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Profit from boardgames?

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Anonymous

I am curious as to what an established game company usually might expect to clear on a game. For instance, if a boardgame lists for $40, what do they generally build in for a unit cost to produce and what would they expect to make per unit? Let's say if they did a run of 10k units.

I guess what I really am interested in is the per unit cost for design work done and then production. I'm also very interested in knowing what fees an artist/designer might expect to receive for creating artwork for a typical game with a set of cards, board, rules and box.

Does anyone have any idea on any of these things?

Anonymous
Profit from boardgames?

I know that, as a general rule of thumb, a product is usually produced for no more than 1/4 it's suggested retail price. Then the game company charges the distributor 40-50% of the MSRP for the game, the distributor sells it to the game outlet who then sells it at or near the MSRP. The game you mentioned below was probably made for no more than $10 and sold to the distributor for $16-20 for a profit of $6-10.

I know that this has been discussed in greater length in the forums, a quick search should pull up the older threads.

zaiga
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Joined: 12/31/1969
Profit from boardgames?

As a general rule of thumb the actual production cost of a game is around 10% of its retail price, assuming a typical print run of 10k. The publisher typically sells one game at a cost of around 50% of its final retail price.

So, in your example the game would be produced for around $4 and sold to the distributor for around $20, before it ends up in a shop for $40, which makes a "profit" of 16$.

Of that $16 the publisher has to pay for other expenses as well. For example, the designer of the game typically takes around 5% of distributor price, which is around $1 in this example.

Other expenses include: graphic design, storage space, housing, phone bills, travel expenses, promotion/advertisement expenses. Also, don't forget that unsold games sitting in your inventory also "cost" you money, since you invested money in producing those games, which means that money is not "working" for you in another way (say in a bank account or on the stock market).

As SiskNY said, this has been discussed before in greater detail. I'm sure a search on this forum would turn up some useful hits.

Good luck!

- René Wiersma

phpbbadmin
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Joined: 04/23/2013
Re: Profit from boardgames?

eyecandy wrote:
Re: Profit from boardgames?

The short answer is no, there is no profit to be had from designing board games. LOL. Seriously, One should not go into this business thinking they're going to get rich from it. You should do it because A) You love designing or B) To possibly make a little money to support 'the habit'. There are very few professional game designers (and by that I mean that designing games is there one and only job).

-Darke

Z-Man
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Joined: 01/01/2009
Profit from boardgames?

zaiga wrote:

So, in your example the game would be produced for around $4 and sold to the distributor for around $20, before it ends up in a shop for $40, which makes a "profit" of 16$.

*****Distributors get around a 60% discount, no less than 55%. And free shipping with a minimum order. So with a $40 retail, you are getting $16. Out of that you paid for shipping.

When producing a game, you should be shooting for 1/7 or 1/8 the cost in relation to the retail price (including the freight for the product to come to you). Most likely you'll be doing 1/6-1/7, though some do it for less, but if your print run is 10K then you should be able to make 1/8 easily. It depends on components, qunatity, and where you print.

EDIT: You _can_ sell below 55% to distributors if you are a large company with product that is in major demand.

zaiga
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Joined: 12/31/1969
Profit from boardgames?

Zev,

So, if I interpret your numbers correctly, a game that sells for $39.95 in the stores was sold to distributors for around $16 and produced for around $5, assuming a 10k print run. Sounds reasonable.

Thanks for the insight!

- René Wiersma

Chad_Ellis
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Joined: 12/31/1969
Profit on board games

Oh how happy I'll be when a good board game justifies me doing a print run of ten thousand! :)

Low volumes are really what makes the board game business bad. So many of your inputs are fixed, from your time in design/development, graphic design, art, printer's set-up costs, etc., so unless you can do a large print run it's virtually impossible to get a good total cost.

Then, as noted, you have to sell to distributors at 60% off retail and you probably have to pay shipping on top of that. Getting distributors is expensive too, whether that cost is in time or money.

One thing to be careful of when talking with people about cost is what definition you're using for cost. Unit production cost is very different from COGS.

Hugs,
Chad

zaiga
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Profit from boardgames?

So, what's considered a "normal" print run size for a small publisher then? 5k? 3k? 1k? What kind of volume do you need at the least to be able to make a decent profit?

- René Wiersma

Anonymous
Profit from boardgames?

zaiga wrote:
So, what's considered a "normal" print run size for a small publisher then? 5k? 3k? 1k? What kind of volume do you need at the least to be able to make a decent profit?

- René Wiersma

Well Warfrog has a standard print run of 3,000 for their annual new release from Martin Wallace. They eventually sell most or all of their product, but it takes some time. The stated goal is to sell enough to make enough money to finance the next year's print run.

