<body><script type="text/javascript"> function setAttributeOnload(object, attribute, val) { if(window.addEventListener) { window.addEventListener('load', function(){ object[attribute] = val; }, false); } else { window.attachEvent('onload', function(){ object[attribute] = val; }); } } </script> <div id="navbar-iframe-container"></div> <script type="text/javascript" src="https://apis.google.com/js/plusone.js"></script> <script type="text/javascript"> gapi.load("gapi.iframes:gapi.iframes.style.bubble", function() { if (gapi.iframes && gapi.iframes.getContext) { gapi.iframes.getContext().openChild({ url: 'https://www.blogger.com/navbar.g?targetBlogID\x3d15677816\x26blogName\x3dGathering+of+Engineers\x26publishMode\x3dPUBLISH_MODE_BLOGSPOT\x26navbarType\x3dBLUE\x26layoutType\x3dCLASSIC\x26searchRoot\x3dhttp://pdxgaming.blogspot.com/search\x26blogLocale\x3den\x26v\x3d2\x26homepageUrl\x3dhttp://pdxgaming.blogspot.com/\x26vt\x3d-1257436599043759910', where: document.getElementById("navbar-iframe-container"), id: "navbar-iframe" }); } }); </script>

Gathering of Engineers

Ludographic considerations from the Silicon Forest

Friday, October 21, 2005

The Economics of Havoc

As we wrap up the production of the first of what I hope will be several (hah) print runs of Havoc: the Hundred Years War, it is time for Sunriver Games to reflect on the economics of this whole business.  I’m not comfortable disclosing 100% of the financials of the whole operation, but I can certainly share a lot and I think many of you who have toyed with the idea of self-publishing are interested in this sort of information.

Let’s look at the cost side of the equation on a per-unit basis.  This will help understand what the unit cost per Havoc copy is.  Note that this analysis doesn’t include any company-level expenses, marketing, etc.  This is just production cost.

Item

Unit Cost

Boxes

$0.99

Cards

$2.66

Rules

$0.50

Art Licensing

$0.23

Shrink-wrap

$0.14

Designer Royalty

$0.45

Total Unit Cost

$4.97


So about $5 per unit.  As some of you may have seen, we did all of the assembly ourselves, and there’s no labor cost factored into this equation.

Those of you buying the game at $18.95 might be thinking “Wow! That’s a pretty good margin!”  The truth is we will probably be barely profitable as a company this year because there are a significant amount of marketing expenses involved in getting this game to market that count as company expenses.  Some of these are very enjoyable marketing expenses: Essen Spiel and BoardGameGeek.CON.  And did I mention that nobody takes a salary?  We only wish…

Later this year I’ll disclose some company P&L information for your perusal.  Our big challenge right now is how to bring two games to market next year when we really only have the cash to produce one.  There are a few things that can change this equation:

  • A second print run of Havoc happening early in 2006.
  • The partners (KC, Rita, Chris) put in more cash.
  • We borrow money from a bank.  Or from our kids.
  • We enter into some sort of joint publishing venture.
  • We take some outside investors.

We aren’t sure whether our year-over-year goal is to add one new game each year or to double each year.  We need one more number in the series to get a clue about that, assuming we do 2 games in 2006.  The economics of this whole business is such that:

  • It is hard to make much money on small print runs.  Or rather, small volume sales.  It is easy to LOSE a lot of money on a huge print run with very low sales.
  • It is even harder to make much money on small print runs of low MSRP games.  While the profit margin % might be about the same for a larger board game, the unit margin in absolute value is much higher, sometimes double or triple that of a small game.  There’s also substantially more risk in producing a bigger game.

Because of point 2, we are considering doing one “real” board game next year.

Well, that’s all for now.  Feel free to ask questions in the comment section.  I hope you find this information useful and with appropriate prodding I’ll continue to disclose this sort of information.

11 Comments:

  • At 1:11 PM, Anonymous Evil Timmy said…

    Wow! Thanks for the numbers. Definitely a word to the wise for all the game publishing dreamers out there. I only hope that you can continue to buoy the financial particulars to put out good games like Havoc. And without borrowing from your kids! ;)

     
  • At 2:28 PM, Blogger Coldfoot said…

    Go with the ConSim model and charge to post comments.

    It would help if you made more outrageous statements, and baited people to post comments. You might give Sunday (is that the free day?) to Jeff Widderich. He would appreciate the exposure and the meter on your PayPal account would be running as fast as the "cost-of-the-war-in-Iraq-meter" you see on all the political blogs.

    Just a thought.

     
  • At 4:54 PM, Blogger mike said…

    Not sure how feasible it is for "German/Euro/Family" games, but there is one other option I can think of and that's the P500/Gameplan model used by wargame companies. Get the hardcore fans to commit enough money to pay for the bulk of the upfront cost (of a small print run). Not ideal, but it does help avoid losses which are the real danger. It also gives valueable feedback about consumer wants.

    Mike

     
  • At 8:38 PM, Blogger KC said…

    Great article Chris. I'm thinking there was also the bar-code charge (about 10c per copy), the Dog artist's charge (about 10c), plus the cost of the expansions we give away (the team bag 3c, token bag 2c, rules 5c, etc). Still all this doesn't include development, playtests, all that. But regardless, it's been a BLAST! - KC

     
  • At 8:41 PM, Blogger KC said…

    A few other costs - bar code (10c per copy), the Dogs of War art (10c), the expansions we give away (team bag 3c, token bag 2c, rules 5c). Plus none of these include the development cost, playtesting, etc. Regardless, it's still been a BLAST! - KC

     
  • At 9:45 PM, Blogger Dug said…

    ConSimWorld - Why anyone would pay to be part of a fanboy club that the sysop tolerates is beyond me. When the developer of Barbarossa to Berlin was ridiculing people asking questions about the game, I called him on it, and he ridiculed me, all without the slightest complaint from anyone else, I knew that my days of posting there were over.

    And that was before they went to a subscription model!

     
  • At 2:24 PM, Anonymous Anonymous said…

    How many games did you produce in order to get a $2,66 cost for every deck in cartamundi? 2000 games?

    I designed a card game (Prague 1600) it would be interested in publishing it also.

    Thanks.


    Regards from Spain,

    JC

    http://ludere.ual.es/bsk
    http://ludere.ual.es/bsk/modules/bloghoster/?u=Wkr

     
  • At 1:29 PM, Blogger Chris Brooks said…

    JC,

    You should contact Carta Mundi yourself, as each circumstance will likely be different. We found their pricing to be very competitive.

    -Chris

     
  • At 6:23 AM, Blogger MadJazz said…

    HAVOC is sold out and nowhere to spot in Europe. Can we expect a reprint of HAVOC in Europe? I'd love to have a copy.

    Best wishes

     
  • At 11:07 PM, Blogger marry said…

    Blogs are so informative where we get lots of information on any topic. Nice job keep it up!!
    _____________________________

    Law Dissertation

     
  • At 4:29 AM, Blogger Dissertation Writing service said…

    This kind of information is very limited on internet. Nice to find the post related to my searching criteria. Your updated and informative post will be appreciated by blog loving people.

    Buy Dissertation Online

     

Post a Comment

<< Home