Starting Your First Kickstarters

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A friend asked for some handy tips for their first starter. This has inspired me to share a few things that we at Tangent Artists have learned from our experience:

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If I could give you one tip, this would be it:

  • Keep in mind that your production cost (the amount you need to make a minimum order with the printer) and the “funded goal” are not the same thing. Digital products are the easiest to factor, in that they are almost pure profit; a $10 digital backer means you’re $10 closer to your fund goal and, after expenses (taxes, KS’s cut), have $9 towards the production cost. If you’re dealing with physical products, don’t forget that they give you a false “boost” towards your KS funded goal. For example, a $40 backer with a $15 product and a $15 S&H (don’t forgot to include shipping from the printer to you and back out to backer) means you’re $40 closer to the funded goal, but only $21 closer to your production goal. In this sense, it’s better to have two-hundred $5 digital backers than fifty $20 physical backers (although, reaching two-hundred people might be harder). I’ve read plenty of horror stories about people who reached $20,000 goal for a $20,000 printing cost, only to end up going several thousand dollars in the red; they reached 20k, but after S&H, KS’s cut, and taxes, it ends up costing 25K or more.

Other Tips:

  • You can build and share the KS page before you launch it. This lets you get feedback from peers, but also lets you start promoting it in advance. Sadly, you won’t have the final link itself until the launch date, so it’s good to have a private promo page (ex. your website or blog) that you can promote. This way, you can update push people to go to your promo page for both the “preview” link, and then change the link later to an active “KS” link after you launch.
  • KS must approve all pages before you can launch it.. Once you’ve had feedback and are happy with the page, submit it for approval. This can take a few days, so do it at least 7 days before you need it. Once approved, it will give you the option of waiting before you launch, so you can let it sit on it for a while.
  • Backers will shun KS accounts that have never backed KS projects before; they believe you have to give to the community before you can take. Go find a dozen projects you like and support them, even if it’s for a tiny amount. If you’re a company, have a company account and have all of the members back their personal KS through the company, and you’ll build it up faster.
  • Have one “manager” setting up the page, levels and handling the KS updates. You can’t just let it sit for 30 days alone.
  • People like graphics. Have a video. Make sure it has a GREAT opening slide- this the first thing they see when the load the page, and when you share it on social media. Make sure you’re updating your progress with visual aid trackers.
  • If the person managing the page is a different person than the person doing the graphics, prepare all of the graphics for all of the different levels ahead of time. It might seem strange, but we needed our “funded” and three of our “stretch goal” graphics on day two.
  • Set your initial goal as low as you can go afford (assuming it’s not putting you in the negative). People are more likely to back something that is funded than something that is not.
  • Always have a cheap ($1 – $5) level. Even if it has no tangible rewards (thanks, glory, good karma), it allows people to tag you and follow your updates easier, and lets family and friends who have no interest in the product show their support.
  • Have different levels, but don’t overdo it. 3-6 is fine. More than 10 is a mouthful, unless there’s a specific reason why. More levels is also tricky in case you need to send messages out- KS lets you message all backers, or all backers in a specific group (ex. group A); however, if you’re messaging groups A-C but not D, you have to send it to groups A, B, and C individually; thus, if you have 20 levels and you’re sending it to 19 of them, you might be copy-pasting the message 19 times.
  • Have a slightly higher level with recognition; sometimes people will pay $24-50 just to have recognition on the finished product.
  • Have at least one large shoot the moon level. Don’t expect it to be taken, but you never know.
  • KS has strict rules about selling in bulk to merchants; I’ve seen some projects do it, but I would research the rules carefully first to make sure you’re not violating anything.
  • If you’re dealing with a digital product, calculate the longest estimated amount of time you need to deliver it. Then put the delivery date as DOUBLE that date. If it’s a physical product, QUADRUPLE it. That may seem like a stretch, but those dates come on you fast.
  • With stretch goals, digital rewards are your friend! If going with physical products, don’t be afraid to add it as an optional thing they can BUY by pledging extra. Again, a lot of people go crazy adding free physical rewards, which raises their production cost and shrinks the profit.
  • If you are adding an optional stretch bonus product, this can be handled by having the backers over pay and then respond to the survey which add-on product they want. However, MAKE SURE the survey has the optional bubble, “we didn’t pledge anything else, no add-ons,”; alternatively, allow for write-ins. We learned that the hard way, and you can only send out one survey.
  • Limit it to 30 days; you don’t want it to linger.
  • This is a rough estimate, but about 75% of your backers will be pledge on days 1-10, and the last 2 days. In between, don’t be scared by the lull. Be sure to still send updates every few days, and keep promoting outside. If it’s a game, I recommend G+ (there’s LOTS of gamers on G+).
  • Plan a lot more stretch goals than you need. A LOT. The levels these are best planned around price breaks for the printer (ex. cheaper to print at 5k, 10k and 50k). If there are no price breaks, you can set at anything you like. If I could turn back time, I would have spaced them further apart. We had ours set at a fixed increment (about .5K or 1K apart). Although it doesn’t look as clean, I would have spaced it at rising increments. Maybe use the Fibonacci thing (.5k, 1k, 1.5k, 2.5k or 4K), so it’s less than double. The hard part is judging the right amount. Too far and you lose momentum, too small and you flood the backers with too many goals- if you’re forced to do more than you had planned for, you risk creating subpar stretch goals, or hastily adding new physical products that might cost more than you originally estimated.
  • If you have multiple projects in mind, and your KS is starting to go into stretch goals, resist the pressure to merge the two together. There’s no shame in doing a smaller KS first and doing a second one later. If you have a successful KS under your belt, they’re more likely to back you later. Better still, when you do a KS in the future, you have all of the backer info, so it’s easy to promote.

