Doctor Esker's Notebook Project - by the numbers

I did a workup of the finances and sales I've had for the Doctor Esker's Notebook project. I figure this might be of interest to other indie game designers and publishers. The project started in May 2018, with the first printing (1080 copies) ordered in August 2018, arriving misprinted in October, and then fixed and ready to sell by February 2019. The sequel and the second printing of the original game (2160 copies each) were ordered in July 2019 and arrived in late September 2019.

Let me know if you have questions in the comments.

Bigger version of the image is here.

Finances update

I haven't done a financial update in a while. Here's how it looks. Graph #1 is my total revenues stacked on top of my total expenses.

   

 Graph #2 is my net profitability, now about $4,900 in the red but rising fairly steadily.

 

Both graphs show my initial costs for 1080 games, the gradual rise to net profitability, and then the larger costs of my second print run (2160 each of original and sequel for 4320 total games), and my sales since then.

In terms of inventory, I've still got about 4575 games, which at the net revenue I typically make per game is about $39,000 in total potential revenue if I'm able to sell them all. Set against that revenue will be any future advertising, promotions, taxes, free copies, spoilage, and other such expenses.

So, I have a good shot at net profitability, but probably not until next year, and only then if my sales stay steady or increase.

Doctor Esker's Notebook project financial update

I've been doing a series of posts about the financial end of my game project, and I haven't posted an update for a while. I'm nearly to the break-even point, which is great! I'm at $-194 by my calculation, with revenues of $3,454 offsetting expenses of $3,649.

I have sold 386 games and sent out 35 as promo or reviewer copies. I have 134 in stock at Amazon, and another 525 or so at home (uh, I mean in my warehouse 😀 ). I make about $9 per game depending on the sales channel, and I am not incurring too many new expenses at this point - the major expenses were printing and development, and I don't have many ongoing costs (other than the cut Amazon and PayPal take from each sale). So, I could make up to about $4,000-$4,500 on this if I just sell out the print run and don't do anything else.

Sales have taken a little bit of a hit over summer. I'm at about two sales a day, where from February to April I was at more like three a day. I hope that's just seasonal and not a trend. Nearly all sales now are through Amazon.

Here's the info in graph form. First, expenses and revenues by category:

The picture above shows revenues (above zero, climbing) and expenses (below zero, mostly flat). Time progresses along the bottom, but not evenly - initially I was updating every day or two, but now I'm updating less frequently.

Next, net revenue (income minus expenses): 

On this one, the time axis is properly scaled. I'm almost back to zero, as you can see.

Of course, I'm not including the time I've put into this project. My hourly wage is something like negative fifty cents an hour. So, this isn't (yet) a good way to make a living, put food on the table, or pay for health insurance. It's not even a good investment relative to a good solid mutual fund, although it will be if I sell out the print run by the end of the year, which looks likely if sales pick up a little around the holidays.

Anyway, looking good. I should hit break even sometime later this month.

A business milestone - $2K

This past week I crossed $2,000 in revenue for Dr. Esker's Notebook. The last bit of that came from a distribution deal in Canada with a game store, who bought forty copies at a steep discount and arranged for a U.S. cargo forwarder who I could send the games to, which saved a lot on shipping and complexity for me. I am very grateful for that.

I haven't tried to get into game stores directly other than this effort, and I think that might be a cool avenue to pursue, particularly if I do another print run. Here is the updated revenue and expense chart and net revenue track. I've had pretty healthy sales on Amazon for the past week (around 2-5 per day), so that's helped too.  I've gone from being $3500 in the hole after printing to $1650 in the hole now, about two months later, so that's good progress.

Esker business update

For those of you following the business side of my indie game publishing project with Doctor Esker's Notebook, here's an update. I'm up to 115 total sales with revenues of $1,108, set against costs of $3,530, for a current (but shrinking) loss of $2,422.

The bulk of the costs is the development process and the print run, but I continue to have additional costs with marketing and promotion. If I sell out the entire rest of print run, I probably have another $8,800 in potential revenue, which (barring massive future marketing expenses) would make the project profitable. That assumes my time is worthless - if we paid me even a minimum-wage hourly rate for my work on the project, I'm deep underwater. Given that this is a so far a passion project, I'm fine with my time being counted as free.

