Kickstarter dangers

Great post over at BGG by a Nathan McNair, an aspiring Kickstarter self-publisher at Pandasaurus Games, who points out that even with Kickstarter, the economics of publishing don't work until you're at a huge number of units.  He says he's $2000 in the hole from his publishing effort before even starting Kickstarter.  I'm probably around $1,200.

A big chunk of that is the filing fee plus two years of LLC fees ($450); not sure I'd recommend that for everybody starting out, but I think it was the right move for me to protect my other assets.

Another big chunk is web hosting (probably around $200); I saved by pre-paying for this site for several years, but I had to put up the cash at the start.

The rest is mostly printing up demo/test copies of my games; I've spent probably $300-$400 on that for many different items plus shipping.  Beyond that, some incidentals like toner and paper; I've also bought a bunch of glass stones, dice, and pawns and such for testing copies.

As income, I have very little.  I have a relatively low number of low-margin sales from TheGameCrafter.com for my games published there, and I have one larger multi-unit sale of Diggity to a friend who bought a number of copies as holiday gifts.  I probably netted $40 on that.

So, even if I did a Kickstarter campaign, unless I hit it out of the park, I'd never get back those sunk expenses. Kickstarter does two things well:

1. allows you to raise capital if you don't have enough to self-fund a print run 
2. allows you to eliminate the middle-man costs of distributors and stores

The first is extremely important if you don't have money to burn; your game doesn't happen without it.

The second is a big deal; you go from getting about 25% of the sales price through distribution to 90% of the sales price (after Kickstarter fees).  However, as I've commented on before, unless you're making more than 3000 copies, the math doesn't work anyway - your cost of production is going to be $5-10 even for a small game without moving parts; add shipping and art into that, and you're easily up to $15-20 per game just to get them made.  You're not going to run a Kickstarter campaign selling a simple game for more than $20 or $25 - you're just not competitive with commercial games then - and Kickstarter buyers usually expect shipping to be included in their price.  That's another $5 per game at least.

So, roughly speaking, you don't make money on Kickstarter until you hit a really high sales figure.  Even saying it's 2000 copies, at $25 a pop that means you've got to interest 2000 people and raise $50,000, in a game they've never seen.  A very tall order.