Apr 072010

We launched the Dresden Files RPG preorder on this past Sunday, and I’ve been plenty transparent about what’s going on over on Twitter, both in the fredhicks and dresdenfiles tweeter accounts.

So, I was tooling around for commentary and ran across this post at Lamentations of the Flame Princess.  I’m gonna quote a big chunk of it here, then get into some nitty gritties:

Tweets from Evil Hat‘s Fred Hicks indicate decent chances that they will hit 500 pre-orders each (on a book that’s not shipping for another 2-3 months) today.

That’s $45,000 grossed in two days.

He also said, “If those numbers hit 1000 each in direct-sales preorders, the print run (5000 copies each) and nearly all production costs will be covered.”

$90,000 gross to cover print and production costs. That’s one hell of an investment. Evil Hat’s not even considered one of the “large” RPG companies, is it? I mean, before this month.

So, yeah. It’s one hell of an investment.  But how does it break down exactly?

First off, consider the form factor we’re talking about here. Each book is full color, hardcover, full bleeds (the ink goes all the way to the edge of the page). The first is ~400 pages, and the second is ~270 pages.  Hefty little beasties. By getting those printed domestically, I am trading a little higher unit cost for more immediate shipping times (no customs, no slow boat from China) and a greater likelihood my print partner will be regulated in ways I find attractive (environmental regulations, worker protections), as well as the communal advantage of putting money from my company into the domestic US economy, which needs all the help it can get.

The two books at 5,000 copies each (total of 10k units) price out at a total that’s a few thousand dollars over $60,000 to print.  That’s over 2/3rds of the $90,000 gross that was mentioned in the quoted thing above.  Yes, I could have knocked that figure down a bit, but I’d be looking at an extra 2-3 months of delivery time, easy, based on what I saw come about with the send-the-files-to-getting-the-books timeline with other overseas-printed projects I’ve worked on.  I like the choice I made there and I feel good about it.

The price point on each book is $49.99 for the big one (Your Story) and $39.99 for the … uh, less big one (Our World).  This cover price translates into a flat fee per sale based on a percentage of the cover price that goes to Jim each time one of the books sell: it’s the royalty stream.  No, I’m not telling you what the percentage amount is.  With every license you’ll encounter a different structure.

So beyond whatever other fees are involved in a book sale, the royalty percentage comes out of the total (and in this case is not itself reduced by whatever discount I had to sell the book at).  In the case of an Evil Hat webstore sale, consider transactional and handling fees to take 5-10% off the top.  In the case of the preorder deal, shipping is free in the USA and mildly subsidized (about $6-10 per pair sold) for international customers.  Consider this then to amount to us making about 90% of cover on the usual web-store sale (before royalties) and 80% for free or subsidized shipping.  (Once we start selling through IPR, direct sales will get us 70% of cover before royalties come out; selling into retail through IPR or distribution will put it roughly between 40 and 44% with IPR at the high end.)

These cuts amount to the costs that scale on a per item sold basis.  I don’t pay them until the sale is made, but they come out of our theoretical $90,000 gross when we’re talking about 1000 copies of each book sold. What’s left out of that $90,000 (minus 60-odd thousand for the printing and the royalty percentage and transactional fees) are the flat, usually up front costs. Shipping could play into that (though I tend to view it as a scaling cost factor and lump it with the above).

From there, I pay for art, editing, writing. I would pay for layout, except I’m the layout guy and I own half the company so that’s sweat equity territory.  A lot of what’s left of that cost is the art, in fact, and the number would have been higher if I’d had to individually pay for every piece in the final product — but I got a big break when the guys publishing the Dresden Files comic book  gave me permission to use art from that source.  (Word to the wise publisher who wants to get into licensing: think what visual assets might come along for the ride with your license; comic books and TV shows might make the most sense from a budgetary standpoint.)

