Feb 122016

Generator-20071117This is a repost of a comment I made on a G+ post I did about some interesting factoids about the recently concluded Fate More Part 1 Kickstarter. Someone asked how print sales compared to PDF sales, and that sent me off to dig into my own perspective on the value of print products vs digital products as revenue generators. It went a bit long, which was practically guaranteed once I said I was gonna try to keep it brief. Go figure.

At any rate, here’s the comment!


Okay! This is a big topic, but I’ll try to keep it brief.

First, the general case.

I usually price PDFs at about half of the cover price of a book. The major market for PDFs is DriveThruRPG and they take a 35% cut of nonexclusive sales (which is fat, but given that they probably own 90% of the PDF market, that’s the price of admission to the fertile lands), so on a PDF sale you can assert you most commonly take in 65% of the price of sale on the PDF. If we say the cover price, is C, and the PDF is priced at half of C, then in the most common scenario your PDF revenue for a sale is 0.325C.

The major market for print books is distribution, and they buy books at 40% of cover price (60% off). You’re usually also paying some or all of the shipping bill to get items to distro in the first place, and/or storage or flooring fees for keeping your product at that distributor. So if you start at 0.4C for a book sold in distro, and then there’s some stuff nibbling away at that number before you actually get to receive money for it, the adjusted number probably looks similar to that 0.325C from your PDF sale.

So in general my perspective is that 0.325C is the monetary value of your content regardless of the format you publish & sell it in. For example, a $20 physical book that also sells as a $10 PDF provides about $6.50 in monetary value to the publisher per sale, whether the sale made is a PDF on DriveThru or a book sold to distribution.

(Yes, there’s the cost of manufacturing your books, but I’m setting that aside for now. The physical book revenue stream doesn’t happen at all if you don’t make physical books, so there’s a “gotta spend money to make money” thing going on there. There’s also the shared cost of developing your content and getting it to the point where it could be printed. Those parts are a factor in the big picture but it’s not something I can dig into without making this thing considerably longer; those live over in expenses land, and this comment is more about what’s happening here in revenue land.)

So, this general case starts to get a little weird when you start to get into specific cases that don’t fit the general mold, especially where a kickstarter or your own webstore is concerned. This is the land of direct sales, where you’re able to get way more revenue from an individual sale than you would in the general case’s sales scenarios. Sell a $20 book, you get $20 (minus payment processing fees, but that’s small percent, 5% tops). Sell a $10 PDF, you get $10 (same comment).

How’s that compare to the nearly-equivalent print vs. PDF revenue of the general case? Check it:

If you sell a book with a cover price of C, you get C. If you sell a PDF with a sale price of 0.5C, you get 0.5C.

So, a print sale under this pricing strategy is worth twice a PDF sale.

Both of these are considerably higher than the 0.325C standard revenue value, so it behooves the publisher to try to create and capture direct sales revenue when possible, so long as it doesn’t undermine business relationships in the process. (So don’t heavily discount your goddamn physical games for direct sales if you’re planning on trying to convince retailers to get them on their shelves. 10% off now and again, sure. 20%, pushing it. More than that, you really don’t care about your retailer partners.)

That 0.5C direct sale PDF is a nice boost over 0.325C, but not quite double. That 1.0C direct sale book is a huge boost over 0.325C, over triple. Direct sales of physical games areawesome. They’re worth a ton to a publisher.

Kickstarters can have some pretty strange or unusual pricing constructions. Ours tend to get weird and experimental and discounted on the digital component (because you’re not really undermining any retailer relationship with the PDF format), while our physical books tend to remain at cover price (to help support and preserve the value of the physical item and therefore retailers as well).

For Fate More, our $10 digital tier had at least 4 books represented there. One could argue it’s actually 6 books because of the two compilations, but those contain content from PDFs that are all already available pay what you want (including $0) so I’m leaving those out. Similarly one could argue that it’s only 2 books because 2 of them were also digital rewards for people who backed Fate Core in 2013. But that’s not necessarily everyone, so I’m gonna average all those numbers and call it 4 books. That means a single product sold in the $10 digital tier had a sale value of $2.50 ($10 divided by 4).

Our entry level single $20 physical book tier added $10 shipping for the domestic scenario; I’m confident suggesting that that $10 covers the shipping nicely. As you add more books, in the domestic scenario, that $10 ship fee doesn’t increase, even tho the ship cost does scale up. I’m also willing to suggest that the ship cost doesn’t increase anywhere near as rapidly as the aggregate full cover prices of additional books do, so the increased ship cost gets spread around nicely in multi-book situations. So for this calculation I think we can look just at the $20 portion of the pledge, the amount actually being paid for the book.

That $20 single book, then, compares to a $2.50 single pdf. Even if you assert the $10 tier really only covered 2 new PDFs for most $10 backers, that’s a comparison of $20 to $5, then, the most generous scenario.

So for a given title, a physical-shipment backer on the Fate More KS represents between 4x and 8x the title-specific revenue of a PDF-oriented backer. (And look at that, the PDF backers only represented an eighth of the revenue. Granted, a sizable chunk of the 7/8ths that remain also contains shipping fees, but even so the ratio is steep.)

Regardless, all of this revenue in the KS is focused on manufacturing the physical books and shipping them to folks who ordered them. But on the other side of doing that, I’m left with a big pile of additional inventory that I can sell into distribution and other non-KS direct and indirect sale channels as a pure profit source. A result made largely possible, financially speaking, by folks who bought physical books.