Here are some other tips passed on from Evil Hat’s Kickstarter Guru, Fred Hicks:

  • Launch it on a Mon. night / Tuesday morning. Most office workers do all of their web surfing on Tuesday morning (after they finished Mon’s work).
  • If you’re KSing a physical product, don’t plan to make money from the KS itself; instead, set the selling “price” of the basic ks level (for a backer buying one unit) to be 2x the cost of the unit (including other costs), and then order double the number of product from your printer. Thus, if your KS sells 500 units, you order and ship out 500 units to backers, and have 500 units sitting in your garage that are already paid for; anytime you sell one of those extra units, it’s 100% profit.

That’s all for now. Hope it helps!

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Ecognomics – In the Home Stretch (Goals)

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In what’s likely to be our last Kickstarter themed blog for a while, we’re going to focus on Stretch Goals and Backer Levels.

From the creator’s pov, the goal of a stretch goal is obvious: to make more money, or to fund further projects. Of course, if you wanted to fund further projects, you could theoretically start a second kickstarter. (And, if money was all you really cared about, you’d likely skip all of this hobby stuff and go become a stock broker.)

WHY A STRETCH GOAL?

What is the point of a stretch goal? Here are some reasons:

  • A stretch goal encourages backers of a lower level to reinvest at a higher level. This can be because of a new level is created (that wasn’t there before), or because a higher level has become increasingly valuable.
  • A stretch goal encourages players to spread the word of the kickstarter to others, as having more investors join will increase the value of a level for all backers.
  • After a project has been funded, the stopping point is more abstract. However, a stretch goal gives a psychological end point that a promoter can “push” people towards. Whenever a goal is met, it gives backers a feeling of accomplishment, much like leveling up a character in an RPG.
  • As mentioned above, a stretch goal allows a creator to fund further projects. The advantage to tacking it onto an existing kickstarter is that you already have positive momentum, with a captive audience of people who have already given you some funds, and might be interested in similar products.

WHAT MAKES A GOOD STRETCH GOAL?

Of the panels and articles I’ve seen, the litmus test I’ve seen for a stretch goal is a two-part question:

  • Does the add-on depend on the base project? (Rather than being a stand-alone product in its own right.)
  • Is the add-on finished or near finished?

If the answer to both of the above is “no,” then it doesn’t sound like a good stretch goal item. For example, if you’re selling an RPG rulebook, going through the work of writing a novel for the setting is a poor idea, as it involves as much work as the rulebook. (Of course, if the novel’s already finished and edited, that’s just fine.)

HOW DO I OFFER THESE STRETCH GOALS ITEMS?

There are three ways to offer stretch products to members through Kickstarter:

1. Add-Ons – When a stretch goal is reached, you can give members the option of adding the item on as an add-on.

  • Pros – The cost is easy to calculate; easier customization (i.e. mix & match items); anyone can do it!
  • Cons – Because it’s not listed in the basic backer levels, backers are more likely to miss it; because anyone can add it on, it doesn’t encourage members to increase their level to a higher one.

2. Added to Old Level – The item is added onto to an existing back level.

  • Pros- Pleases current backers; encourages those who haven’t backed to jump in; Good for small, no-cost items (ex. desktop art); increases backers at lower level to upgrade.
  • Cons – Doesn’t encourage current backers to increase pledge (unless at lower level); increases cost without increasing revenue (more on this later.)

3. New Backer level – When a certain stretch goal is reached, the creator adds a new backer level, which merges an older level with the new product.

  • Pros – Increases backers at lower level to upgrade; provides more revenue; easier to track cost of new item.
  • Cons – If not promoted well, older backers might miss the new level; done too excess, can make you look greedy; less backer customization of products than “add-ons.”

PRICE BREAK-DOWN: BAD EXAMPLE

Imagine if you will a fictional Kickstarter creator named Steve. Steve has a really BAD kickstarter stretch goal set-up; we’re going to do everything wrong, just to prove how wrong it can be.

Kickstarter name – KittehPower! – Steve’s fake kickstarter is about releasing a photo book of kittens wearing superhero costume pieces. It has a modest goal of $100.00 (which includes KS’s cut & taxes) and only two backer levels:

  • $5 – PDF – Backers get a digital copy of the KittehPower! Photo book.
  • $20 – Paperback – Backers get a hard copy of the KittehPower! Photo book. (Cost: $10.00)

Very early into the campaign, the goal is met (Steve is happy). So, Steve adds a stretch goal. He really wants to raise $100.00 so he can buy a cheap photo editing software- with it, he hopes to more special effects to his Kittehs! He adds the following stretch goal:

  • $200 – If we reach $200, we will add 20 new pages of kitteh pics in the book.
Photo by Krzysztof P. Jasiutowicz. This file is licensed under the Creative Commons Attribution-Share Alike 2.5 Generic license. Alterations made by Dave Joria, because he was bored.

Photo by Krzysztof P. Jasiutowicz. This file is licensed under the Creative Commons Attribution-Share Alike 2.5 Generic license. Alterations made by Dave Joria, because he was bored.

Flash forward, the $200 money gets raised! Steve is so pleased, he offers all of his cat-superhero-photographer friends (of which he has many) a chance to jump into the stretch goals- he wants to pay his friends $100.00 each to add their own photos to the book. He adds a series of stretch goals to the kickstarter for $100 each, all of them saying:

  • $300 / $400 / $500 (etc)- For each $100 that is pledged, we’ll add another 20 pages of Kitteh photos to the book.

Why this is a Terrible Set-Up:

The model above doesn’t take a lot into account. Such as:

  • Kickstarter Inc’s 10% cut and taxes. (Although, technically, the software might be fileable as an expense on Steve’s tax return, but that’s a whole ‘nother matter.)
  • Any backers who bought a book are adding $20 towards the stretch goal, but only $10 to the profit.
  • By adding more pages to the book, you increase the cost of the existing product without taking any additional money from the backers who’ve already bought it.

