plan to market it to those potential customers, the cost of production versus the cost of retail.

This is called ROI or Return On Investment. Simply put, you should get ten times what it costs to produce your product. Now that's a rule and a flexible one at that but if you shoot for that and say you're getting five times instead, you're going to determine if that's enough to earn a profit.

A more realistic ROI is two to three hundred percent, You have to take into account all the things that go with running a business - I mean everything. Gas and electric, phones, staples, note pads, computer equipment, marketing, advertising (The BIGGEST EXPENSE) and having enough to launch your new business and live. Are you planning to keep your job or work full time? How about liability insurance? Property rental, maybe a printing press to print your game in-house, box creation, promotion... and these are just the big things.

Are you prepared to pay for a thousand games to be made so you get quantity pricing? If your game takes off and you get ten thousand orders, could you handle that? Cost of production is going to be in the mega bucks range and you better have a way to get those nearly overnight or you'll lose the sales and your customers. Ever get "We regret that this product is on back order and it will be two moths before it will be ready to ship" messages from an online store? My first response is "F... it! I want it now! WTF type of company is this that they don't have their own product in stock? What happens when you order too many of your product and suddenly the orders drop off? You eat those. Bye bye profit, these are your losses. How will you liquidate them and make more than break even?

Now that two hundred to three hundred percent mark up doesn't look so good and if you raise it to five hundred percent, will your customers still want to buy it?

So the real question is:

Are you creating this game for you or your potential customers. You must accept that it's a product and you'll have to change it even if you don't want to, to please those customers. Otherwise, you are creating a vanity product. It's only for you because it's a dream, much like a writer creates a memoir. It's not meant for distribution but for family and friends.

Dislike me if you wish but if I save you a lot of money and frustration by putting this out there for you, eventually you'll appreciate me.

And I'm all for vanity games. Most of AD&D was created by the players themselves and though they used Gary Gygax rules and accessories, they made the game their own. Those were opportunities Gary missed.

I'm sure people will differ on this with me, and that's fine. I never claimed to be the messiah of business. I'm not. There is so much to learn that no one has the answers to everything.

There are a lot of people here that have gone through this to get their product to market. I'm sure they would happily share their experiences with you if you ask. I'm always learning new stuff, I love to learn because knowledge is power. So I hope I've helped someone here. Starting a business and producing a product (your game(s)) should be fun and understanding the business side is going to make it successful and profitable.

"Yesterday's idea, is today's dream and tomorrow's reality"

My quote.

Comments

"Simply put, you should get

"Simply put, you should get ten times what it costs to produce your product."

In games, this is simply untenable. What designers should do is look at keystone pricing to get a reasonable starting point for pricing their game; take the total FOB cost of the game and double it...this is your wholesale price to retailers. Double that, and you've got your target MSRP. That is effectively 4x your cost of goods, and the commonly accepted figure for a healthy profit margin is 5x.

If you expect to charge 10x the FOB cost of your game, no one is going to buy it since the price will be so astronomically high. The sweet spot for games is $40 or less; sure many "dudes on a map" games are priced higher, but if you're looking at the category as a whole, you're best bet (unless it has a ton of figures) is to price your game at <$40.

As for ROI, it's true designers should calculate this, and if running a Kickstarter, account for all those costs in addition to your manufacturing MOQ and any tooling cost: artwork, prototyping, paid playtesting, rules editing, etc. Whether or not to charge for your own time is up to the designer, though I think most count that as the cost of playing ball, and in the interest of keeping the funding goal as low as possible they leave it out.

So if you invest $5K into designing your finished game, you should expect to get 2-3x that amount back in profit...your ROI. Don't account for the cost of goods, as you're asking your backers to cover that...same with shipping (to them, not to your warehouse or garage). So let's say you've got to sell $10K worth of your game to cover the cost of goods, then your break-even goal is $15K, your profit goal is between $20-$25K.

The added benefit of KS is that you can offer your games for substantially less than it would cost at retail, and many campaigns leverage this with offers like "$10 off retail." You're selling direct, so you can either use that extra profit to build your business (however small it may be) or pass the savings on to the backers. It all depends on what you decide your game is worth, and how much you've invested vs. how many backers/sales you're likely to get.

If you're not going the KS route and expect to sell into retail or through a distributor, your numbers will shift to account for that added layer between you and your consumer, but the same principles still apply.

chris_mancini wrote:In games,

chris_mancini wrote:
In games, this is simply untenable. What designers should do is look at keystone pricing to get a reasonable starting point for pricing their game; take the total FOB cost of the game and double it...this is your wholesale price to retailers. Double that, and you've got your target MSRP. That is effectively 4x your cost of goods, and the commonly accepted figure for a healthy profit margin is 5x.

Couldn't have said it better myself.

Mike Atencio wrote:This is

Mike Atencio wrote:
This is called ROI or Return On Investment. Simply put, you should get ten times what it costs to produce your product.

Mike Atencio wrote:
don't understand their customers. = EPIC FAILURE

But I'm gonna seriously look at the details for earning profit for a bit

So, retail price = 4x production cost is pretty typical in board games.