But to go back to the general case again — where the majority of the action happens, at least at the scale Evil Hat currently operates — I said above that the revenue generated sale by sale is about on par, right? It’s easy to end up thinking that means that PDFs generate the same revenue as print overall. But that’s not the case, because print’s volume sales, on reasonably successful products, tend to outstrip PDF.

Here are a few examples to go with that assertion.

Atomic Robo RPG
PDF sales to date via DriveThruRPG – 973 – representing about $8.4k in post-cut revenue.
Print sales via distribution – 2615 – representing about $36.5k in post-cut revenue.
Print sales volume is about 2.6x PDF’s; print sales revenue is about 4x PDF’s (but there are some hidden costs as mentioned above that knock that down a fair bit).

Monster of the Week Revised
PDF – 770 – ~$6k
Distro – 1048 – ~$10.5k
Volume ~1.4x PDF, Revenue ~1.75x PDF

Paranet Papers
PDF – 593 – $7.7k
Distro – 2456 – $49k
Volume ~4x PDF, Revenue ~6x PDF

So obviously there’s a range of possibilities; every product has its own specific, multi-factor reasons for performing in its own way; there will always be occasional exceptions, which do what exceptions do, they prove the rule. The trend I see is that PDF remains the minority share in volume, so even if each format provides roughly the same revenue value to the publisher, the volume differential means that physical products remain the majority driver of revenue generation.

End of the day, no matter how excited and committed people are to consuming content in PDF, it’s print sales that provide the vital majority share of revenue generation. It’s usually the sale of physical goods that primarily funds the development of content, as well as paying for the additional expenses of manufacturing those physical goods. PDF sales put a dent in it, to be sure, but just a dent.


  9 Responses to “PDF Products vs Physical Products as Revenue Generators”

  1. Nice thoughts in general, made me think a lot. One think I want to add is the benefit PDFs bring to the table: the can be shared before they are really ready for production and serve as test cases for catching errors and point where contradictions happen, or where clarifications are needed. And this happens before you go to print.

    So while the distribution and revenue is smaller, they bring to the table benefits that, from my POV, are priceless.

    • Ah yes! I’d like to passionately assert that PDF is a vital part of our publication strategy. This post was strictly about a narrow focus on PDF compared to Print as revenue generation. It does generate revenue, they’re just not peers in that sense. But in terms of the intrinsic value, the benefits of the format’s features, etc, I like PDF a bunch. That’s why I don’t make people choose between them whenever possible. Get both!

  2. How do print and PDF bundles play into this?

    • That’s not super calculable, at least in the situation I deal with where the book+PDF costs the same as the book without the PDF. There’s not really a way to measure how many books would have sold under a scenario you didn’t experience, right? 🙂 As far as how I *see* it goes, tho, the low fulfillment cost of PDF (plus — arguably — the obviousness of it being good not to charge people twice for the same content) means it’s a pretty low risk value-add for the print product that incentivizes purchases or, at least, increases customer satisfaction with the content they’ve bought from me in physical form. Maybe that has a significant impact on the volume of direct print sales we do, maybe it doesn’t; maybe things like Bits & Mortar has a significant impact on the volume of distributed print sales through stores and to customers that are aware of the benefit, maybe it doesn’t. Again, that’s unknowable. I think where it’s most measurable, tho not in a strictly quantitative sense, is in how positive our fans tend to be, and how well we’ve managed to grow our audience over the years.

    • I’m happy to pay a bit more for the convenience of having the PDF as well as the book – but not much more, because I don’t like to feel that I’m paying for the content twice. Having the PDF thrown in with the book is nice, makes me feel I’m getting something worthwhile extra.

      I’m sure this doesn’t help with your calculations at all. 🙂

  3. Sorry, I still want ePubs. 🙂 I just bought a bundle from Storybundle of game design books, including Kobald Guide to Board Game Design, and all were delivered in ePub format.

    I will buy PDFs when there’s no alternative, and I have quite a number of PDFs from Evil Hat, but they don’t display terribly well on smaller tablet devices and they don’t reflow text. In fact, I use a program called Calibre (multi-platform) to convert database articles that I reformat in Word to ePub for my iPad Mini. I don’t expect ePubs to be perfect reproductions of PDFs or the print material, if an illustration is slightly displaced I’ll cope, as long as the information (such as in tables) renders accurately.

  4. Hello dude!
    Very interesting article!
    I have translated it and shared with the Spanish community in my blog: http://rolhypnos.es/?p=2001
    Thanks a lot for the insight!

  5. Follow up this article with your thoughts on the non-revenue benefits (and costs!) of PDFs! For a KS, PDFs have the advantage of cost the backer no shipping fees, and are less likely to have production delays (I think) than printed material. Personally, I prefer PDFs because I can print out a scenario from a book without having to bring the entire book with me, or whenever I have something I want to write notes in. Plus, I can use the art in a PDF as handouts for the players!

    • I’ll consider it, tho some of what you’re after is in this article — in a KS, PDFs do have the advantage of costing the backer (and the runner) no shipping fees, but they also tend — in the ones I’ve run — to bring in relatively small percentage of the overall campaign revenue. Revenue from print sales ends up funding the budget that makes those PDFs possible in the first place. So PDF might be your preference, but you very likely owe the creation of many of your favorite PDFs to the sales of their print counterpart.

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