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The Truth about Kickstater

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Sat, 11/23/2013 - 20:37
questccg
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Okay,

So I figured I'd share my Kickstarter experience (so far). I have spent numerous hours pondering my reward levels and funding goal. What get's to me is that no matter how much the amount, I never seem to make any money...

I did a pie chart to see how where the money was really going. Over 30% goes into Shipping from me to contributors! Another 20% goes to Amazon Fees and Management Fees. That's 50% already, and I haven't even talked about production!!!

So I though if I could UP my production and the number of contributions, I could maybe squeeze some dollars from that. Here's the 1st TRUTH: from my funding goal, 20% of it is Artwork (What I am trying to fund). By reaching my funding goal, there is ZERO room for profit. That's right, all that we make is the money that will go into the Artwork (20%). Fact #2 is coming soon...

My bright idea was to have some *Stretch Goals* which would mean some extra pocket change. Here's TRUTH #2: to earn more, you need to spend more. So production costs about 25%... And it's a percentage that is FIXED. You earn MORE, you need to SPEND MORE (to produce more game boxes). The other problem is that *Stretch rewards* are generally "freebies" you give to ALL your contributors.

If you have been doing the math alongside with me, all we have left is 5%... YES! That is what over 6 months of development time comes out to!!! It's like ALMOST nothing.

Even if you make $100,000... That's ONLY $5,000!!! How are we expected to pay the bills for only 5%. Clearly designing games with Kickstarters is not the way to earn a living... It doesn't even begin to scratch the surface of the reality behind crowdfunding. I am giving it to you STRAIGHT: 5%...

Note: My funding goal and stretch rewards are LESS than $50,000 (I'm not going crazy). That means profit of less than $2,500! And now you wonder why everyone is not all that excited about Kickstarters. :P

Clearly designing tabletop games is a *serious* hobby... But don't expect Kickstarter to fund that outdoor swimming pool you have been dreaming about! ;)

Note 2: My 5% is more like 3% because I have professional fees (Graphic Design) and a software license to pay... Maybe I'm left with $1,000 in pocket change! :}

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Sat, 11/23/2013 - 21:23
#1
questccg
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In case you were wondering...

Had there been more profit, I would have probably invested it into building a *website* for the game...

We have a lot of Digital Design students from a college not far from my home. Many of these students accept freelance work and could potentially design a *nice* looking website.

However from the above figures - I won't have enough to pay for a website!

This might be something I would need to negotiate with my future publisher. That's right after our Kickstarter we will continue talks with a publisher we have already approached. They are interested in the game (and the result of the Kickstarter doesn't necessarily spell doom for us). So we would have to see if they might be interested in further marketing the game with it's own website...

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Sat, 11/23/2013 - 21:23
#2
X3M
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Here is a link of really bad

Here is a link of really bad endings:

http://www.businessinsider.com/3-kickstarter-campaigns-gone-bad-2013-6
http://www.joystiq.com/2013/11/18/a-kickstarter-developer-in-the-final-s...
http://betabeat.com/2012/03/oh-so-heres-why-kickstarter-lets-projects-ge...
http://www.ign.com/blogs/13sponge3/2013/10/14/why-is-kick-starter-bad/
http://www.inc.com/erik-sherman/when-kickstarter-campaigns-go-bad.html
http://a.wholelottanothing.org/2012/01/lessons-for-kickstarter-creators-...

Whoever invented kick starter. Must be really rich by now. Remember, 5% goes to kick starter. How much money has been funded?

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Sat, 11/23/2013 - 21:25
#3
X3M
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Ah, you updated another

Ah, you updated another post.
Website is not a bad idea.
I was planning the same. But only after I figured out everything that I need to get the game working.

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Sun, 11/24/2013 - 00:26
#4
questccg
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Nothing to hide

X3M wrote:
Remember, 5% goes to kick starter.

Don't forget that another 5% goes to Amazon for transaction processing.