The rest after an up-front licensing fee paid to Jim went to my text oriented team.  And to be honest, with little exception, they’ve been underpaid.  Now, everyone gets underpaid in the game industry. No job in the hobby industry gets done without a little bit of “I’m paid in loving what I do”, whether that’s expressed explicitly (as it was with much of my team) or implicitly (by the rates and the paychecks simply being what they are when they’re offered).  Sweat equity happens.  All that stuff.  I do plan to pay out more if we smash through some of the bigger financial goalposts beyond simply “break even on costs”, and I’ve done everything I could to do right by the Evil Hat family throughout the process.  But this project was as much about belief and fandom as commerce, and many members of the team came to me and said “How can I help?”  Every game you see on every shelf is to some extent a labor of love for someone, somewhere in the process.  With the Dresden File RPG, it’s carpeted in wall to wall love.  Still, if you’re doing the approximated math, you can see I still paid out a solid chunk’a change in all of this to the writing and editing team, so it’s not for nothin’.

(On all of the above where I’ve been vague, I can’t get into the specific figures — percentages, amount paid to whom and so forth — because that information isn’t just mine to share.)

Math heads will also remember that the biggest chunk of change Evil Hat gets on a sale is one made direct through its web store.  That said I absolutely do not begrudge sales that happen to retailers through middle-men operations, whether it’s IPR or Alliance or Esdevium or DriveThruRPG.  Those services get us more customers and they allow the customers to support more than just the publisher with their purchasing dollars.  Which is why I’ve been enthusiastic about signing up retail stores to partner with us to offer instant PDF access for people who preorder in-store.  A retailer is an advertising program that buys your products from you — at a discount, sure, but they reach people you won’t necessarily reach yourself, and their customers often don’t want to feel like they’re forced to choose between supporting a local business and a favorite publisher.  Letting them choose both with a clear conscience is a good service to them and is why I offer it.

But to stick to the math of it, the figures I’ve given for breaking even are based on number crunches I’ve done built solely around our direct, webstore sales.

There are really three or four tiers at which I can evaluate breaking even on costs.

  • At the direct sales tier, 90% of cover, Your Story breaks even around 1,000 copies, and Our World breaks even around 900.
  • At the direct sales through IPR tier, 70% of cover, YS is about 1,300 copies, OW is about 1,200
  • At the sales to retail high end, 44% of cover, YS is 2,400, OW is 2,100
  • At the low retail end, let’s say 37% of cover based on a deep distro cut of 40% and free shipping to that distributor, YS is 3,000, OW is 2,700

But basically in the “worst case” scenarios I could expect to encounter on this product, if I’ve sold through (and been paid for) half of each print run, all costs are covered.  I plan for the worst case, seasoned with a bit of optimism that asserts I’ll sell at least the quantity of this “worst” case.

But in terms of targets for my webstore orders — my best case — I’m looking more at numbers somewhere between the first and second bullet. (Remember, about 10% of a preordered pair goes towards covering that free or subsidized shipping cost.)  So in truth we’ll hit our break even point through our webstore sales alone if we go a little bit beyond 1,000 preorders of each.

But 1,000 was such a nice round number that it’s what I tweeted as our goal.

Any questions?


  44 Responses to “Dresden Sausage”

  1. Holy shit man. I know most of this, and STILL this is an awesome compilation.

    All the more fascinating to contrast with the original “Minimal Risk” printing model for SOTC, though. God. Unbelievable how long ago that was.

    -Rob D.

  2. I do plan to pay out more if we smash through some of the bigger financial goalposts beyond simply “break even on costs”

    I have been struggling with whether or not to pre-order this game because of the high cost. Note that I am not saying that it is overpriced, just that $90 is a lot of money for a roleplaying game, especially one that I’m interested in based on curiosity rather than pre-established fandom and that I’m not even sure I’ll ever have an opportunity to play.

    However, I do know some of the people working with you on this (for various levels of the word “know”), and it’s good to be reminded that support for these games means support for them too. I’m still not sure which way I’ll go on this, but I’ve got one more tick in the “pro” column.