Other small publishers may have print runs closer to 1k. I think I heard that Plenary games reprint of Fresh Fish was in that range. Hangman games also produces games in numbers like this, although I believe that they have a system set up so that only certain components need be purchased in the full run, others are made as orders come in. I also believe Richard Breese typically makes his games in a number close to this size. These games are also partially hand-made assembled. It is tough to make profit at this print run size, and that doesn't even account for the costs of your time. Still, this is the size at which you have a better hope of selling your product.

Some designer/publishers will do a very small production of around 100 to 300 games or so. A sort of crossover between traditional publication and rapid prototyping. These will then be sold primarily at conventions (specifically Essen) and possibly the internet. Thus distributors are largely removed. This tends to result in more expensive games, but also a better chance that the investment will be recovered. Of course, in this case booth and travel costs should also be figured in. Winsome games follows this model as well.

To be reasonably profitable you need to have a good product, lots of capital and a print run of at least 10k. You also need a good marketing strategy, retailer awareness, etc. Days of Wonder is a terrific example of how a company with enough capital, a focused plan, good marketing and good product can quickly enter the market and actually make a profit in this field. It is worth noting that I have heard that most distributors prefer to deal with companies that have multiple items in their product line, so really you are talking about multiple games that will appeal to similar markets and all justifying a 10k or more print run.

Hope that helps.

Brian

Chad_Ellis
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Profit from boardgames?

PghArch wrote:
To be reasonably profitable you need to have a good product, lots of capital and a print run of at least 10k. You also need a good marketing strategy, retailer awareness, etc. Days of Wonder is a terrific example of how a company with enough capital, a focused plan, good marketing and good product can quickly enter the market and actually make a profit in this field. It is worth noting that I have heard that most distributors prefer to deal with companies that have multiple items in their product line, so really you are talking about multiple games that will appeal to similar markets and all justifying a 10k or more print run.

I think a small shop can be profitable at closer to 5K, but it's hard for a small shop (like Your Move Games) to do everything it needs to. For "real company" status, I think you're right with 10K. Another factor to consider is that no matter how hard you test, some games will flop for reasons you couldn't anticipate. So you can't just say, "Well, at 3K or 5K if I sell 85% of my product I'm in good shape," because you have to account for the games you make where you'll sell 10% or even less.

The flipside to this is that the gaming market is as much about hits as it is flops. If your game is a hit, you can do another print run. If it's a mega-hit...well, I read that when Ticket to Ride won Spiel de Jahres (sp?) they did a print run of one million copies.

This also means if you don't have capital you can consider making small numbers of good quality products and concentrate on getting them out there. If one of them does well, you can approach a major company with the idea of doing a larger run. Pair-of-Dice games has gotten two of "their" (really his) games noticed by Games Magazine's top 100 list.

Hugs,
Chad

Anonymous
Profit from boardgames?

Wow. Really great information here. Thanks so much, all!

Has anybody had any experience with hiring graphics people? How much is typically charged for graphic design for doing the package? Does this include illustration and if not how much in comparison do you charge for that?

thanks again!

Anonymous
Profit from boardgames?

Read above thread.
In terms of scope of questions concerning graphic design when I said "package", I meant the whole package including a board, rules, cover some tolkens and cards – not just the box package.

thanks
mike

Oracle
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Profit from boardgames?

zaiga wrote:
So, if I interpret your numbers correctly, a game that sells for $39.95 in the stores was sold to distributors for around $16 and produced for around $5, assuming a 10k print run. Sounds reasonable.

It sounds right, but I'm not so sure it sounds reasonable. It seems like far too much to lose in distribution expenses. The designer and players both lose and the only winners are the middle-men. It seems very unreasonable to me.

You can sell this hypothetical game game for $39.95 at retail or $19.95 from your website including shipping and still make the same profit. Why doesn't a company like Alea with the repetation to move a lot of stock do just that. PR is a $38 List. So it should be $19 straight from Alea. At those sort of prices I'd have bought their whole product line by now.

Actually, I'm probably going to buy the computer game World of Warcraft when it's released on Tuesday and I've been thinking about the same issues with respect to that game. It's an online game that will cost $15/month to play and has a $50 retail price including the first month of play. Assuming the same sort of numbers for a computer game, of the $50, they get $20, and from that have to manufacture a high-quality printed box, CD and DVD, and manual. There's also a pre-order box which is essentially free but requires the game maker to print a second high quality box and a novel.

It seems to me they'd make more profit just letting people download the game for free and then make them pay the $15/month right from the start. The $50 cost creates a fairly large barrier to entry and they'd probably get a lot more customers without it as well.

Jason

Anonymous
Profit from boardgames?

Oracle wrote:

It sounds right, but I'm not so sure it sounds reasonable. It seems like far too much to lose in distribution expenses. The designer and players both lose and the only winners are the middle-men. It seems very unreasonable to me.