Here are the numbers is in graph form:

The time axis advances to the right here, showing increasing revenue compared to mostly fixed costs, but the time isn't linear - it's just whenever I do an update.

For this one, time is linear - this is the history of the project starting with the print run at the end of last year, with additional costs added to revenues as time progresses to the right.

Doctor Esker's Notebook: One week in

OK, I've had a published game out there for one week. Yay! Here are some numbers:

• I started with 1080 copies; I've sold 24. 
• After shipping (which I'm offering free and covering from sales revenue) and payment processing fees, I've cleared about $220 in net revenue. I'll owe a little bit of North Carolina sales tax on in-state sales.
• Of the 24 sales, at least 22 are to people who have a personal connection to me. One of them I don't have a name for yet, and one of them (purchased on Amazon) seems to have found me in another way, but I don't know how. 
• I really need to expand my sales beyond just people who know me, because I don't have 1080 friends.
• I've spent about $3300 on this so far, as broken down in the chart here:
• That comes to about $3 per game in costs. After the selling and fulfillment fees on Amazon (I'm having them ship the product), I clear about $7.50 per game. For the ones I've sold on my site via PayPal and shipped myself, I clear a little under $10 per game. So, I have to sell somewhere between 500-700 of my print run to make back what I've spent so far. 
• I've done small ad campaigns with Facebook affinity ads and Google search ads directed to my site. They've both produced about the same (small) number of clicks, but Facebook has about 400 times the impressions (showings) as Google. That suggests that Google search results are much more efficient (i.e. clickable) than  Facebook ads. Neither of them have (as far as I can tell) resulted in any sales. Not sure I'll continue with those.
• Board Game Geek's minimum ad package is $500, which would mean it would have to produce at least 50 sales to pay for itself. If reports from Kickstarter campaigns (which don't even have real games yet) who've advertised on BGG can be believed, that might be possible.
• I do have a bit of a secret weapon, although I have no idea how strong it is. Although I no longer have an ownership stake in the Snood corporation, my partner there has said he would be amenable to advertising Doctor Esker's Notebook to their mailing list. The audience between Snood and a puzzle card game probably doesn't have a strong overlap, but it might have some, and there may be some residual Snood customer goodwill there.
• I've sent the game out to several reviewers. I'm hoping to get some reviews up, either from those review sites, or from Amazon customers, or Board Game Geek users, before I do too much more marketing, because right now, there is no way for a potential buyer to know if the game is any good or not.

I'll update more later, but it's been a really exciting week.

Great post on publishing process

I found this post by James Mathe from someone in the boardgame design community on Google+.  It's a really great summary of steps to publication (and a cautionary tale for prospective publishing enthusiasts).  It includes a lot of costs and steps you probably haven't thought of before.

Tasty Minstrel Kickstarter fund drive

Tasty Minstrel games has started a Kickstarter fund drive for its next release, a space-themed card game called Eminent Domain.  Tasty Minstrel is a small company (two games in print, two more on the way) run by two guys, Michael Mindes and Seth Jaffee.

They've funded their publishing costs out-of-pocket, and I think they're getting close to breaking even.  But it's hard to keep publishing if all you're doing is breaking even.  As a result, they're using Kickstarter to fund their next release.  The fund drive is mostly set up as a pre-order site; for $35, you get a copy of the game shipped to you when it's ready, and they have other more lavish rewards for higher donation values.

They're looking for $20,000 in funding, which seems like a tall order - that would be nearly 600 games they'd have to pre-sell.  It's also a bit odd for an existing company to be fundraising in this manner; it sort of seems like if you already exist, you shouldn't be hitting up friends and fans for startup cash, but I think the pathetic economics of the game publishing industry might justify it in this case.

There's nothing wrong with pre-selling, of course; many companies do that, particularly in the console game industry.  It allows the publisher not to have to take as big a bet as they would otherwise, and it allows them to gauge interest in their products. GMT Games does much the same thing with their P500 program, where they don't print a game until it has 500 guaranteed customers.

We'll see how they do; they've given themselves a month for the $20,000, so it shouldn't take long to find out.

Big step

I filed the Articles of Organization for Plankton Games LLC today.  Not a huge step in terms of what I had to do, but a big psychological step, and one that left me $125 poorer.  But if I'm producing manufactured goods, I really can't afford to be personally liable for problems or issues.