Assuming that each the first $100 was made by having 10 new backers buying new physical books, let’s see how much this stretch goal “earned”:

First Goal:
+$100 revenue
-$100 cost (software)
-$20 (KS’s 10% cut and taxes)
-$50.00 ($10 Cost for each new book)
-$15.00 (Assuming 20 color pages adds $1.50 to the 5 new and 5 old books)
= -$85.00

Now, if Steve got really carried away and reached $600 (initial $100 + five stretch goals), you end up with:

+$600 revenue
-$100 cost (software) (1st Stretch)
-$400 for friend photographers
-$120 (KS’s 10% cut and taxes)
-$420.00 (30 physical books, each now Costing $14.00)
= -$440.00

And thus, a successful $600 equals a huge deficit. Now, just imagine his goal had been for $6000 instead: he might end up with a negative $4-5K.

HOW TO AVOID THIS:

1. If you’re running a digital only or “print-it-yourself” model (see last week), you’ve avoided ONE of the pitfalls already, in that the only costs to consider are for the creators.

2. If you ARE dealing with physical items, only introduce new stretch goal items through add-ons (ex. Pay $5 more to get this keychain) or through a new backer level (ex. The Deluxe level for $50).This way you’re never increasing the print or production cost of an existing, already-paid for item, like Steve did. (Poor Steve. He’ll never learn.)

3. Include your stretch goal level to include all inherent costs plus MORE. I’d recommend double. Like the “stockpile” business model, this means that every stretch goal you reach is paying for that stretch goal and the cost of the next goal too.

STRETCH GOALS: GOOD SET-UP

Steve’s friend, Zara, is running a game kickstarter. She has reached her goal, and wants to hire a guest author to write a new adventure for the setting. It’s a little short, and uses new new art, so her guest and her agree on paying the writer $200 for the adventure (and that includes the editor too). For the following, we’ll assume that Zara is using only the digital only or “print-it-yourself” model.

$200 ~ Writer
+$50 (KS’s 10% cut and taxes- remember, divide by 0.8)
X2
= Stretch goal of $500.

This means if the goal is reached, the next guest writer, who is also paid $200.00, is already-paid for in the budget. This will likely mean that you have $200 that you, the creator, can pocket; but should something end up costing a bit more than you anticipated, you have a little more of a buffer to pay the guests.

However, Zara’s not going to give this PDF away. She’s going to encourage existing backers to increase their level:

$5 – PDF Version
$20 – Print-it-yourself Version + PDF
$30 – Print-it-yourself, + the Guest PDFs.

Resourceful, no?

STRETCH GOAL STRINGS

If you’ve met a few stretch goals, you could theoretically string them into a very long chain, giving your $30 backers an ever increasingly great value for their buck. This is what Evil Hat did with their campaign, which was amazingly successful. However, unless you really know what you’re doing, I would caution against this: while it gives lower backers a LOT of incentives to increase their pledge, it gives backers at the $30 level little reason to increase. I would instead recommend an alternative:

Soon, Zara’s first stretch goal (and thus, 1st guest author,) is reached, she introduces these two levels:

$20 – Basic – Print-it-yourself Version + PDF
$30 – Deluxe – Print-it-yourself, + all Level A PDFs

Level A PDFS – 
Guest PDF 1 
Mystery PDF 2 (Unlocked at $2000) 
Mystery PDF 3 (Unlocked at $2500)
Mystery PDF 4 (Unlocked at $3000)

Thus, the deluxe backers gain one extra pdf for $10 (not great, but not bad.) However, the players have an idea of how good the level will be (fingers crossed). As more stretch goals are unlocked, the extra value of level goes from theoretical to factual, and suddenly you’re getting 4 pdfs for $2.50 each- sweet!

Once the fourth pdf is unlocked at $3000, Zara opens a new level, Level B PDFS, and amends the backer levels:

$20 – Basic – Print-it-yourself Version + PDF
$30 – Deluxe – Print-it-yourself, + all Level A PDFs
$40 – Royale with Cheese – Print-it-yourself, + all Level A PDFs AND + all Level B PDFs

Level B PDFS – 
Guest PDF 5 
Mystery PDF 6 (Unlocked at $3500) 
Mystery PDF 7 (Unlocked at $4000)
Mystery PDF 8 (Unlocked at $4500)

And thus, players are encouraged to increase their level once more. Of course, you can only stretch them so far, but you get the idea. If Mystery PDF 8 is unlocked, perhaps the next goal squeezes a fifth PDF into both Level A & B (4.5 & 8.5?)- this will help satisfy your current backers.

WHEN DOES IT BECOME TOO MERCENARY?

No matter how many levels you make, always ask yourself: “Is the product worth it?” Paying $40 for several hundred pages of well-done, well-edited product sounds worth it- however, paying $40 for something you slapped out in an hour just so you can fill the obligation of one of those stretch goal slots is not. They might buy something you haphazardly publish, but they’re not going to buy it twice. That’s part of the reason raising that extra double for each author is nice: if you end up having to pay for a second author or editor, or find that the author turned in something twice the length (and thus twice the price), you can spend a little more to get a quality product.

Ecognomics – America’s Next Top Business Models

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Last week, we crunched some numbers for different Kickstarter payoff models. To recap it slightly, if you were to pay your creators $2100, you would need the following number of sales:

PDF Model – To pay artists, need to reach goal of $2600, which would take 260 sales of $10 pdfs.

Book Model – To reach goal of $2600, need to sell 65 books at $40 each. However, to pay the artists $2100, you would need to sell 116 books (making your “real” Kickstarter goal about $4640.)

An accurate representation of our financial planning sessions.

An accurate representation of our financial planning sessions.

