Nov 152013
 

So, woo! The Fate Core Kickstarter brought in $433,365. That’s money in the bank, y’all. We’re swimming in it like Scrooge McDuck, right?

Well.

For illustration purposes only. No twenty-dollar bills were harmed in the making of this image.

No twenty-dollar bills were harmed in the making of this image.

At this point we’ve taken care of printing and shipping all of the physical reward components for the Kickstarter. There are still funded stretch goals that we’ve yet to get done, which we haven’t really spent any money on yet. Those are Do: Fate of the Flying Temple, Young Centurions, Shadow of the Century, and Dresden Files Accelerated.

So the question is, how much money do we have left to make those things happen?

  • $433k to start…
  • minus ~$22k for Kickstarter’s cut
  • minus ~$20k for Amazon’s payment processing cut
  • minus ~$20k for development & art of Core (not including printing)
  • minus ~$4k for development & art on FAE
  • minus ~$8k for development & art Fate System Toolkit
  • minus ~$20k for development & art Fate Worlds 1 & 2
  • minus ~$6k to get the art, Fate Core expansion, and index for Strange Tales of the Century (editing and writing had already been paid for outside of the kickstarter)
  • minus ~$15k for development and where necessary art on other projects (Sally Slick novel, Freeport, Day After Ragnarok, Deck of Fate, the various consultations)
  • minus ~$68k for printing Core, FAE, Worlds 1, Worlds 2, Toolkit, Strange Tales, and Sally Slick
  • minus ~$24k in preemptive royalties paid to Jim Butcher for the essentially free PDF we’ll be giving backers of Dresden Files Accelerated once it’s done
  • minus ~$120k for shipping all the physical rewards (rough estimate to include cost of sending replacements for lost and damaged stuff as well)

Assuming I’ve accounted for everything in the above — and it’s not certain that I have — and that the shipping estimate is accurate, that leaves us with about $106k to spend on the remaining four projects from the Kickstarter.

This is without accounting for the expense of supporting all that: my time, Carrie’s marketing time, Chris’s business development time, Sean’s project management time. I didn’t charge the company anything separate from my salary to do layout on FAE and Toolkit; I’ve spent at least a full month’s time solely on customer service and data-wrangling for this campaign. Carrie has been making sure we’ve got solid product message and marketing for all of that. Chris has been charting the trajectory for all this stuff and helped conceive of a bunch of it with me during the campaign. And Sean’s efforts are a big part of why we’ve been able to deliver so much in so little time. So what’s definitely not reflected in the above is a lot of additional sweat and the coin needed to turn up the heat.

Bottom line, I think there’s a chance that we’ll still retain a small profit after accounting for the as-yet-unpaid costs of those four stretch goal projects we have as yet to complete, but it’s in no way certain… and really, taxes on the income/“profit” we’re carrying into 2014 might eat that up right quick. So I’ve been looking at Fate Core as a “profit-neutral” Kickstarter.

Had we not managed to time the second wave of physical books such that they all came out and were able to be shipped at the same time, the additional shipments for those who wanted the split might have put us more firmly into the red. As it is, I’d rate this as a very approximated break-even, with our actual profit-taking to come in the sales of the product line outside of the Kickstarter campaign.

Which, at the end of the day, is pretty much as designed and intended.

Folks have joked that Kickstarter should be called “Kickfinisher” because you do best to bring a nearly-finished product to any campaign you’re Kicking; it’s not so smart to launch a campaign where you really haven’t started work yet.

But I think it’s in this kind of breakdown and analysis that the -starter suffix makes the most sense. Having crowdfunded an entire product line, with solid expectations that our costs will be all or close to covered by that funding, we’re now starting a new phase of Evil Hat with our most robust product line ever on offer. If there’s profits to be made, it’s not in the Kickstarter campaign and its fulfillment, it’s in what comes after, that the campaign made possible. We brought a near-finished product to get it going in the first place, yes, but we walk away with thousands of books in inventory and already paid for and ready for sale.

That is what we Kickstarted.

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  25 Responses to “Fate Core Kickstarter Breakdown To-Date and What We Actually Kickstarted”

  1. I’m curious, Fred: Did you overprint the books to have extra for retail and were they part of your funding plans? Does the selling of these additional copies through traditional distribution methods (including direct sales) add to your profitability?

    • Yes, we printed extra — about double what was pledged for, for each title. So far that looks to have been a good idea. 🙂

      Since the print runs and development costs above are all paid for out of the Kickstarter funds, yes: a sale of any of the books through any of the channels they’re getting out through adds to our profitability. That was and is, one might say, the plan. 🙂

    • There are profits aplenty to be had, they’re just happening in sales *of* the kickstarter-funded stuff, outside of the kickstarter. 🙂

  2. That’s actually kind of upsetting as a consumer. I dropped $90 on the “book trio”, and you guys aren’t really going to see any of that?

    • We saw it plenty! And spent it on what it was intended for.

      Never think that *paying our bills for us* means we didn’t “see” the money. We just had a specific use for it as soon as it arrived!