There's a $200 annual report fee for the LLC, so I guess this starts the bleeding - my games have to make more than $200 in the next year to cover that expense.  Of course, I also have already paid for the web hosting, artwork, samples from TGC, etc.  But some of that I'd have done anyway.

Exciting stuff.  Next step (assuming my LLC application is approved) will be to get a state sales tax ID and a local business license, and then I'll need a federal EIN so I can get a business bank account.  And I'll have to figure out how to collect, report, and pay state sales tax for in-state sales.

This is the part that's not so glamorous, but it's still part of the journey, and even a little fun at this point because of what it represents.

Tasty Minstrel

Michael Mindes over at Tasty Minstrel games posted an interesting defense of a decision to sell one of TM's products, Terra Prime, at half-price through a game enthusiast site called Tanga.  I hadn't heard of Tanga before, but I've looked into it just a little bit, and it sounds like an interesting idea - kind of a Home Shopping Network for games and related stuff along with a community component.

I'd suspected that Terra Prime wasn't doing as well as Tasty Minstrel's other release, Homesteaders, because Michael has started giving out only Terra Prime, not Homesteaders, for his free game Friday giveaway.  He confirms this in his post, indicating he's still sitting on 800-1000 units in inventory with very slow sales.  I'm not sure how many he ordered to start, or what his cost structure looks like.  I know he used Xinghui for manufacturing, which produced cheap but apparently flawed products, and for a game like that to make economic sense, he'd have to have made at least a couple thousand of them.  The print run was 2,000 for Homesteaders, so it's probably the same for Terra Prime, although I can't find where Michael's mentioned the figure specifically.

This was both disheartening and inspiring. Disheartening in that he seems to be living one of my worst fears with this, which is having a significant portion of his product currently unsold and selling very slowly.  Inspiring in that he actually has moved maybe 1000 or more copies, half of those through distribution, within half a year.  That's pretty great, although it would be better were it to continue.

I'm guessing he doesn't suffer as big a markup through Tanga as through retail, although I haven't found anything with their terms yet.  Regardless, at some point, it's going to be worth it to move/liquidate some stock and recoup some of the investment, and the exposure from Tanga may (as Michael guesses) move sales elsewhere as more games get out in the hands of players.

Food for thought, and thanks to Michael for being willing to discuss his business openly.

Profile of a start-up company

Dominic Crapuchettes has an autobiographical post about his game company up at BGG (link here, via BoardGameNews.com).  Interesting stuff - he's made the big time (carried by Target) and has $1.5 million in revenue, but still isn't breaking even.  Some different choices than I'd have made (e.g. running up all the debt on credit cards), but I might not have lasted as he has.

A very interesting read.

Inevitable Kickstarter project complete

The Inevitable guys have finished their fund-raising drive at Kickstarter.com, raising a total of $9,435.  About $2,650 of that was from people who pledged more than you needed to pledge to get a copy of the game (including four at the $500 level).  I posted previously on their efforts here.

They'd promised a print run of 100 for $3000 raised, so I imagine they're well past the costs they'll incur for 100 games.  Something like 87 of their 100 games are spoken for at the site, going to pledgers, but they'll likely be able to produce an additional couple hundred games with the funds they've raised (if that's what they decide to do with the extra money).

An unabashed success, leading to a game with a big following and positive cash flow before it is even printed.  Sounds like a great outcome - my congratulations to them.

Game production costs summary

The graph at left (click it to make it bigger) shows some results from quotes I've gotten for my card game, Diggity. I thought it might be useful to other game designers and people contemplating publishing their own games to see what I've learned.

Tuck and Setup refer to box types - tuck boxes are one-piece boxes with a flap that tucks in, like a regular playing card box, while setup boxes are usually two pieces (base and lid) with an internal platform for holding the contents in place.

These numbers are tricky to compile and to compare - even though I send the same specifications to each printing company, I don't always get the same results back. For example, some of the quotes include different kinds of boxes, or different box materials, or different card sizes, or different paper stocks and paper coating. Some of them include shipping; others do not, and I have to estimate it, which I've done here. I have only included printing and shipping charges and setup costs where appropriate; no other charges like import duties, file preparation, shipping of samples, etc.

