In our Facebook groups, we get asked a lot of the same questions over and over and I thought much of this is scattered throughout my blog, it can be hard to find. Thus, here is a short blog about typical expectations and standards in your tabletop hobby game industry.
Meaning of terms:
- Markup means what you add to your costs to sell a game. That is typically 100%. In other words, doubling the price you paid for it. This is also known as Keystone pricing. This is a common markup for many industries.
- Margin means what you make on selling a game. That would be roughly 45-50% if you don’t take other expenses into account.
- Profit is how much money you keep after bills and staff, rent, insurance, shipping, and all that stuff are paid for. That is very typically going to be under 10%. A company can survive just fine on anything over 5%. 8-10% is considered healthy.
- NET Pricing is where a publisher is forcing a fixed price (usually cause they have the demand/market share to do so) and thus it’s not usually looked at as a % of MSRP. Typically this is in cases where the distributor is paying more than normal and thus the retailer is going to as well.
- Gross Revenue is the total amount of sales (money earned) before taking out expenses.
- A distributor typically pays 40% of (or 60% off) MSRP for a game they get from a typical average publisher.
- A retailer will typically get a game from a distributor for about 45-50% off MSRP. Most retailers will sell at MSRP but some will just use Keystone pricing (doubling their cost).
- A retailer (usually online) that is considered a “deep discounter” and disruptive in the industry are those that sell things for 20-30% off MSRP. They do this usually cause they are not paying a lot of rent and/or staff and they obviously don’t run events and support play space in a store, etc.
- To help fight against the devaluing of their products, Publishers will use a MAP (Minim Advertised Price) contract with buyers to prevent people from getting their games unless they agree. They will typically allow a small discount on a regular basis and a larger one on short term sales.
- Working with all the above math, for a publisher to even make a little money they will typically have to price their game’s MSRP at 5 times the cost of production and shipping to their local warehouse. So that’s where that number (and the 20% thing) comes from.
NOTE FOR EU: the above mainly pertains to USA distro and retail. EU tends to do a lot more direct purchasing but here are some numbers I got from a fellow publisher:
- A Publisher gets a net 40% of the net of vat price from distributors. So assume an rrp of £100 your net of vat is 100/1.2 or £83.33. The distributor will give you 40% of that or £33.33.
- A Retailer would give you approx net 60% or £49.99.
These numbers are generalizations and can vary a bit, but good for a guideline:
- 1% = the number of packages/games you should expect to get damaged. lost, or have flaws for reshipping
- 1% = the number of backers you can expect from a large broad mailing list
- 5-6% = the royalty of Gross Revenue a game designer can be expected to receive (2-3% MSRP)
- 5x = the minimum multiplier of your production cost (plus shipping to your warehouse) you use to figure out MSRP
- 7 = the number of “touches” you need to make a sale
- 9 = maximum number of rewards you should be offering in a Kickstarter
- 10% = pledge cancel rate on Kickstarter in 2018
- 15% = average conversion rate for a campaign specific mailing list
- 15% = additional sales you can expect when using a pledge manager
- 18% = what a consolidator typically charges of your wholesale sales (works out to about 10% of MSRP)
- 30% = amount of backing a good campaign can expect during the first 2 days, the last 2 days, and the middle.
- 50% = the discount a Retailer will look at buying your game for
- 60% = the discount off MSRP that a Distributor will purchase your game at
- 65% = typical % of backers living in the USA.
- 1000 = the number of games you should print over the total you sold in Kickstarter for post-KS sales if you plan to go to distribution
- 1500 = minimum number of units you should make of a game to not waste money
- $300-500 = typical amount to purchase wholesale to get free shipping form a publisher or distributor
- $3000 = average cost of a mold for miniatures or dice (each mold can hold 4-5 unique items)
If you plan to run a campaign soon, please add it to our combined calendar so everyone knows and we can avoid similar launches on the same days.
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Written by: James Mathe