There are a few other business models to consider, though. One of which I heard of through Evil Hat’s Fred Hicks: the stockpile system.

STOCKPILE SYSTEM

It works like this: the sale price for a paper book is exactly double the cost. Now, in a PERFECT world, the “cost” of the includes the payment for the artists and writers, but considering how high the prices are for on-demand printing, for this demonstration “cost” will solely equal printing and shipping. We’ll assume for the sake of calculations that our staff is patient enough to wait for the payoff later.

Looking back at the printing price break, the books become much cheaper when you order 100 of more. So, let’s assume the goal of the kickstarter is to purchase 100 books from the printers. An individual book costs 15, including S&H to us, but we have to apply the 10% for taxes, and 10% for kickstarter’s take, so let’s divide $15.00 by .8, which comes to $18.87. That means we sell the book on kickstarter for double that, $37.50 (and assume any additional S&H to far off locations is added on by the backer.) We set the goal at 100 times the cost, or $1,887. (Compared to last model’s goal of $2600, that’s pretty modest).

Now, let’s imagine you reach the goal exactly: all it takes is 50 sales. Here’s the breakdown:

Revenue: $ 1887. Cost of 100 books: $1500. Taxes & KS’s take: $337.40. Immediate Profit: $0.

That’s right, the immediate payoff to the kickstarter is 0 profit. However, what the creator DOES receive 50 books that have been completely paid for (and the intangible benefit of having 50 books in the hands of hopefully happy customers, who will potentially buy more of your products and spread word of mouth). This means you can do whatever they want with these 50 books. You can sell that conventions or an online store, and keep every penny. They can drop them at the local game store, which might give the creator 50% of the profit.

So, let’s see what you get if you sell those 50 books:

Sale Cost (each) Total Profit Profit to Goal Ratio: Minus Artist Cost ($2100)
$20 (Consignment) $1,000.00 52.00% -$1,100.00
$35.00 $1,750.00 92.00% -$350.00
$40.00 $2,000.00 105.00% -$100.00

You’ll note, of course, that even at $40.00, you’re still short the estimated $2100.00 to pay the creators. Easy enough to factor in: if the sale of 50 books yields $2000.00, how many books do we need to plan for to make $2100?

50     x _X_

2000  2100

x = 52.5 post kickstarter book sales. We means we have to change our kickstarter goal to pay for 105 books. We could recalculate from scratch based on 105 books, but to save time, let’s cross multiply again. (Confession: Most math I learned in high school has been generally useless in my day-to-day life. However, when my elementary & middle school teaches always repeated, “you’re going to need this,” they were right.)

100   x 105

$1887     X

Which results in a goal $1982.00. Thus, we were able to take a kickstarter for under $2000, and turn it into $2100.00, while still giving Kickstarter Inc. and the IRS their share.

PROS of this Business Model:

  • You have much more control over the product prices.
  • You have a much wider span of time to sell the product, rather than depending on a narrow window.
  • Instead of profits, you could potentially extend any gains towards more books, extending it infinitely- using the profits from the first 100 books to buy the next 100, which buy the next 100, etc.
  • Potentially gives you a low KS goal, with a high percentage pay-off (compared to last week’s models).

CONS –

  • If you can’t make the additional post-kickstarter sales, you don’t get any money. It’s a gamble.
  • Payment Timeline – The cost, as this small level, doesn’t pay for the creators at first, which means they must wait for sales to pay them (and if I was an artist, *I* wouldn’t let someone pay me based on sales.) The only alternative is the project head pays the artists out of pocket and (hopefully) gets reimbursed for it later.
  • Reach – A Kickstarter is a great way to spread the word about a product, which will hopefully stay in people’s minds later. However, once the kickstarter’s over, you now have to fight to retain interest and to get people to buy your physical book. This means they have to buy through your website (which may need advertising to get people there), through a convention booth (which costs money), or through a 3rd party store (which will take at least 50% of the cover price.) Even the best game books in the world peak in sales after a few years.
  • Sustainability – In a perfect world, you could have each 100 pay for the next 100, on to infinity. In the real world though, there is a finite number of people who are willing or able to purchase your product. Any business model that is based on endless growth is unsustainable (e.g. Ponzi schemes, the Roman Empire).
  • Bookkeeping – Even if your artist IS willing to work for a share of the sales, this leads to some heavy bookkeeping. Our convention booth, for examples, sells lots of different products, which means you’d have to meticulous of how many of each book you sell and make sure that money doesn’t get mixed into the other company funds.
  • Tax-Timeline – If you earn $1887.00 money in one year (let’s say, 2015) and invest all of that money into the printers in 2015, you’re looking at relatively low taxes- you earned little-to-no profit, as it was offset by costs. However, if you wait until 2016 to pay the printer, your 2015 company income is not offset, so you’re paying a lot more. I don’t know exactly HOW much more, which is another flaw in doing this model- you might need someone who knows current business tax law for your state.

PRINT-IT-YOURSELF MODEL

The last model I’ll discuss has supposedly been around for a while, but to give credit where it’s due, I first saw it used by the Silent Legions Kickstarter. This is how it works:

This kickstarter requires your product to be available on a website that prints its own products. Most of these print stores let the creator sell the product at a higher price (ex. $40 for a book), but allow the creator to purchase it themselves for the cost (i.e. for their own resale.) A popular example of this is DriveThruRPG and it’s sister sites (DriveThruComics, DriveThruCards, etc.)

The “Print-it-Yourself” model works exactly like the PDF model, except that if gives the backer access to the same “at cost” rate as the creator. Here’s the version as Kevin Crawford phrased it:

Pledge $20 or more

GRIMOIRE COLLECTOR: Get immediate access to the beta PDF and get the full PDF when it is released. Get an at-cost code for ordering your choice of the softcover or hardcover POD print edition of the book from DriveThruRPG, which should come to about $11 for the hardcover and $6 for the softcover, plus shipping. In addition, you’ll get your name added to the list of special Kickstarter supporters in the PDF and printed book.