X3M wrote:
How much money has been funded?

Our campaign is not live yet. We plan to launch it in the middle of January 2014. I am just doing preliminary work to try to make certain the campaign will be successful. People who have read my blog know that I forgot to include the cost of shipping to contributors. This was a big omission... Correcting the mistake meant that the funding goal needed to be DOUBLED!

I really want to deliver on the Artwork for the game... I have a very good artist and I can't wait to see what he can produce. So I'm content with making $0.00, the bottom line is that we need enough to fund the Artwork. From that standpoint it is pretty awesome thing...

It's funny that in one of your articles, the person launching the Kickstarter is actually worried about TAXES. Kickstarter pledges are considered DEBT not profit. You owe for a product. Once you convert that debt into sales (once items are shipped), then once you calculate all of the costs, the profit remaining is very little. Many people have forgotten to include shipping and it needs to be factored in otherwise you will lose pledges.

Note: Over $889 million has been raised on Kickstarter. (See http://www.kickstarter.com/help/stats)

5% Kickstarter fee = appx. $45 million earned.

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Sun, 11/24/2013 - 07:17
#5
anonymousmagic
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You could include more

You could include more incentives that don't require you to ship physical products. Is there anything you could offer that you could send out digitally? Of course you should make that difference crystal clear in the campaign.

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Sun, 11/24/2013 - 08:41
#6
X3M
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Wait a minute. Here in the

Wait a minute.
Here in the Netherlands. Some companies simply tell you that you need to pay for shipping yourself. The farther you live, the more you pay. And its up to the customer to see how expensive it is.
I order a lot for my company all the time. Only if I reach a certain threshold, the shipping is "free" for us.

You could tell the customers that. And provide a list of al the countries too.
Don't forget to mention that your stuff is breakable and soft.

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Sun, 11/24/2013 - 08:46
#7
anonymousmagic
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X3M, Yes, normally speaking

X3M,

Yes, normally speaking people are supposed to pay for their own shipping, but if you do that on a kickstarter project, you wouldn't have to worry about shipping to begin with, because people wouldn't support the project. The more you offer for each pledge, the higher the chance pledges that amount of money to support you.

That said, I've seen multiple kickstarters that specified additional shipping fees for physical items to be sent to backers, so it does have precedent.

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Sun, 11/24/2013 - 09:13
#8
Ristora
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Yeah, don't include shipping

Yeah, don't include shipping in your costs. People need to pay for shipping themselves. On every kickstarter campaign I have supported I have paid shipping.

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Sun, 11/24/2013 - 09:20
#9
anonymousmagic
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Or if you absolutely want to

Or if you absolutely want to offer shipping, restrict it to the people who pledge the most to you. That tends to make this particular choice slightly more cost effective.

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Sun, 11/24/2013 - 10:38
#10
X3M
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Right, Like saying, support

Right,
Like saying, support 10 more dollars, then you get, this, that, and "free" shipping.
20 more dollars, more of this, more of that, and "free" shipping over seas.

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Sun, 11/24/2013 - 16:56
#11
questccg
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As suggested by Kickstarter

Kickstarter recommends you add shipping to the price of each Reward level. That is their recommendation.

Obviously you can decide to say that shipping is *Extra* and provide a shipping table... but my experience has been that contributors don't like that very much. So what that means is that you will lose some pledges.

Also you can *restrict* your orders to the Continental U.S. (which is what I plan to do). What this does is that it restricts orders to come from only U.S. residents. This is a form of controlling shipping since it's like from Maine to California... And is somewhere between $20.00 to $25.00 (depending on weight and distance).

Nobody offers *free* shipping, it's about 30% the costs of a reward. Shipping often costs more than the price it costs to manufacturer the product (as stated by Kickstarter). That is why they recommend pricing shipping into your reward levels.

Where you can save is multiple items rewards. This means you use one (1) box and include several products in that box. This is good because you only pay the shipping ONCE (and it might be a little bit more expensive because of weight - but overall it's a way to save money).