You can sell this hypothetical game game for $39.95 at retail or $19.95 from your website including shipping and still make the same profit. Why doesn't a company like Alea with the repetation to move a lot of stock do just that. PR is a $38 List. So it should be $19 straight from Alea. At those sort of prices I'd have bought their whole product line by now.

Well, your analysis seams to be on. Most distributors won't carry a game unless the manufacturer sells it for retail on their website, which most publishers do more as a convenience for customers than as a primary sales source. See Columbia games as a key exception to this rule.

As to whether it is reasonable, it seems that you are suggesting that the distributors and retailers should be able to sell games, make a profit and keep prices lower. Certainly some web-retailers have done this.

Finally, computer games are a completely different topic and really shouldn't be compared here. Volumes, costs, distribution and support are all vastly different than in the realm of printed games.

Brian

Chad_Ellis
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Profit from boardgames?

zaiga wrote:
So, what's considered a "normal" print run size for a small publisher then? 5k? 3k? 1k? What kind of volume do you need at the least to be able to make a decent profit?

Any of those numbers are possible, depending on the ambitions of the publisher and the means they have to promote and distribute their games. A well-known trap in game production is that the numbers only start to look decent at a 5K print run...so you print 5K copies, sell 500 and learn that "unit gross margin" doesn't count for much if you have to write off most of your stock! :)

Your Move Games is currently in the process of seeing how much this trap applies to us... ;)

I've spoken with small publishers that do 2K and 3K runs, and then there are the "by hand" guys who may do a run in the hundreds and who package many of the components themselves. When you're making hundreds of games it's pretty clear that you're a hobbyist who is paying for his hobby (and perhaps waiting for the breakout game that will get published in larger scale). At 2-3K it's very hard for me to see how you can possibly do more than break even, if that. Your unit costs are just going to be too high relative to the competition, so unless you cut your margin down to killer levels your game will look pricey for what's in the box.

Hugs,
Chad

Chad_Ellis
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Profit from boardgames?

Oracle wrote:
zaiga wrote:
So, if I interpret your numbers correctly, a game that sells for $39.95 in the stores was sold to distributors for around $16 and produced for around $5, assuming a 10k print run. Sounds reasonable.

It sounds right, but I'm not so sure it sounds reasonable. It seems like far too much to lose in distribution expenses. The designer and players both lose and the only winners are the middle-men. It seems very unreasonable to me.

You can sell this hypothetical game game for $39.95 at retail or $19.95 from your website including shipping and still make the same profit. Why doesn't a company like Alea with the repetation to move a lot of stock do just that. PR is a $38 List. So it should be $19 straight from Alea. At those sort of prices I'd have bought their whole product line by now.

"Get rid of the middleman" is often a rallying cry of people who think that channel costs (distribution and retail) are too high. One of the premises of the dotcom boom was that retailers could eliminate the costs of physical retail and that the prices they would offer would offset any barriers to purchase online.

Of course, it's different for a new publisher like me, but when Your Move Games is one of the big boys we're still going to get a lot out of our channels. It's not just shelf-space -- retailers run demos of our products, tournaments, provide expert recommendations, etc. Even if there were enough online customers, you would lose that if you sold your products at a level that made it impossible for retailers to compete.

Another thing to consider is that your estimate for how much of a cost reduction is possible is probably than reality. As evidence, look at the online specialty retail shops like funagain.com and gamefest.com. They are buying from distributors at 50% off MSRP and yet typically offer discounts of only 20%, implying a markup of 60% -- or $12 -- to cover the costs of taking orders, packing, shipping, etc. This is with scale and flexibility that no publisher could match -- they only order what they need and can sell to any game buyer. A publisher who makes 5K or 10K of a game eats whatever doesn't sell; online retailers buy only what they have demand for.

There's also a BIG risk to adding a major mail-order business to your publishing business. You have to take on new expertise and substantial new overhead, both of which complicate running your business dramatically.

As a publisher, I share the gut reaction that something is amiss when a game selling for $39.95 "only" sells for $16 to distributors. And I've taken on an additional cost by using Impressions to consolidate my distribution. But I'm very glad that this expensive system is out there!

Hugs,
Chad

fashun_diva
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Joined: 12/31/1969
Profit from boardgames?

Hey Chad,

Just a off-topic question... how is Impressions working out for you? Have they been very effective in marketing/distributing your game?

I am considering using Impressions but am not too sure if the end-results will justify the fees I would have to pay them....

Any input wld be greatly appreciated!

eve

Z-Man
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Joined: 01/01/2009
Some info regarding distribs, print runs, etc. LONG

Folks,

I'm going to give my opinion on some of the latest posts rather than quote a bunch and answer.