Pros of this system:

  • Buyers have the option of buying physical books (sometimes in hard or soft bound)!
  • There are 0 printing costs to the kickstarter host.
  • You can sell the pdf at one tier, and the “book” at a higher tier. (Mr. Crawford set his “pdf only” level at $10.)
  • You’re effectively selling a $26-$31 book under a $20 price tag, without decreasing your profit. Psychologically, it’s easy to sell (which is why items are labeled as $1.99 instead of $2.00).
  • The book cost isn’t included in kickstarter goal cost, which inflates the 10% you have to pay without increasing the profit.
  • Some companies, like DriveThru, use local printers, allowing them to keep costs to the backers the same in many different continents.

CONS of the PRINT-IT-YOURSELF Model

  • You are dependent on the limitations of the Print Store. For example, I’ve heard DriveThru’s color pages aren’t very high quality at this time. (Note: not from personal experience.)
  • Some people find it inconvenient (and they are not necessarily wrong.)
  • The printing cost of the individual books are potentially higher, due to the fact that you’re not printing in bulk.
  • The at-cost promo code would technically allow a backer to buy any number of your products at cost, rather than one. This means it kind of relies on the honor system, but as long as someone is not reselling them without our permission, I don’t really mind.

FINAL PLAN

Having crunched all of the numbers, I suspect that our first kickstarter, the Fate Accompli is going to fit into the Stockpile system- the art is relatively light, so it’s not like we need to shell out thousands for art and editors. The goal is to print at least 100 sets from a local printer- which means the first 50 sets off-set the costs of buying the next 50 sets. If people end up ordering more than 50, then we’ll likely take what’s left over from the cost as income to us *yay!*

With the next kickstarter, we’ll likely use the Print-it-Yourself model, as the extra art and editing raises the cost to the point that adding it in physical printing is just not viable. This every stretch goal gives 100% of the revenue towards the goal.

Next week – Stretch Goals!

Kickstart the Commotion: Ecognomics, Pt 2.

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Last week, I talked about Ecognomics: the assumption that product = profit. Sadly, this is not always the case, unless you plot things out just right. Likewise, a successfully funded kickstarter can mean a product that is paid for, or a heck of lot of unforseen costs.

I’m going to run through a hypothetical kickstarter twice: once with selling electronic pdfs, once with hard books:

Electronic Version – Here’s the neat thing about pdfs… because there is no physical cost per unit, selling one costs as much to the vendor as selling one-million.*

*Assuming you go through a 3rd party to handle downloads and bandwidth cost.

However, this also makes them deceptively tricky, for a few reasons.

1. For the above reason, it can be difficult to convince someone to buy a pdf. If it cost the vendor nothing to give away, why should someone pay $1, $5, $20 for it? This argument is not without some merit- personally, I find it ridiculous that book publishers insist on charging the same amount for an eBook as a physical book; it makes sense to deduct the cost of the paper and shipping and handling, and then pay what is left over.

2. Buyers aren’t the only ones who are unsure about the price tag. Because it costs you nothing to give it away, a generous creator’s instinct might BE to give it away. This is doubly so if they are struggling to find buyers. To quote the Barenaked Ladies lyric, “Can’t even give this stuff away, why would I sell it?”

The reason WHY you have to sell it lies in the old adage: TIME IS MONEY. Now, I advocate humans creating whatever they want, for their own joy and sanity. Creating can bring a state of mental peace or catharsis that cannot be quantified- just because a poet gets published and paid money doesn’t mean that their work was better than the Emily Dickensons of the world who choose to publish little, if at all.

However, if you DO decide to seek money for your creations, make sure you’re not underselling yourself. If you were paid minimum wage for every figure you painted or every campaign you wrote, you’d soon find out how much your work is worth.

A few weeks ago, Morris posted what an rpg writer was paid per word around the industry. http://www.enworld.org/forum/content.php?2301-What-s-a-Freelance-RPG-Writer-Worth#.VNwTtfnF-Sr

Using this as a basis, let’s take a look at the cost of the Skeleton Crew book, which currently around 105,000 words.

Publisher Pay per word Cost of 105,000 words Cost divided over 100 pdfs
Paizo $0.07 $7,350.00 $73.50
Wizards of the Coast $0.06 $6,300.00 $63.00
Evil Hat $0.05 $5,250.00 $52.50
Pelgrane Press $0.04 $4,200.00 $42.00
Goodman Games $0.03 $3,150.00 $31.50
Fat Goblin Games $0.02 $2,100.00 $21.00
Purple Duck Games $0.01 $1,050.00 $10.50

Now, I’m not certain what’s a fair price for a PDF, but I feel pretty certain that asking 73.50 is a bit much. That being said, many modest, first-time kickstarters are lucky to get 100 backers- and at 7 cents a word, that “free” pdf costs quite a lot.

However, as I am a humble guy who wants this kickstarter to succeed more than I desire money, let’s go with the lowest pay rate for myself, aka. .01 a word. That makes the foundation of our kickstarter at $1,050.00.

However, I can’t do the book by myself. We have one of our group members working as editor and publisher, who’s going to work damn hard on the book too. Let’s assume that this person is a saint, who will take a fraction of the cost of a professional. Let’s estimate the total pay: $350.00.

New total: 1400.00.

Next, the art! Our in-house artist charges $40 for a B&W art… let’s assume that we commission her for 15 pieces. We also pay her for a full color cover, bursting forth with tons of different characters (those cost extra), for $100.00. That’s $700.00 for the art.

New total: $2100.00.