But then you need to consider the overhead costs like artwork, development time, prototyping materials (which are roughly related to game complexity and quality)

So make any money at all, you need to sell enough copies of a game that your overhead cost is covered by your profit per unit.

Eg $5 print, $20 sale, $10,000 development and art costs, you need to sell 700 copies to break even.

And that's assuming you sell them direct to customer, rather than going through wholesalers or retailers.

But selling direct to customer will bring it's own marginal cost in your management time. You'll also have other overheads of the business, like an accountant and lawyer and web administrator. (and if you can do those roles yourself, you're still adding the cost of your time doing it)

And if you take too long to sell, you'll get long-term storage costs. If you want to sell fast, you've got marketing costs.

Oh and if you're in the UK like me, yay, VAT.

So let's call it 1000 copies to break even. And at this point you're still paying yourself minimum wage.

Anything else I've missed?

In other words...

Take the COST you pay to produce the game (including all shipping) x5 = MSRP.

So if you pay $7 USD, the MSRP = $35.00 Retail.

Sold to the retailer (x50%) = $17.50
Sold to the distributor (x70%) = $10.50

You make $3.50... Now you see Mike how low the margins are for selling to Traditional Channels.

It's very costly and not much profit making in LOW volumes.

Just an FYI. 10x is not possible - it's just too expensive.

Note: That's a state of affairs for the Tabletop Game Industry... It's rather ugly. If you are trying to make a game - do it for the PLEASURE or FUN. If you are interested in becoming a Publisher - well the profits are lean and the channels are already in place for HOW to sell.

Note 2: Publishers pay very little to the designer. On $3.50 profit - you still have to pay the Artist/Illustrator, the Graphic Artist/Designer, and your overhead. There is hardly enough money to go around. I don't see how they do business using the traditional distribution model...

One other comment

In terms of PRODUCTION, there are economies of scale (75%+) when an order is upwards of 3,000 units. So your $7 USD game (cost to produce) will drop to $5 for (2,000 units) and about $4 for (3,000 units). The more you produce the lower the per unit price becomes.

So $7,000 for 1,000 units
$10,000 for 2,000 units
$12,000 for 3,000 units
and so on...

But on the flip side, the cost of shipping goes UP (again proportionally). So 1,000 units might cost $1,300 and 2,000 units maybe $1,500... And so forth...

You can make more money if you spend more... But the onus is then on YOU to figure out what to do with 2,000 Games that might be left over (if say you bought 3,000 Games...)

In terms of pricing

Generally you want to take the MOQ, and use that as the COST to manufacture the game. So in my example $7 for 1,000 copies.

Then if you increase your production, you still keep the $35.00 retail price tag. But now you have economies of scale and therefore you can make more money if say your game cost $5 to produce.

We said earlier that the profit is $3.50 for a $7 game. When the savings drop the cost to $5, the Publisher earns $5.50 per game. And $6.50 for 3,000 units.

So that's the name of the game: figure out your retail price point and try to buy and save for more.

Kickstarters are good for Game Designers because you EARN "retail" (less a discount). So that $35.00 game means the Game Designer makes $28. Pretty good. You can afford to save the backer some money and maybe charge on $30. $23 of profit (obviously less 10% of KS fees) = $20 of clear profit.

Now you can see why it's very palatable to do a KS campaign. As a business the idea is to re-coup as much of the money invested in the production of the game (artwork, card templates, website, etc.) And you might have partners in the KS venture... so it's $20 divided among the partners. That's something you can partner with...

Wonderful

After reading the comments, looks like I was right about break even. Ten times is a rule but not the standard, unless you purchase everything in China in mass quantities. You are absolutely right in estimating 4 to 5 times at max. Not a very good ROI unless you do a huge sales campaign for a quick return, otherwise, the long haul is bleak and filled with losses.

I had come to this assessment prior to posting here but, I thought it important that people involved with creating their dream game has a dose of reality, like I did. Figure a year of time spent refining a game, creation of artwork and the lot. That is all a loss if you can't get the product to market. In fact, if you can "borrow" from other games mechanics instead of reinventing the wheel, you might be able to save time but you're still down for the cost of production. $20,000 isn't an unreal estimate.

My research indicates that a person needs to be everything - inventor, creator, tester, producer, promoter, salesman, accountant and a slew of other hats to wear. Realistically, it's a no-win scenario. So why do people like me and all of you still try?

Have we lost our minds? Do we think we are the one to make millions? Is it fame and fortune combined... For me, it's the accomplishment of completing something. It'll bug me until I do. That's why I use the feasibility plan. It crushes the dream by providing a healthy dose of reality. While dreams are great, reality is better when it comes to gambling the family's savings on a dream.

That's not to say don't chase your dream, chase it but take the blinders off.

"Note: That's a state of affairs for the Tabletop Game Industry... It's rather ugly. If you are trying to make a game - do it for the PLEASURE or FUN. If you are interested in becoming a Publisher - well the profits are lean and the channels are already in place for HOW to sell."

Great advice.

chris_mancini wrote:"Simply

chris_mancini wrote:
"Simply put, you should get ten times what it costs to produce your product."