Higher rewards usually means LOWER profit margins. So if you offer a reward for $150, you are probably discounting the reward and it means a lower margin. What this means is it is MORE lucrative for the designer if people choose the cheap reward (let's say $50) because there is no discount off that price. Therefore with the cheap rewards, you make the HIGHEST margins...

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Sun, 11/24/2013 - 17:10
#12
anonymousmagic
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questccg wrote:Obviously you

questccg wrote:
Obviously you can decide to say that shipping is *Extra* and provide a shipping table... but my experience has been that contributors don't like that very much. So what that means is that you will lose some pledges.

Also you can *restrict* your orders to the Continental U.S. (which is what I plan to do). What this does is that it restricts orders to come from only U.S. residents. This is a form of controlling shipping since it's like from Maine to California... And is somewhere between $20.00 to $25.00 (depending on weight and distance).

Yes, if you give a shipping table and expect backers to pay for shipping, you're bound to lose pledges, so why in the name of sanity would restrict orders to the continental US? That would greatly reduce the pool of potential backers in an already limited field.

You'd be angering the people of Hawaii just because they happen to live on an island.

If you're trying to raise money, people will understand you can't offer everything for free, but they won't understand if they can't get what you are offering AT ALL. Television rights are an excellent example -- people don't wait for the rights of a series to be sold to their country. They go looking for the latest episodes online.

Don't lock out potential backers -- don't limit the US. And while we're at it, accept as many forms of payment as you possibly can because if you limit backers to using credit cards and they don't have one, you've lost your pledge right there...

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Sun, 11/24/2013 - 17:15
#13
questccg
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From before...

Note: The last part about MARGINS is rather IMPORTANT. Basically I want my buyers to *enjoy* their gaming experience with the game. And so I *recommend* people buying a minimum of two (2) game sets (or boxes). This allows players to dual, 1 vs. 1. But in truth, it terms of earning pledge money, I would rather prefer two (2) buyers of a SINGLE game set (or one box). That is because I make a HIGHER margin on the single game set.

So the MOST money I make is on the lower-end rewards (Funny right?) And then I make slightly lower margins on the medium to high rewards (because of discounting).

When I say discounting, I mean that I reduce the price by $10.00 if you buy two (2) game sets. Plus you save on the shipping (one box instead of two). This kind of discounting lowers the margins... It also encourages contributors to pledge more money. But it's still MORE profitable for me to have only cheap pledges! :)

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Sun, 11/24/2013 - 17:28
#14
questccg
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Shipping is COSTLY

anonymousmagic wrote:
Yes, if you give a shipping table and expect backers to pay for shipping, you're bound to lose pledges, so why in the name of sanity would restrict orders to the continental US? That would greatly reduce the pool of potential backers in an already limited field.

Yes this is true... But shipping to Australia is $62.00+. Uh, that's like more than the REWARD level ITSELF! That means DOUBLE the amount/cost just to ship there...

So no thank you, I don't want logistic nightmares and dwindling costs/margins because of EXPENSIVE shipping amounts... I'd rather stick to the good, old U.S.A. (excluding Alaska and Hawaii).

Lot's of people have gotten ROYALLY SCREWED because of shipping costs... I don't plan on being one of those people! :)

Note: That there ARE cheaper shipping options, however they do NOT offer DELIVERY CONFIRMATION. This is essential... Because contributors can complain and say their order was NEVER delivered... This is another LOGISTICS nightmare. Trust me, YOU NEED "Delivery Confirmation" and at $62+ for Australia, I'm not interested...

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Sun, 11/24/2013 - 18:41
#15
anonymousmagic
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Yes, shipping prices can get

Yes, shipping prices can get ridiculous, but if some Australian is willing to back you and pay for the shipping, then why would you want to stop them? By all means, make sure you don't have to pay for everything so you're left with some funding, but I don't see the point of locking out people who are willing to pay or even pay extra. Aren't those the people you're looking for?