    • Sorry, I meant Evil Hat as a enterprise, didn’t make any net profits? I suppose that in the gaming biz, just paying the bills is a win. I had hoped this kickstarter would have been a nice windfall for you guys.

    • There are profits aplenty to be had, they’re just happening in sales *of* the kickstarter-funded stuff, outside of the kickstarter! 🙂

    • In effect, you used the KS as initial investment to create a product, then the rest of the sales later on end up as profit.

  3. I did the same thing for my Kickstarter. Not quite as many books, mind you, but with some of the same goals.

  4. FWIW, I ran our Dawning Star KS with the same mindset, i.e., profit-neutral with a goal of having paid-for books that can go into distribution and pay off as pure profit going forward. Similarly, it lets us relaunch the Dawning Star line to build off for future products, e.g., Shadow War. Running the KS as profit-neutral lets you hem in price and add more value, which presumably increases the total backer base.

  5. I don’t know whether I’ve seen anyone say this, so I will: thank you! I really appreciate your transparency talking about these kinds of issues. As someone who is looking to do stuff like this down the road, it helps me tremendously to establish realistic expectations about the likely outcome of doing a Kickstarter.

  6. This is a tremendously helpful way to look at what you’re doing, I think. I’m curious about Kickstarter cannibalizing possible sales, though. I’ve been thinking about this since Amanda Palmer pointed out that her Kickstarter had about as many backers has her previous album had sold. Now I’m curious: how many records does she have left to sell?

    On the other hand, I discovered Fate via the Kickstarter—so maybe it’s not quantifiable, since I might never have purchased a Fate book without the Kickstarter…

    • As long as you’ve got a viable sales platform, it’s not “cannibalizing”. They’re still sales. It’s equivalent to reinvesting the profits from a pre-order into more stock. Moreover, the dynamic of the KS is such that these backers are typically good at amplifying your signal overall, which should lead to more sales.

    • Yup. We’re still selling plenty outside of the Kickstarter.

    • Hoping we get a graphical breakdown of first quarter sales of Dresden vs. First quarter of fate core sales, with kick starter broken out.

    • I got Fate 2.0 years ago, and I thought it was pretty good, so I backed the Kickstarter, but only at the PDF level. Once I realized how awesome the new edition was, I bought a print copy of the Core book, signed on to the Fate Dice Kickstarter, and bought the Deck of Fate from Drive-Thru. I still plan to buy a print copy of the Toolkit, as well as Atomic Robo and Dresden Accelerated when they finally release, and its turned my kids into gamers where other games have failed. So yeah, they’ve created a loyal customer where one didn’t exist before.

    • That’s basically my experience, too. I actually didn’t even know what Fate was, I just saw the Kickstarter being pimped by lots of people I like on Twitter. So in the very final minutes I grabbed the PDF level. I actually updated to physical copies and bought a copy of FAE for my sister’s middle school gaming group (get ’em while they’re young!). I have since purchased Fate Dice (didn’t back the Kickstarter because of international shipping) and I plan on getting physical copies of Dresden Accelerated and Atomic Robo as well.

      I wish there had been a way to measure how many existing fans made up the core of the Kickstarter, and how many new fans got dragged in, thus functioning as a capital investment AND advertising campaign in one.

      Actually, the more I think about it, the more positive the Kickstarter model looks for just this kind of situation.

  7. Thank you, Fred. It’s always refreshing to read about of the economics behind the gaming industry. There are always complaints about the costs of books, etc., but people don’t realize what it costs to get products ready for sale. As always, your transparency and honesty is great to read.

  8. Folks expressing concern about the profitability here may be missing the point. We’ve got a lot of inventory that’s paid for, but not shipped to the backers, and we’ve been selling the heck out of it. In the past four months in distribution alone, Fate Core has sold 2500 copies, Fate Accelerated has sold 1800 copies. Even with the big discount that those sales occurs at, that’s over $28k in additional post-Kickstarter sales. So the profits are happening: just not within the sales and expenses of the Kickstarter itself. The fact that the Kickstarter has made our costs practically nil as we go into distro and other post-KS sales cycles is a huge advantage.

  9. This is so spot-on — it’s very similar to where we were at the end of our Kickstarter (and what we’ve seen regarding sales since then). Thank you for writing this.

  10. We had a much more modest success on Kickstarter last year ($15K) with our game, but saw a very similar pattern to you, Mr. Hicks. No left over money, but the printing and fulfillment was covered and the sales of remaining games are going straight to profits. Thanks for the insight!

  11. This is a really well-written post and lines up very well with the one I plan on writing for our Name of the Wind project. Even when the numbers are there, I think it’s going to be hard for folks to fathom how we barely broke even on a $600k project and our profits will only come from after-Kickstarter sales. Thanks for writing this!

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  13. “and really, taxes on the income/“profit” we’re carrying into 2014 might eat that up right quick.”

    I think there may be a way around this. I worked with other companies to avoid taxes on remaining kickstarter funds that will be used in a subsequent year. I like FATE Core a lot, and would be happy to share some of my research free of charge if it will help you guys save on taxes. You can find me on twitter @danthecpa if you are interested.

  14. […] Fate Core Kickstarter Post Mortem […]

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