"Why not get rid of the middleman?"
Answer: Cause you ain't gonna sell enough to justify doing any kind of print run.

Unless you are a major publisher with a core audience for your games, the amount of games you will sell online will be pitifully low and will net you probably less in monies than if using a distributor.

Having a distributor, or actually several distributors, you have a good shot of selling 300 or so games initially - this means a new company with an unheard of product. How many copies you think you will sell online if you are an unknown company with an unknown product?

Let's do some numbers. Assume your game retails for $24.95. Through distribs you sell 300 copies at $10 - that is $3000. Online you'll sell, what, 100 copies? I think that is overestimating but let's say 100. That's $2495. Of course we can't quantify sales in any channel while missing many other factors, but I know many pdf games under $10 that barely sell 50 copies.
Still, in my example above you'd need to sell another 20 games to catchup up to the distribs. The other factor to consider is that one assumes that your product is in more stores which means more people see it and it can result in faster sales. Not only that but the 300 games is the initial sale so you'll get all that money owed with in 60 days. You are not going to sell those 100 copies in one month.

"What is the typical print run?" "And is it enough to make a profit?"
Answer: I don't know if there is a typical print run but I'll tell you that I normally do 3000 copies of a new game. And yes, you can make an ok profit.

There are so many factors that I can't break it down easily, but if you price your product well, using the cost to make the product and freight as a basis, then you can see what you need to break even and what profit you would make if you sold everything. And you usually don't need to sell everything to make an ok profit: but you have to look at your numbers.

Here's an example from one of my games, Ideology. It cost me a little over $4 to get the game done, plus freight to my warehouse, for a print run of 2500. Why do 2500 and why price it at $24.95? I was new to board games, competing with better looking more expensive German board games. I needed a low price point. I also did not wish to risk so much more money so I took a chance with a smaller print run (thus paying a higher per unit price). But doing the math, I knew it would take me about 1100 games to break even at the $10 wholesale cost. I know I have some reputation and lots of distributors, so could sell 400-600 games intially (I actually sold near 700-800 initially). So the investment was worth the risk: if it flopped after only selling say 700 games, I'd be out a few thousand dollars. I thought I could take it - and it worked out: I've now sold over 1500 games, almost a year later. The numbers are not great from a good business perspective, but I made my money back and am making a profit, though it took a lot of time.

The point is that you CAN make ap rofit with a print run of 3000 games if you set the retail price right according to what you are paying for it.

"Distributors will only take you if you have multiple games for sale"
Answer: Nowadays that is more likely. Howevew,r if you market your game, go to the GAMA Trade Show (GTS), get the word out on your game to retailers and consumers, then distributors might seek you to carry your one game.

Impressions works for many because the distributors can do the one-stop shopping thing. Is it worth the money? You have to figure out that cost and see if you can make a profit after paying that percentage.

I know Aldo, owner of Impressions -a great guy: if you do go with him he'll work for you. But if your product doesn't sell, well... it's business.

I'll stop here. Hopefully I've illuminated some things for someone.

Chad_Ellis
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Profit from boardgames?

fashun_diva wrote:

Just a off-topic question... how is Impressions working out for you? Have they been very effective in marketing/distributing your game?

I am considering using Impressions but am not too sure if the end-results will justify the fees I would have to pay them....

Hi Eve,

It's too early really to know, but my initial impression is moderately positive. Here's what I think we've gotten so far:

1. Access to nearly all major distributors. All that really means is that we're in their catalogs, but even that is something. It means that when you're trying to push your product to retailers you can tell them you're available via any of their distributors. That makes life easier for them and tells them you're at least somewhat a serious player.

2. Reduced shipping costs. One shipment to Impressions goes out to distributors on a weekly basis. That's a pretty big deal, both in terms of time and cost. It also means that if a distributor runs out he can reorder as needed rather than waiting for ENOUGH demand to meet our minimums. Games often reach a "trickle" demand level, and you never want your distributor to get an order for a few games, decide he won't get enough to justify a new order, and thus tell the retailers that you're out of business or otherwise try to get them to order something else.

3. Information. Aldo let us know about two distributor/retailer shows (one with Alliance, one with ACD) that we hadn't heard about and going to those let us show our products off to a bunch of retailers and get some decent sales.

We're not doing a lot of advertising at the moment, but when we do I think Aldo will be useful in identifying which magazines to use and possibly in helping us by ads at below rate-card costs. But at the end of the day, Impressions is close to a one-man show with fifty clients and hundreds of products. Simple math says he can't spend much time pushing any individual product and at the end of the day you're going to have to create the demand yourself. As I see it, his value proposition is greater in terms of easing your access to distribution and thus to retailers.

Hugs,
Chad

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