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Mon, 11/25/2013 - 01:09
#16
questccg
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El-Cheapo

anonymousmagic wrote:
...but I don't see the point of locking out people who are willing to pay or even pay extra. Aren't those the people you're looking for?

Like I said in my earlier post: I make my HIGHEST MARGINS on the CHEAPEST rewards!

So really what I would want is lots of gamers interested in the game - but who don't want to spend a lot of money. Funny thing, this is MOST gamers... They want a deal. My cheap reward (for the game) is exactly what most funders are looking for: they want the game at the best possible price.

Instead of going against the grain, I figured - might as well do as people want. Sure there are HIGHER rewards with either more game sets, or more games, but as I said, I offer DEEPER discounts to the higher rewards. And so the result is smaller margins. You get much more value if you buy four (4) sets for $150 (includes shipping). But you would save like $50.00! That's a DEEP discount!!! That's about $30 for a game set...!

So spending more, doesn't mean more funding. In my case the single box (one set) reward earns me my BEST margin...

Note: There are too many countries around the world to factor in for shipping. You can't say "International" $25.00. Some places it's MORE expensive (like Australia which is $62+). So tables don't work... If you want the extra funding, you could RISK it... But I'm not willing to be wrestling with all kinds of shipping prices, just to find out I'm not making my margins...

Update: Doing some more research into shipping and I have found that to Brazil the cost to ship a package (box) WITH "Delivery Confirmation" cost a WHOOPING $89!!! Can you imagine that... It's only South America and it cost $89! People who have suggested using an International Shipping rate of $40 are LOST. Brazil = $89... More expensive than to Australia ($62+)... I know now for CERTAIN, I don't want to mess with International shipping... It's PRICEY and UNPREDICTABLE.

I also checked to Italy (Europe) and WITH "Delivery Confirmation" the cost is $76. No where near the $40 some people were suggesting...

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Mon, 11/25/2013 - 06:10
#17
TheKeyLosers
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That sounds like a terrible

That sounds like a terrible international shipping option unless the game is insanely heavy. I think a lot of the best Kickstarters spend a lot of time working out how to get their product out globally but affordably.

Personally I've never backed a project with "Delivery Confirmed" shipping but always had my packages arrive (the project owner has confirmed when they've been sent and they've been trustworthy enough that I'm happy with it).

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Mon, 11/25/2013 - 06:33
#18
anonymousmagic
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Have you checked multiple

Have you checked multiple companies? I have no idea how heavy your game is, but I've had some quite heavy stuff shipped from the US to Europe with a LOT lower price on shipping. Unfortunately, I have no clue which service they used at the time.

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Mon, 11/25/2013 - 06:38
#19
richdurham
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Kickstarter isn't for profiting?

The shipping issue is a sticky one, for sure. I know Kickstarter has a feature where international backers (notice I don't say purchasers) can be charged an additional fee for shipping rewards.

But one of the notions you have running through this thread is about margins and profit - all really good concerns, but more for a store than a crowd sourced artist-space. Contrary to how the boardgame section seems to typically present itself (that is, as a preorder system), Kickstarter itself would argue against that. It's for seeing a creative vision of a thing come to fruition, and that's it.

Even designers of games don't come out and say the money they get is going to their pocket as profit. They do a breakdown, like you did above, accounting for all the money. Here's an (adequate, but barely) example of a breakdown for a game: on this project near me.

As an extreme example on the "I'm profiting; this is not really art" side of things, look at this project asking for $500 to cook an onion and put it together again. The reward is access to the 3-5 minute youtube video he'll make. Unsurprisingly, he won't make his funding.

I guess I'm fuzzy on what you want out of Kickstarter? Can you clarify for me?

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Mon, 11/25/2013 - 07:01
#20
anonymousmagic
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Slightly off-topic

Hi Rich,

I think I know what he's talking about, but I'll let him answer.