Done, right? Wrong! Don’t forget taxes- kickstarters count as income! Our accountant isn’t here, so we’ll set it at a flat 10%. (Now: $2310.00.) Also, if you reach the goal, Kickstarter takes 10%. That means add an extra 10% on, right?

Wrong again, because math is WEIRD; adding an extra 10% (2541.00) and taking 10% again leaves you with 2286.00, about $25 short. To make sure you have enough after Kickstarter takes their cut, here’s the formula:

Kickstarter goal = amount you need / divided by .90.

In this case, the result is $2566.67.

Let’s round that up to $2600.00, just to have a buffer.

So, what does that mean? Well, let’s look back at the pdfs, and see how many we need to sell at what cost to reach that goal.

PDF Sale Cost $ Raised at 100 $ Raised at 200 $ Raised at 500 $ Raised at 1000 # to Sell Reach Goal
$1.00 $100.00 $200.00 $500.00 $1,000.00 2600 sales
$2.50 $250.00 $500.00 $1,250.00 $2,500.00 1040 sales
$5.00 $500.00 $1,000.00 $2,500.00 $5,000.00 520 sales
$7.50 $750.00 $1,500.00 $3,750.00 $7,500.00 347 sales
$10.00 $1,000.00 $2,000.00 $5,000.00 $10,000.00 260 sales
$15.00 $1,500.00 $3,000.00 $7,500.00 $15,000.00 174 sales
$20.00 $2,000.00 $4,000.00 $10,000.00 $20,000.00 130 sales

Of course, the first time you glance at the chart, it might seem that charging more money is the key. However, you’ll notice the catch that, even at $20.00, it takes 130 sales, above your average 100 backers for a newbie kickstarter, just to reach your goal. Even if your product is good, you got to ask yourself: is it harder to convince 100 people to pay $20, or to convince 200 people to pay $10? I don’t really have the answer to that, but I know that the more your kickstarter extends to people who know you and your products less and less, you’ll have a harder time convincing people that the product is worth the money.

Paper-version – if you’re going with a paper-version, the rules of the above stay the same, except every price now has the price of the product, the shipping and handling added on to it.

Let’s assume your company is printing small batches, and going through a domestic printer. In this, let’s take a great company, Ka-blam, that prints our comic. A massive book of 350 pages, with B&W interior and color cover, costs 11.50 for one book. There’s a price break at 25 copies (10.50), and at 100 (9.50). Add in a round 3.50 for shipping and handling per book, that gives you: $15 at 1, $14 at 25, $13 at 100.

For example, the same above chart, adding the same values above:

Add to Cost: Total Sale Cost 1 Revenue at 25 Profit at 25 (-350)
$5.00 $20.00 $500.00 $150.00
$10.00 $25.00 $625.00 $275.00
$15.00 $30.00 $750.00 $400.00
$20.00 $35.00 $875.00 $525.00
$25.00 $40.00 $1,000.00 $650.00
Add to Cost: Total Sale Cost 1 Revenue at 100 Profit at 100 (-1300.00) Revenue at 200 Profit at 200 (-2600.00)
$5.00 $20.00 $2,000.00 $700.00 $4,000.00 $1,400.00
$10.00 $25.00 $2,500.00 $1,200.00 $5,000.00 $2,400.00
$15.00 $30.00 $3,000.00 $1,700.00 $6,000.00 $3,400.00
$20.00 $35.00 $3,500.00 $2,200.00 $7,000.00 $4,400.00
$25.00 $40.00 $4,000.00 $2,700.00 $8,000.00 $5,400.00
Add to Cost: Total Sale Cost 1 Reach Revenue $2600 Cost at Goal Profit at Goal
$5.00 $20.00 130 sales $1,690.00 $910.00
$10.00 $25.00 104 sales $1,352.00 $1,248.00
$15.00 $30.00 87 sales $1,218.00 $1,382.00
$20.00 $35.00 75 sales $1,050.00 $1,550.00
$25.00 $40.00 65 sales $910.00 $1,690.00

So, let’s imagine a hypothetical situation: you got exactly 200 sales. Let’s see what it comes at various prices:

Cost – Remember, this includes the approximately 20% for kickstarter and tax.

Product Revenue Reach Goal? Reached Goal at Cost Profit
PDF $5.00 $1,000.00 No! N/A None None
PDF $10.00 $2,000.00 No! N/A None None
PDF $15.00 $3,000.00 Yes! 174 sales -20% (-$600) $2,400.00
PDF $20 $4,000.00 YES 130 sales -20% (-$800) $3,200.00
Book $20 $4,000.00 Yes 130 sales -20% (-$800), – $2600 (books) $600.00
Book $30 $6,000.00 Yes 87 sales -20% (-$1200), -$2600 (books) $2,200.00
Book $40 $8,000.00 Yes 65 sales -20% (-$1600), -$2600 (books) $3,800.00

Based on the 200 sales model, we can see that selling 200 $1 pdfs gets equals a failed kickstarter; whoever, a kickstarter that sells 200 pdfs at $15 each makes the same as a kickstarter that reaches $6000 selling books at $30, and makes four times the profit of a campaign that sells 200 books at $20 bucks.

One last chart: let’s see what happens if we calculate that each product level made EXACTLY the number of sales it needs to make to reach goal.

Product Reached Goal at Cost Profit
PDF $5.00 520 sales -20% (-$520) $2,080.00
PDF $10.00 260 sales -20% (-$520) $2,080.00
PDF $15.00 174 sales -20% (-$520) $2,080.00
PDF $20 130 sales -20% (-$520) $2,080.00
Book $20 130 sales -20% (-$520), – $1,690 (books) $390.00
Book $30 87 sales -20% (-$520), –$1,218 (books) $862.00
Book $40 65 sales -20% (-$520), –$ 910 (books) $1,170.00

And thus we see how kickstarter goals are really sneaky, in that they measure only revenue, not cost. Adding higher priced goods at higher costs can make you reach your goal faster (the $30 book needs half the sales of a $15 pdf). And reaching a goal is GOOD- backers are more likely to sign up if the goal is reached, so the profits are more likely to come in. However, at the $30 book level, the artists end up with a mere 1/3rd of their self-estimated cost, and less than a 1/4th of what they raised from the kickstarter.