I often got multiple quotes for different quantities from the same company; these are connected by lines. I sometimes got quotes for different products from the same company, e.g. tuck box vs. setup box (a two-piece box with a bottom and a lid). In this case, I've grouped them with a number; e.g. everything marked "China #1" comes from the same Chinese printer, while "China #2" would be a different Chinese printer.

I'm still pursuing bids, and I will not necessarily go with the lowest bidder here. There are a host of other concerns, such as product quality, the component materials, the box type, my estimates of other costs incurred when dealing with the company involved (which are higher overseas), the professionalism I perceive with the company, and others. I'd love to have a "Made in America" on the label, too, if I can afford it.

For a look at how this plays out in terms of actually making the economics work, see this post and this post.

Alien Frontiers - another Kickstarter success

Back at the end of April, I posted on another Kickstarter donation campaign, this one for a game called Alien Frontiers.  Well, they're over $11,000 with just under a couple weeks to go, marking yet another successful use of Kickstarter for pre-sales.  About $7500 of their pledges are at their basic, $50 level, which gets you a copy of the game.  They report here at BGG  that their print costs are going to be probably in the neighborhood of $15,000 (my guess is that after shipping and other costs this bleeds up toward $20,000) for 1,000 copies, so a $50 sale price per game with $15-20 production costs is probably a good target for them, although a bit steep for the retail market.  I haven't seen much on the game yet, but it does seem to have a ton of bits.

I'd be interested if they manage to sell out the 800+ copies that aren't yet spoken for.  I'd also be interested what ratio of their funding comes from anonymous donors.  I asked a couple folks about this for earlier Kickstarter projects (see here and here), and it seems to be actually about a third to a half of the buyers in these things are unknown to the organizers - a far higher ratio than I'd have guessed.

It looks like Kickstarter is a great way to leverage game production.  My earlier misgivings seem nearly entirely unwarranted in the light of these three projects.

Production costs and financial returns

Seo at BGDF has a good very brief run-down of the economics of publishing.  He's left out shipping and marketing costs, which can easily eat up the meager 1/8 of the final sales price that the publisher eventually sees, not to mention the difficulties of getting distribution, the very real risk of not selling out your print run, which leaves you deep into negative territory, and paying yourself something for the effort and investment you're putting in.

How the later commenter sees this as a very good opportunity for self-publishers is beyond me...

Kickstarter as pre-ordering framework

I've been toying with the idea of using Kickstarter.com to fund part of my first print run - not so much to ask for donations for a commercial enterprise, but merely to give friends and family a way to pre-purchase the game.  I think I may do it, although it feels a little hitting up your friends for something they don't really want, like when your kids go around selling candy bars or coupon books.

A couple of the earlier versions I commented on (Gentlemen of the South Sandwiche Islands and Inevitable) approached their pitch less as mere pre-ordering and more as artistic patronage, where you were getting a chance to support the hopes and dreams part beyond just buying a game.  I was wondering if a simple pre-order thing would work.  Via Trask at LivingDice.com, It looks like we've got a test case - GamingPaper (site here) is looking for funds to print up an 8.5x11 version of their product in what is essentially a plain pre-order scheme.  They do have other rewards for various donation levels, but those rewards are already available as products they sell - the 8.5x11 version is the only new product.

In this case, there's no artistic vision to support (although the Kickstarter video playfully suggests there could be), since you're basically buying 250 sheets of graph paper.  I'll be interested to see how they do.

Summing up the GTS 09 talks

So, what are the main points I've learned listening to these couple of talks? There's a ton of good stuff in these, but I think I can distill it down to a few major points that will be most useful to me.

• You can save a goodly amount of money printing in China vs. domestically (they say between 30% and 70%), but it's a big hassle. I'm not sure it will be worth it for me if it's at the 30% end.
• The savings in China will be bigger for bigger print runs, for bigger games (i.e. larger boxes, more pieces), and for games with plastic parts. None of these potential savings likely apply to me.
• Don't start with a print run bigger than about 3,000 - that seems to be the sweet spot they recommend between getting a low enough cost-per-game balanced with any hope of ever selling them all. 5,000 is too ambitious, and 10,000 is insane.
• Design is very easy; refining a design into publishable form takes some serious effort, and printing is harder still, but none of these hold a candle to the challenge of actually marketing and selling your game.