I just want to comment on the ridiculousness of that onion thing. I'm completely in favour of researching cooking processes, but I have no clue about the guy's qualifications and the amount of money he's asking for is ridiculous. I could do that for $50 tops (including the price of the onions, the gas and the time it takes me to do it).

That said, I think the onion guy is beating a dead horse. As far as I know that research has already been done... He'd have known if he investigated the literature, before starting that onion kickstarter.

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Mon, 11/25/2013 - 07:58
#21
pelle
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kickstarting

I know a few kickstarters got crazy and made lots of money, but still isn't the idea as I understand it to kickSTART something, to get a first print-run done? Have seen successful kickstarters write about how the most important thing about kickstarter is the marketing it does for you, not the money you are likely to make. The expected (non-superhit-kickstarter) path would be for the kickstarter to give you enough to complete and print a first run of the game (probably the most expensive run) and then with the help of that marketing and now having everything set up you can do your real mass-production run with much better margins? Kickstarter is intentionally not making it easy to take multiple orders from a single customer because they don't want to be just some web-shop or pre-order system, but it is about helping someone with funding and get some reward for doing so.

There are a few things I have ordered that were the results of kickstarter, but I bought them after the campaign was over when the product was already funded and in full production. Counting on the kickstarter itself to be THE print-run you are going to make does not surprise me at all if it results in zero profit.

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Mon, 11/25/2013 - 13:25
#22
talmorgoth
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Aaaaaaand now my day is shot...

Well, I was wanting to do a Kickstarter to fund the art work for my game but after reading this I want to just crawl in a hole and cry.

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Mon, 11/25/2013 - 13:28
#23
anonymousmagic
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talmorgoth wrote:Well, I was

talmorgoth wrote:
Well, I was wanting to do a Kickstarter to fund the art work for my game but after reading this I want to just crawl in a hole and cry.

Your project will be different than that of questccg. Who says your project won't work just fine with the Kickstarter process?

If that doesn't work, maybe Indiegogo does.

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Mon, 11/25/2013 - 14:29
#24
talmorgoth
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Don't get me wrong

Oh yeah I have no doubt mine is different and may be successful. That was just a depressing read so early in the morning and panic mode kicked in. =)

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Mon, 11/25/2013 - 16:51
#25
questccg
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Sharing in the venture

richdurham wrote:
I guess I'm fuzzy on what you want out of Kickstarter? Can you clarify for me?

Well for starter's it would be nice if a JOINT-VENTURE, an artist and me, could SHARE in some of the returns. Right now the only person making any money would be the artist. I wanted to be able to take away some profit for the many months of investing time (I designed the game, I wrote the rulebook, I created artwork for the game, I did layouts, I did all the prototypes, etc.) Not too much but somewhere along the lines of what my artist is going (or could) make.

I too have put in a lot of hours and effort in making the game. Does it seem so unreasonable to expect a little in return?

That having been said, the Kickstarter will be used to FUND ARTWORK. But it could have been nice if there was some money left over to design a website...

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Mon, 11/25/2013 - 17:21
#26
anonymousmagic
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questccg wrote:I too have put

questccg wrote:
I too have put in a lot of hours and effort in making the game. Does it seem so unreasonable to expect a little in return?

That having been said, the Kickstarter will be used to FUND ARTWORK. But it could have been nice if there was some money left over to design a website...

If you want to build a website, shouldn't you build that into your funding goals going in? Anyway, the biggest expense is the hosting. If you really have faith in the game you're making, funding that website should be as easy as selling around 2 games a month. Your initial investment could be $10-30. You do expect to sell games after sending stuff out to your backers, right?

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Mon, 11/25/2013 - 17:25
#27
richdurham
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Thanks, Questccg for

Thanks, Questccg for clarifying, I think Pelle said better what I was trying to get at in terms of the purpose of Kickstarter for boardgames. In your situation, I'd look to an example like Michael Mindes over at TMG, who has made a habit of kick starting new titles. Personally, I think it's treated a bit too much like a preorder store with TMG, but they've been successful.