Luckily, this is not the ONLY model for a kickstarter- we’re going to explore a few of those next week.

In the mean, if you’re in the DC Metro Area, you should visit our booth at Katsucon this weekend, Feb 14-15th, in the Artist
Alley! It’s the first anime con featuring our newest book, the Cleric’s Guide to Smiting! Come on down!

gazebo

Ecognomics of a Kickstarter

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Later this year, our group hopes to launch a grand kickstarter for

the Skeleton Crew PRG. We’ve got high hopes. We’ve got big dreams. We want to do it just right; so much so that we’re launching a second kickstarter before it, just to test the waters. I’ve read all of the blogs, heard the panels.

I am still shaking like a newb.

So, this is not a blog from a kickstarter veteran, saying how they got all-the-moneys. Rather, this is the step-by-step brainstorm, so you can see the planning process for yourself… specially, in how to avert Ecognomics.

What are Ecognomics?

Some of you might be old enough to remember the South Park episode with the Underpants Gnomes. If you’ve never seen the episode, the pivotal scene with them plays out as follows…The underpants gnomes, after amassing a large amount of stolen underpants, present their cunning business plan:

Phase 1. Collect underpants

Phase 2. ???

Phase 3. Profit

It’s a silly bit, but I’ve heard that economists and business theorists have actually latched on to it in serious lectures. Personally, I call it “The Underpants Plan,” or Ecognomics.

Who is Guilty of using Ecognomics?A lot of independent artists and creators, sadly. I’ve been on a lot of web comic panels, in which someone in the audience asks, “How do you make money?” The knee-jerk reaction from artists is to laugh, but that could be out of nervousness.

The problem is many creators think that there’s a direct correlation between Product and Profit. They have Phase 1 and Phase 3, but they fail to consider part two. Of course, at least those artists have gone ahead to think about Phase 1: a Product. I remember before the Dot-com bubble burst, some people thought you could launch a website, slap a Paypal donation button on it, and they’d be showered in money.

With Kickstarter, the same pitfalls occur. There are people who think that all they need is a product, launch a kickstarter, and you’ll have a profit. (Again, some don’t even think too hard about the product.)So, I don’t have all three phases planned out, but I’ll walk you through my ponderings.

PHASE 1 – COLLECT UNDERPANTS (Figuratively Speaking)

The first part is to clarify what the product you are selling is. With us, we’re relatively confident about this: it’s an rpg book, using the Fate Core rule system. The setting is based on our webcomic series, Skeleton Crew. Of course, there are still a few things to figure out.

Labels – This issue is mostly resolved, but it wasn’t when we started the project: we had to clearly define the genre of the setting in order to best promote it. We originally called it “Comedy / Horror,” but that didn’t seem to go over well. While there are definitely a few horror elements in the comic, and optional rules for running scary adventures, my cowriters convinced me that the “horror” tag wasn’t accurate. We’re now promoting the rpg as “Supernatural Comedy.”

Stand Alone or Supplement – Shortly into the RPG’s production, we settled on using Evil Hat’s Fate system- it wasn’t too crunchy, we (a bunch of writers) loved the story-telling basis, and the creators were generous to offer it to the Open Gaming License, making it free to use. To add icing to the cake, the Fate Core kickstarter practically exploded.

hipster elves

<hipster moment> Yeah, you heard me- we liked Fate BEFORE it was cool </hipster moment>.While I’ve seen a few kickstarters that offer to add other systems on as a stretch goal, we have decided NOT to make SC for any other system at this time (except a possible FAE side version). If your book can be so easy ported from one system to another, then how much attention did you really pay to that system?The question becomes whether to make it as a “supplement” or as a stand-alone. It’s a fat book already, roughly 350 pages. To make it a “stand-alone” book would require adding additional 100-200 pages, greatly raising the print cost. It would make it more accessible to newcomers, but most of our target audience is experienced gamers who already own the Fate Core rulebook anyway. We’re polling playtesters for their opinion. Speaking of which…

> Playtesters & edits– The last steps are to playtest the stuffing out of it, and edit the feedback into a cohesive book. Easy, right? *nervous cough*

That’s it for the Underpants. On to…

PHASE 2 – ??????

If this were a REAL economics plan, I suspect the middle area is for revenue. For non-business folks like me, that’s “money made before factoring cost.” In regards to kickstarter, it also means, “having a variety of backer levels and add-ons, providing each backer an opportunity to spend exactly the amount of money they are willing to part with.” If the only levels are cheap, you risk losing potential profit. If the only levels are expensive, you risk it all. I’m leaving the ???? in, as it also covers all sorts of other pre- & mid- Kickstarter factors. Like most brainstorms, and keeping with the ‘YES AND’ spirit, the “????” section shall include any ideas, no matter how ridiculous. This is the “yes, we can!” section… (save the “no, we can’t. Really.” for the “Profit” section.) I’ll start with our thoughts for the kickstarter levels.Backer Levels – The first thing to consider for the kickstarter is the basic backer levels. These are the Core levels, ignoring other “throw in one more thing!” Here are the very basic, platonic levels:

  • Impulse Buy
  • Electronic Version
  • Paper Version
  • Special Edition
  • More Money Than God Version

Impulse Buy – Costs a very small amount, which is very good for people who are unsure of the product, broke, or are generous relatives who want to help but could care less about the product. For our version, I think we’re going to take a lesson from Tianxia’s fantastic kickstarter, and give anyone who pledges a small amount ($1-2) gets a copy of the rough draft Beta rulebook pdf. It’s a great way to lure impulse buyers, costs us nothing, and gives the backer a product immediately after they pledge (rather than having to wait for months until the product is finished before the backer receives anything.)

