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Breaking even?

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Dralius
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Joined: 07/26/2008

I have set a cost for my product based on the x6 that was suggested by our resident experts. If I have calculated my production cost correctly assuming a 3% overrun on average. Not including advertisement or promotion costs I will have to sell 15 units at full retail price to break even. Does this sound right? Also can anyone recommend a good sized first run for a micro producer? Should I gear up to make 50, 100, 200 or more?

P.S. Unless things work out better than expected this is going to be my second job for the foreseeable future.

Yekrats
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Re: Breaking even?

Dralius wrote:
I have set a cost for my product based on the x6 that was suggested by our resident experts. If I have calculated my production cost correctly assuming a 3% overrun on average. Not including advertisement or promotion costs I will have to sell 15 units at full retail price to break even. Does this sound right? Also can anyone recommend a good sized first run for a micro producer? Should I gear up to make 50, 100, 200 or more?

Well, I certainly think you should take into effect the "6x factor" but you should also consider the market and other factors. What price point are you shooting for in your game? What stuff do you get in it? Are you having someone else create them for you so you have to make a minimum order?

Also, you might want to factor in giving away games for free -- for promotional stuff and whatnot. Those factor into cost, and it seems that retailers really like to "try before they buy" often. Also, if you want reviews, be prepared to hand over a few more.

I'd advise making the minimum amount you can, and still be profitable. You can always do a second print run.

-- Scott S.

Dralius
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Breaking even?

The game in question is a two player abstract strategy game which makes it a specialty market product. It consists of the board, 32 playing pieces of two types in two colors and rules booklet. Price range will be on the low end, above cheapass games but below what small two player German games are going for. I will be making the game myself as soon as I work out some production issues. If I had the money I would just have a small manufacturing co make me 1000 of them and focus on promotion it. Right now my minimum production level is being driven by the price of materials. As for working promotion into the mix I have not decided on how many copies I will be sending out for review.

Yekrats
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Joined: 08/11/2008
Breaking even?

Dralius wrote:
If I had the money I would just have a small manufacturing co make me 1000 of them and focus on promotion it. Right now my minimum production level is being driven by the price of materials. As for working promotion into the mix I have not decided on how many copies I will be sending out for review.

Well, only risk what you can afford to lose. I'm serious. You might invest in 1000 games, and nobody will buy a one. Not to be a pessimist, but it's within the realm of possibility.

A couple of prospects that I thought were "sure sales" have so far come up dry after I actually went to press. Then again, some prospects that I never expected came through. I've also sold fewer to people I know than I expected. Also, I had to really work to make convention sales, which was just a trickle. Fact is, you don't know what sales will be like until the day comes when you try to sell them. And I don't want anyone to lose their shirt or house on the dream. I get the feeling (from talking to others in my limited circle of small game company peers) that many people in this business have trouble making back what they invested.

Also, I think it's difficult to know what people want in a game. I know that sounds overly basic, but it's more subtle than I at first realized. There is a balance that must be made (I think) between the cost of the product and the goodies you get in it. The more goodies (and the bigger the box to a certain extent), the better "perceived value" of the product. Take a product like one from Days of Wonder, for instance. Little gimmicks like a 10-cent tinkerbell in Mystery of the Abbey can seem really impressive, without adding much cost.

I'm kinda drifting from the subject here. Maybe I should make a new thread. ;-)

I don't want to sound like a pessimist. But if there's anything I can do to help, let me know.

Best wishes.
-- Scott S.

Dralius
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Breaking even?

Thanks for the advice scott.

I am a penny ante gambler at best so i won't be betting the farm. Funds for the project comes from extra money a have socked away. My intention is only to produce the best quality game that i can afford to make with no aspiration of becoming rich or even making money at this point. I only need to make enough money to justify keeping it going.

Anonymous
Breaking even?

Wow... we usually go 10X on cost, but that is because we sell through distribution to game stores, and they pay 40% of MSRP (i.e. a $10 game nets me $4 from a sale to distribution).

Our numbers run in the 250-500 range on a first pass through distribution, with a 'good game' selling about 1000 units in the first year.

These numbers are pitifully small for the vast majority of the games industry. Matching your production to your market is the key here.

All I can advise is this: make sure that you have calculated ALL of your costs, logistics, admin, warehousing, etc. before you jump in... On average, for instance, your paying 0.8% monthly to hold inventory at your apartment, house, or whatever (as compared to having said money to pay bills or to make interest in an interest-bearing account).

If you get to the point of having 10k in inventory, that amount begins to become sizable... ($80.00 a month just to stare at unsold product).

Thats why we went to a Just-In-Time production scheme on the vast majority of our titles... This alows us to hit 'break-even' at about 12 units on our micro-games... about 65 units on larger products with color covers.

XXOOCC

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