  3. For the nth time, I truly appreciate your policy (and the effort that goes into it) of sharing in detail the numbers and decision behind your process. It’s interesting and an education on so many levels.

    I particularly applaud your choice for choosing to do your printing locally. Bravo.

    • Add me to the list of people supporting the “print locally” decision whole-heartedly.

      And thanks for the breakdown. It’s awesome to see that Evil Hat’s positive, grass roots publishing model that focuses on making sure people know what they’re getting into and have a great experience with your games (from free FATE to the SOTC SRD to this) is working out and growing exponentially.

      I count myself lucky to have had your layout skills early in this process for Beast Hunters, because I’m sure you wouldn’t have anywhere near enough spare time nowadays 🙂

  4. Thanks for the very interesting look behind the scenes, and I really like that you’re printing in the US, not just because it means they’ll arrive months earlier than overseas printing, but for the environmental and worker reasons you cite.

    The preorder PDF (I got mine through Endgame at their minicon) is very pretty; I’m looking forward to the hardcopy!

  5. Already ordered mine. Yeah, $90 is steep, but I’ve been eagerly awaiting it for years, and my group loves FATE. Good luck, Fred, and I hope you bank enough to finance the next one… whatever that might be.

    • Yup. We’re waiting with bated breath.

      I was pleased with how the system works, and my girlfriend who’s not big on character generation seemed to enjoy the process.


  6. Are you guys doing any marketing to the non-gaming fans of The Dresden Files? I’m very curious of the crossover value of the game and if it might get some new blood into the hobby.

    • Well, I maintain Jim Butcher’s official website at http://www.jim-butcher.com/ — check out the front page (scroll down a little)

    • Brilliant, and opposite the general trend. In Ep 50 of 2d6 Feet in a Random Direction, we talked about just that trend … I think I was venting about how Doctor Who magazines didn’t say zip about about the Doctor Who rpg among all their 3rd party ads.

      Then along comes Fred, zigging when everyone else zags. 😉

  7. Oh very well positioned! I see you laid those plans a long time ago. 😉

  8. That is a scarily big commitment, but offset produces beautiful, beautiful books, and it’s a great license. I’ll be interested to hear what negative reaction you get (if any) for preselling from the retail channel.

  9. Just curious, have you considered partnership with, say, Cubicle 7, to print a run of the books outside the US?

    I ask this for purely selfish reasons, as shipping from the UK is less than half of what it costs from the US. [And I have yet to lose an order from there (something which cannot be said for trans-Pacific packages, where I am convinced I am supporting at least one Cargo Cult). <grin>]

    Even with the small subsidy (and thanks for that, btw), the international shipping options from the US are rather steep, being more than the cost of either of the books, but fortunately not quite the cost of both. [Oh for the good old days when shipping by surface mail was still possible.]

    • No. We want to be in the driver’s seat with printing our own stuff.

      Instead, as you can read at the preorder link I gave Simon above, we are partnered with Leisure Games to provide the preorder benefit to UK customers who order through them.

    • Sadly as that invokes two lots of shipping (US to UK to Oz) it isn’t any cheaper.

      [I hate paying freight, as you no doubt have already guessed. <grin>]

    • Then why’d you say that shipping from the UK is less than half of what it costs from the US? 🙂 EDIT: Never mind, I figured out that part.

      If you’ve got a local game store in Australia that has arrangements to get books distributed by Alliance or Diamond (as the store that we signed up in New Zealand does), we can work with them to get signed up for the program.

    • <grin> Rest assured that I have contacted my FLGS about it, but, knowing them, I sincerely doubt much will come of it. The good news is that they have started to carry smaller publishers again. They didn’t for quite a while.

      [Then again, the “L” in this instance is roughly 723km. The Store where L is 720km less doesn’t want to carry small publishers at all, even if you pay for the goods up front. So I suppose you can remove the “F” part from that store.]

      I can wait.

    • And as I said, it was just a wild idea. [I realise quite well you are quite hamstrung by what shipping options are actually available to you. Keep up the good work. Great post, btw.]