Electronic Version – A digital version- in this case, a pdf of the finished product. Fortunately, Tangent Artists is lucky enough to have a publishing miracle-worker on team, so the layout can be done in house. A pdf is beautiful thing, in regards to profit, but more on that in Phase 3. At the moment, the goal is to have a B&W book with lots of art. For a creepy setting like ours, B&W is perfect, in that it helps capture the mood, and easier on the artists. We plan to have original art by one or two artists, supplemented by art from the webcomic itself. This would likely be in B&W, although, if we’re pulling images from the webcomic, we COULD make the pdf B,W & red.

Paper Version – A physical version of the book printed and mailed. Unless we hit ALL DA STRETCH GOALS, it seems unlikely that the supplemental material will be in print form.

Special Edition – This would be supplemental material tied in directly to the product itself. Some brainstormed ideas:

Art – Prints of the art itself. (May not do this, as shipping art without creasing it is a pain). Maybe the cover art for the book?

Comics – We’re hoping to do a big compilation book of our first few issues of the Skeleton Crew Comic, in a volume called the Necronomnibus. Likely in B&W, to save cost. Luckily, this one doesn’t require much in the ways of creating a new product, which is nice, and it printing in bulk is much cheaper than individually.

-Gaming Extras – If our Kickstarter for Fate Accompli, dry-erasable Fate cards, is successful, then these would be a great add-on.

-Artsy Odds-and-Ends – Any other art-related material, such as keychains, postcards, etc. As I am not an artist, I won’t insist on these, nor will we make these a priority if there’s not demand for it.

However, I remember one kickstarter panelist, who shared a great nugget. He advised against writing new novels as stretch goals to an rpg book. This was his litmus:

– if the supplement is stand-alone (i.e. doesn’t require / build on the base kickstarter), and requires work as much work to finish as the base kickstarter, why doesn’t it have a kickstarter of it’s own?Thus, adding a stand-alone novel is way too much energy to invest on something that doesn’t add to the product. (Of course, if you wrote the novel already, that might be a different matter.)
-Rules Supplements – This is where I have even BIGGER plans and schemes. Here are some wild ideas. These would expand the current rules for new locations and subgenres. Some of the ideas we’re batting around include:

– Guest Authors – Getting outside authors to write additional material for the setting. If we can get well known authors, to draw in more backers, all the better. And while we’re dreaming the impossible dream, we even hope to PAY our staff and guest authors. This would definitely beat the old system of having writers work for free, for credit, or for reassurances that their loved ones will be returned safely (mwah ha ha).
-Adventures – One-shot adventures for players. I’ve definitely a few that I’ve run before that would be great, including Fright at the Museum and the Revenge of Blackstache.

– New Locations – A fairy-focused setting, set in the West Coast, written by our very own Rachael. Several working titles, including “Triskelion.” We’re also considering: a Road Trip Campaign book (WIP title: Highway to Hell, Globe-rotters), with scatterings of monsters from all over the USA or the world; also, a setting focusing on beings from Japanese and Chinese myths.

-New Sourcebooks – A Lovecraft book (because, as we all know, if you want a kickstarter to succeed, throw in an Old One)… the working title is “The Madness of the Color on the Doorstep of the Dark”; a sci-fi 1950s B-movie book “It Came From Science!”; a source book on ancient religions, demigods, demons, cambions, nephilim and angels; a setting in the land of Cockaigne.

-New Twists – Several ideas: Paranormal Investigators – A procedural, monster-of-the-week setting, a la X-Files & Nightstalker. Would likely use a system similar to Atomic Robo’s “Brainstorm” mechanic, assuming our version wasn’t TOO similar (Robo isn’t in Open License); a rule-set for familiars and lesser demons, with a Pokemon-esque “snatch-em all” rule set; Giant, city-smashing monsters (because: giant monsters).

-Rule Adaptations – Attempts to incorporate existing rules from other Fate Core games into SC, assuming we are not violating or infringing on any rights. These might include: Skill modes; super powers / super stunts; Fate Accelerated version.

– Supplemental Info – Languages – A guide to the many real (and fictional) ancient languages, from Rongorongo, to Atlantean, to Epoch. Might have rules, but possibly rules agnostic.

– Characters – Extra mortal states and professions that didn’t fit in our (already bulging) rulebook. We might release it by itself, or might save some of the characters to drop in with supplements that fit the theme.

-Campaign Books – Fate doesn’t really lend itself really well for pre-made campaigns, but I would enjoy an expanded setting based on the Lost Continent of Lemuria.

More Money Than God Version – Generally, these are levels that most people can’t afford, but would be fun anyway. And since we’re not throwing out any ideas here:

– Personal Touch – I, Dave Joria, will official skype / drive / fly / paraglide to your living room or game store to run a game for you.

– Commission Normal – Our artists will draw every member of your party.

– Commission – Published! – Our artists will base one of the character designs in the finished book off of one of the pre-constructed characters off of YOU.

-Comic Star – We will write and draw a 4-page comic based on your skeleton crew characters.

– City of Dreams – I will create a brand new city location just for you and your party.

– Sup it Up – I will design an entire supplement for YOU- rules, characters, monsters, settings, plot points, you name it, we make it.

– We’re Really Reaching Here – I will dress as a zombie and do a happy little dance just for YOU!

– Unholy Rites – I will build a dark shrine to your honor, and sacrifice a goat, chicken or watermelon to you, while chanting in an Eldritch tongue (and film it.)

That’s all of the odd-ball ideas I have for the moment. Next year, I’ll be crunching Phase: Profit!