In games, this is simply untenable. What designers should do is look at keystone pricing to get a reasonable starting point for pricing their game; take the total FOB cost of the game and double it...this is your wholesale price to retailers. Double that, and you've got your target MSRP. That is effectively 4x your cost of goods, and the commonly accepted figure for a healthy profit margin is 5x.

If you expect to charge 10x the FOB cost of your game, no one is going to buy it since the price will be so astronomically high. The sweet spot for games is $40 or less; sure many "dudes on a map" games are priced higher, but if you're looking at the category as a whole, you're best bet (unless it has a ton of figures) is to price your game at <$40.

As for ROI, it's true designers should calculate this, and if running a Kickstarter, account for all those costs in addition to your manufacturing MOQ and any tooling cost: artwork, prototyping, paid playtesting, rules editing, etc. Whether or not to charge for your own time is up to the designer, though I think most count that as the cost of playing ball, and in the interest of keeping the funding goal as low as possible they leave it out.

So if you invest $5K into designing your finished game, you should expect to get 2-3x that amount back in profit...your ROI. Don't account for the cost of goods, as you're asking your backers to cover that...same with shipping (to them, not to your warehouse or garage). So let's say you've got to sell $10K worth of your game to cover the cost of goods, then your break-even goal is $15K, your profit goal is between $20-$25K.

The added benefit of KS is that you can offer your games for substantially less than it would cost at retail, and many campaigns leverage this with offers like "$10 off retail." You're selling direct, so you can either use that extra profit to build your business (however small it may be) or pass the savings on to the backers. It all depends on what you decide your game is worth, and how much you've invested vs. how many backers/sales you're likely to get.

If you're not going the KS route and expect to sell into retail or through a distributor, your numbers will shift to account for that added layer between you and your consumer, but the same principles still apply.

Chris,
I agree with your thoughts on this. there are a number of different ways to get it into the market but it's going to be tough. KS seems pretty good IF you can get interest in your game. Otherwise, you're sitting with nothing at the end of a long highway of broken dreams.

I'm an optimist but as I age, I have started discovering that my optimism is wants more reality mixed in. I don't leap before I look anymore. That's why I like an feasibility plan to keep me grounded.

Growing up sucks....

Personally

As another Designer says: "I design games that I enjoy playing."

Personally I agree and make that my "mantra". Though I waited for one entire year before a Publisher decided not to publish my game, I decided that I would not wait that long - and have made the game available through The Game Crafter (TGC): http://www.thegamecrafter.com

But the price is much too high... I cannot import or resell to local game store because the unit price is so high and retail margins are also a +50%.

However at least I can say that I MADE the game. It's not waiting on some shelf in a prototype version - no the First Edition "core" Game Set is available for purchase. I've had about 50+ sales of the game and have scored a 94% on an anonymous Art Score (to see what people think of your artwork).

So I am trying to see if some more specialized Publishers may want to pick up the game and help me to create a Video and some nicer banners for the KS campaign. If not, by next January, I'll try to KS the game myself. I know KS is a lot of work - but I need to try otherwise nothing will ever happen...

Cheers.

Have you ever

Have you ever thought about taking a box of decks and going door to door (not residential but comic book stores, conventions and the like and just selling them outright?

I invented a tool for law enforcement, won a business plan competition with it and they pitched it to a bunch of angel investors. One investor liked it, and committed to the product. Then his business was wiped out by Katrina in New Orleans... No investor now. I went on the road to the Sheriff's convention and then to the IACP (International Assoc. of Chief's of Police) big convention. I connected with a couple other new and small start ups and we got a booth together, rented a motel room and basically teamed up living on bologna sandwiches until the convention was over. It was awesome and I sold everything I had. I even made a few bucks after it was all said and done.

I say this because there are a hell of a lot more comic / Sci Fi Star Trek conventions in the US than what I had to sell at. I used the Put your name in my hat to build a list of potential buyers. Conventions will rent you a scanner that you scan the buyers card and it downloads their contact info into your lap top, at least at a trade show like mine was.

Fortunately, comic-cons allow you to sell., Trade shows don't. They allow you to take orders. and then, when you get home, you make the sale. Without doubt, you should be able to find a few people here that would do a shared booth with you and travel together. It's a memorable experience and it's fun. Just a thought.

Mike Atencio wrote:So why do

Mike Atencio wrote:
So why do people like me and all of you still try?

Have we lost our minds? Do we think we are the one to make millions? Is it fame and fortune combined...

The people who do it despite everything is often because we have no other choice.
I design games (and write) because I must in order to be happy.
I hope to make some money from it, but I've done it for over 15 years for my own pleasure and will continue to do so, no matter what. Because if I didn't, I'd lose a part of myself.

And, yes, that sense of accomplishment is a great thing, too.

The same for me

It's the same for me and albeit, everyone on here in one way or another. Thanks for responding. I think your answer reflects most peoples sentiments regarding any hobby, not just game making.

Mike Atencio wrote:It's the

Mike Atencio wrote:
It's the same for me and albeit, everyone on here in one way or another. Thanks for responding. I think your answer reflects most peoples sentiments regarding any hobby, not just game making.

Oh, definitely. Some passions are just more profitable than others :)

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