    • The shipping was about $20ish less than I expected — and with the AUD at about 92c, it works out cheaper than what my, er, LGS typically charges for a comparable game. On the other hand, I’ve also been known to pay for express shipping from IPR from time to time. (US to AU in 2 days!)

      Perhaps somewhere like Milsilms might be an option? They already stock Penny, DRYH, and SotC, so it doesn’t seem like much of a stretch for them, and the postage from Melbourne is almost certainly cheaper.

    • If I manage to find an Australian distribution option that I can make work, I’ll be tweeting it on http://twitter.com/dresdenfiles (and Aussies who’ve already preordered I’ll be happy to refund if that happens).

    • @Craig. I agree totally. Even with shipping it is still, in all probability, going to be cheaper bought directly than through the local distributors (aka Jedko; Milsim’s wholesale arm). [The rule of thumb still being, double the US cover price for any game in $AUD, although with 10% off at the moment.] It doesn’t mean I can’t make every attempt to reduce the shipping costs, since that money is not going into producing awesome future games. <grin>

  10. I can’t wait until I have enough cash in the bank to cover the preorder. So excited!

  11. Hugely insightful and very interesting, to say the the least. Fred, you’ve got a mastery of your business, clear decisioning and transparency. I love the look at decision points and smart trade offs on price and margins against time to delivery and what amounts to corporate principles.

    I’m proud to have paid for my pre-order at EndGame this past weekend.

  12. Thanks, Fred. That’s a great idea – include the retailers on the pre-order rather than not do it. Do you have a technical solution to this, are you just relying on the stores to pass on the PDF themselves, or do are you going to pass on the PDF on receipt of the preorder?

    We’ve been supplying PDFs of our products to retail customers on request, but nothing formal like this.

    • It’s low tech — I send them the files, they burn them to CD (or whatever) to get them to their customers. It’s a trust thing instead of a “I verify each transaction” thing, so there’s some risk there, but I tend to operate from the position that a PDF is an easy thing to risk.

      I think it works *because* it’s low tech, too. Not much of a barrier to entry, just the ability to sign up for a dropbox.com account and use email.

      So far we’ve gotten around 20 retail stores on board.

  13. I always find your discussions very interesting Fred. The economics of RPGs are pretty harrowing for creators. I am pretty sure that I am a life long employee of a large organization kind of guy, because I just don’t work well in the world of business with me in the driver’s seat. Add to that the difficulties of the RPG industry that has to run so much on love and passion for the product (and not so much on, ya know, money), and I can’t do anything but salute your drive, fortitude and skill. Evil Hat is hands down a brilliant piece of work, and Dresden Files is going to be quite a crowning glory. I hope that you not only far surpass your break even point, but get all those books sold and make the rounds of the awards, because I know that everyone on the project completely deserves a huge amount of success.

    If only I didn’t have seven hundred pages to read on my computer before I could post a review, I could start getting out the word more (did do a small shout out on my rather neglected blog), but I am going to savor every page.

    Thanks Evil Hat dude!

  14. Now, everyone gets underpaid in the game industry. No job in the hobby industry gets done without a little bit of “I’m paid in loving what I do”, whether that’s expressed explicitly (…) or implicitly (…).

    So true and well put! Thanks, as always, for the insight.

    (How long is the pre-order open by the way? It implies that it would end once books start shipping, but that could be June or July. It doesn’t explicitly state the length of the offer. Thanks. Budget is budget….)

  15. I just wanted to note that it was specifically reading here that the books were printed locally that moved me to pre-ordering *both* books even though I am not a particular fan of DF. (and I’m certain the world book will be full of Evil Hatty goodness). Anyway, bravo for that and all your transparency on these kind of issues.