The talks didn't give a lot of help with that last part - the marketing and selling - other than to establish a relationship with distributors and go to the trade shows.

Estimating the reduction in cost-per-game in production runs

Listening to the GTS lectures over the past couple of days, I've learned that part of the reason prices drop so precipitously with increased numbers of games printed is that the presses churn out a bunch of games before the colors and print quality are set correctly.  The number referenced by Dan Tibbles in the lectures is 1,000 games printed and discarded before they can start the actual print run.  That seems like a fantastically high number, but I know very little about commercial printing, so I'll certainly accept it until I learn otherwise.

I thought I'd compare the production prices for one of my printing bids to this model, where 1,000 games are wasted.  What that means is if you're ordering 1,000 games, you're actually paying for 2,000, so your cost of production should be double what it actually is per game.  If you order 2,000 games, you're paying for 3,000 copies, so your costs are 150% of the actual cost.  The more you order, the more your cost drops, because the wasted games become less and less of the total produced, and their costs are pro-rated over the whole print run.

Sounds reasonable, right?  Well, I thought I'd test it out to see what's going on.  Here's an actual bid on my game from Imagigrafx.  If you're interested, I discussed this in more detail in an earlier post here.

You can clearly see the drop in cost per game with increasing production runs.

I thought I'd try to model this statistically.  The bid above tapers off to something near $2 per game.  So, here's a hypothetical print run, for a game that costs $2 per game to print, but with 1,000 wasted games that also cost $2 per game.  So, if you print 1000 and waste 1000, it will end up costing you 2,000 * $2 = $4,000.  But, you only get 1,000 games, so that comes out to an apparent cost per game of $4.

This graph has the same shape as the real offer above, which makes sense.  However, the values don't line up quite right - the drop off is steeper here, and you approach the $2 more quickly than in my real data.  

So, this model doesn't quite work.  I tried it out with 2,000 wasted games, and it was much closer (green line below):

So, is that's what's happening? 2,000 wasted games?  Probably not, in reality.  I'd guess there are a bunch of actual sunk costs to setting up a print run, and those are going to have to be paid regardless of the size of the run.  So rather than wasting 2,000 games, it might be much fewer, and instead, the sunk costs (one-time setup costs) are making up the rest of the elevated apparent cost per game.

But as far as the statistics go, 2,000 wasted games seems to model the real bid I was getting pretty well, even if it's not exactly what's happening.  Maybe this is a good rule of thumb in estimating the drop-off in printing costs for extended print runs?  Seems like an easy enough model to use.

Manufacturing quotes

I sent around for a few more manufacturing quotes over the last couple of days.  One source in China says they can do the games for $1.32 each, FOB China.  What I've learned FOB means is that they get it onto a ship somewhere in China, and I'm responsible for the transport, tracking, customs, insurance, and additional shipping within the U.S. once the product reaches here.

My problem is that I don't have much of a way to know what that's going to cost.  Also, the rest of the quote is very limited in terms of details, so I don't even know what to ask about in terms of size, weight, number of cartons, etc.  I've asked for more information, and I've done some research, but it's pretty frustrating - the production price sounds very good there, but without the shipping and importation costs, it's hard to know how good a deal it would end up being.

Not to mention the difficulties involved in working with people and sending money halfway around the world, where our laws don't apply and recourse is nearly impossible.  But if I can save myself many thousands of dollars, I'd better look into it.

I'm also looking at a few more domestic printing options, so hopefully I can get a comparison there.  Interesting stuff, but I'm in the dark on a lot of this, working to enlighten myself.

My two cents worth

Blogger reports that I've now officially earned . . . two cents. In two months of daily posting.  Hey, everybody, drinks are on me!

This makes me think that ads are not going to be a major source of revenue for the future.  I've considered releasing some flash games, like Scryptix (not officially released yet, but you should be able to check it out from the link if you're on Facebook), and trying to have them ad-supported, but this makes that look not so promising.

I'm not sure how this money gets delivered to me.  I'm sure they'll send a courier over soon with my two shiny Abe Lincolns.  I'll think I'll tip him 15%.