I assume you've listened to podcasts like Funding the Dream, and if not I highly recommend it as a good source of advice.

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Mon, 11/25/2013 - 17:39
#28
questccg
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TBD

anonymousmagic wrote:
If you want to build a website, shouldn't you build that into your funding goals going in? Anyway, the biggest expense is the hosting. If you really have faith in the game you're making, funding that website should be as easy as selling around 2 games a month. Your initial investment could be $10-30. You do expect to sell games after sending stuff out to your backers, right?

Rewards must be *realistic*. You just can't charge what you want and expect people to pay. If you have reviewed my OP, you will see that the margins are very small. With those margins, I can't have a website DESIGNED. You said the biggest expense is HOSTING, that is FALSE. The biggest expense is hiring a Freelance Website Designer and Graphic Designer to DESIGN a website.

As far as the product goes, we are not certain what will happen after the Kickstarter. Obviously if it is successful we will produce all the artwork and do a First-Run Production (to satisfy all pledges). We will probably approach a publisher with the game... But that also is not 100%... So what happens AFTERWARDS is still left to be defined.

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Mon, 11/25/2013 - 18:19
#29
TheKeyLosers
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questccg wrote:You said the

questccg wrote:
You said the biggest expense is HOSTING, that is FALSE. The biggest expense is hiring a Freelance Website Designer and Graphic Designer to DESIGN a website.

You can buy a good-looking CSS template for about 20 dollars. Fill it with some nice artwork you've got from the Kickstarter, aggregate any good reviews and let people know where they can get the game.

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Mon, 11/25/2013 - 20:17
#30
larienna
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Quote:Well, I was wanting to

Quote:
Well, I was wanting to do a Kickstarter to fund the art work for my game but after reading this I want to just crawl in a hole and cry.

You could use The game crafters with no artwork. Or you could find royalty paid artist.

Quote:
You said the biggest expense is HOSTING, that is FALSE. The biggest expense is hiring a Freelance Website Designer and Graphic Designer to DESIGN a website.

I am an ex computer programmer so my comments might be a bit biassed, but you can build up a website using a wiki system in less than 5 minutes. Then all the concent of the website can be written without any coding experience. You will not have fancy flash app, but you'll have a working website with the information you want published.

You know my website pretty well, they are all done with Pmwiki with a different skin for each site. There are tons of wiki system out there. Even BGDF use a wiki system.

Quote:
Even if you make $100,000... That's ONLY $5,000!!

Like some people said before me, I'll repeat it again and again and again for you:

Quote:
"There is no monetary profit to be made from board game design"

It's a sad truth, but you have to accept it. Even I have problems accepting it. Maybe with technological progress, new publishing methods will be available making them more profitable in the future. But now, game design is a poor man job. We do it for fun, recognition and the pleasure of making people happy, not to pay the rent

I would kill people to make 5000$ with a game ... OK, maybe kill in game. The guy who designed the carcassone dice game made about that amount of money for a game that sold more than 50000 copies. That is about 10 cents per game.

There was also a thread on BGG called something like "If there is no profit to be made, why does the industry still exist" and mostly the industry exist because people want a steady job, not to make profit. Game production could lead to a steady job, game design, not a chance. This is why they are using freelancers.

Also like others said, kickstarter is there to give you the initial kick. You are going to get published with little profit. Then if the game work, you can print and sell the game again and now make profit because the art and other things are already paid and you do not have to repay for it.

There was also an interesting sticky thread on Board game geek that explained how to plan your kickstarter campaign. Maybe you should take a look a it when the site gets back up (anybody has the link?)

So yes there is an interest to use kickstarter as publishing game, it's not perfect, there are some risk if you do not plan correctly and most of all, you will not get rich.

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