  16. Yeah, thanks for sharing this. As someone looking in to printing their first product, I find it very interesting. I’m a little intimidate by the raw dollar figures I’m going to need to come up with to make my product viable. Boxed set, 110-120 cards, 15-20 double-sided dungeon tiles, two rulebooks (16 and 40 pages at 8.5×11). My marketing advisor says $40 is the price to shoot for in this market…that means I’ve got to get production costs down below $10 a unit to make the numbers work out. So far, that seems to mean an initial print run of about 4000. That’s a whole lot of product to move, and a big leap of faith in the product’s marketability.

    • Wow, yeah. And you’re shooting for a market I am not as familiar with — something with board game components. All I know about it is that it gets spendy, fast — and with multiple components you’ve also got an assembly charge to consider on top of all the rest.

  17. I want to thank you for printing in the US Fred. This means something to me. It makes me feel even better about my pre-order.

  18. Dear Mr. Hicks,

    It’s likely that you should be commended for printing locally and environmentally. However, As part of your production consideration you site labor concerns in printing overseas. Further down in disclosure you go into a discussion about how the worker bees and freelancers for Evil Hat just have to deal with being underpaid via some “labor of love” contract inherit in gaming.

    Now, everyone gets underpaid in the game industry. No job in the hobby industry gets done without a little bit of “I’m paid in loving what I do”, whether that’s expressed explicitly (as it was with much of my team) or implicitly (by the rates and the paychecks simply being what they are when they’re offered). Sweat equity happens. All that stuff. I do plan to pay out more if we smash through some of the bigger financial goalposts beyond simply “break even on costs”, and I’ve done everything I could to do right by the Evil Hat family throughout the process.

    I’ve met most of the Evil Hat people and I know that you’re a tight lot and close friends. But, I’m curious about the dissonance between foreign labor and domestic labor and why you haven’t moved towards better pay – or more in keeping with your entrepreneurial spirit… moving towards offering the talent some percentage of the project/points/profit sharing however that would manifest. Unlike many other gaming companies, Evil Hat isn’t a tiny, fly-by-night operation and the inevitability of profit might prove a compelling and ethical response to below-market-rate fees for intellectual capital.

    • When you say stuff like “it’s likely that you should be commended”, it sounds like you’re hedging your language so you can lay out a stealth-whammy on me. Ah-ha! Tricked you! Now I flame you to bits! I’m hoping that’s not the case here.

      I’ll address the rest of your comment backwards:

      “Evil hat isn’t a tiny” etc etc — well, no, it’s not tiny, it’s microscopic. We’re still tiny. If we sold no more books beyond this point, paid for the printing of the DFRPG, paid off the $60,000 loan (over twice what we had in the bank at the time we took it out) we took out in order to be able to pay for the printing, we would right now be well inside the five-figure range as far as the company’s liquid assets go. So that’s something to consider here.

      “But, I’m curious about the dissonance between foreign labor and domestic labor” — when we’re talking about the difference between people earning pennies a day and people earning dollars a day, I think there’s still a clear difference here.

      When I say that people are underpaid in the gaming industry, I mean things like writers hitting 3 cents a word, editors hitting 1 cents a word, when something more like ten times that would be more appropriate given the effort that goes into those words.

      But practically nobody pays at that sort of level, whether you’re talking about a microscopic company like Evil Hat or a larger company with several hundred thousand dollars in assets and the ability to pay people regular salaries. Salaries are nice, and if we become a million-dollar company at some point we can start to consider doing that. (At present I work around 30-hour weeks on keeping Evil Hat going. For that I draw a stipend of $450 a month. Evil Hat still can’t afford to do more than that right now; presently the expenses of our production obligations outstrip the ability to pay the founders of the company — myself and Rob Donoghue — much more than that. And for several years prior I drew nothing.)

      When people use phrases like “the inevitability of profit”, what’s inevitable is a lot of rueful laughter. People get into jobs in the game industry because they want to work in the game industry. Money is not a perk that comes with those jobs, typically.

      Part and parcel of the situation with the folks who’ve worked on this game with me is that they are now a part of the Evil Hat family. That means that their own projects have a home. We’ll be publishing Ryan Macklin’s Mythender. We’ll be fielding whatever project Lenny Balsera feels he needs to do. We’re already the new home for Chad Underkoffler’s projects with Swashbucklers of the 7 Skies. Services are being rendered in addition to cash payouts. The entire team has already been paid a bonus when Evil Hat had a strong quarter about half a year ago, and I made sure what I paid was an amount that hurt a little (totaling around 20% of the company’s cash assets at the time). Evil Hat looks out for its own; that’s always been there in the math.

  19. Ah-ha! Tricked you!

    no, not really. not at all, actually. just pointing out that i didn’t want to get bogged down in the merits of Capitalism and production ethics, whereas labor and pay were specifically dissonant within the original post. so, i wanted to sidestep the one and address the other particularly.

    Regarding scale, i agree that you’re not rolling in “hookers and blow” money at present… there’s no reason to think that you’re not going to continue to trend upward with Evil Hat and that the award winning AND highly playable games won’t continue to go in-and-out of print and increase the company’s profit. You (E.H.) and say somebody like Luke Crane aren’t on the same scale, nanoscale, of the one-off, two-off unprofitable independent game publishers.

    the difference between people earning pennies a day and people earning dollars a day, I think there’s still a clear difference here.

    Sometimes dollars are pennies. It would be sad/amusing/interesting to see a quality of life assessment on what game industry people make. I’m just saying that you acknowledge that game companies pay poorly to outsourced talent (to say nothing of the owner-operators and their sweat equity, but then you’re the owner.)

    With this game, you have the luxury of domestic printing because of the license, scale of the project, prioritizing press control, but also with respect to ethical production. Which peoples get favored? Do you favor printing locally and shoring up the domestic economy; or do you print overseas and take that extra 20%-30% of production costs and share it with the artists and editors that worked on the project domestically?

    I like you. I like the E.H. people I’ve met and played with. E.H. seems to be a great company all around. I get a bee in my bonnet when i generally hear people defend the abysmal pay that writers and artists receive within the gaming community. I think you guys ARE the good guys; and I would like to see gaming companies that are profitable address this issue.

    Congrats on wrangling this game.



    • Groovy. Thanks for explaining where you’re coming from; I’m confident your heart is in the right place. I think Evil Hat’s heart (hat?) is in the right place here, too; we may be going more for a “compensation package” than specifically, solely monetary compensation with our creatives here, and I’ve definitely tried to keep a dialogue going with them to ensure that the ultimate goal — their happiness with their work, with us, with what they’ve gotten for their efforts — is as maximized as we can afford while maintaining the health and growth of the company. We’re still in start-up mode, when it comes down to it, and I think everyone involved has appreciated that, but also appreciated the kind of respect I’ve been showing them as part of that process.

  20. […] of the matter is, though, all of the above is doable on tabletop game industry budgets. If you read this post by Fred Hicks, you’ll note that he’s citing $90,000 gross to cover print and production costs for […]

  21. Very impressive; my key question on this subject is the amount of mark-up for a domestic printer. Did you by any chance compare it to Chinese or Canadian printers to see the difference in per-unit cost? I am looking to print domestically and fortunately for me, domestic is Canada. Just trying to get a baseline when I look forward to the insanity of my print run.

    • No, but the scuttlebutt I was getting was that Taylor was very competitive for domestic full color hardcover printing, but if you wanted to go with a black and white softcover in offset quantities, you wanted to talk to (Canadian printer) Transcontinental. Basically I relied on the tried & tested experience of other publisher friends and partners I’ve talked and in some cases worked with.

      Taylor/Transcon seems to be the footing that Hero Games is on right now, for example (and I do layout/art direction for them), after trying a Chinese printer for Hero 6th Ed. The short version of how that went: a couple bucks less per copy ain’t worth language barrier issues, 3-month customs/shipping delays, and the occasional bizarre business practice.

  22. Another good thing; Canucks can buy DFRPG and bring it across the border without duties, thanks to NAFTA since it was printed in the States. 🙂

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