Introduction: The Online World

The internet changes everything it touches. New production models, new distribution models, even new funding models. It blurs the line between professional and hobbyist by enabling the hobbyist to produce work of a professional standard – simply by replacing the infrastructure that an old-style game manufacturer needed to have with technological substitutes.

Some of these impacts, it must be said, are not strictly due to the internet per se but are the result of advances in the personal computer, one of the technologies that makes a wide-scale internet possible. I’m not interested in splitting hairs and in the wrap-up to the first part of this article I lumped it all in together.

To summarize where we’re at, here’s a quick look at the breakdown of key production costs and how the modern world affects them:

  • Writing – slight increase in efficiency, but overall relatively unchanged.
  • Art – budget for a major project is unchanged (but produces a higher art-to-page ratio). Assuming that you use clip art or digital artists that really take advantage of the technology available, art budget can be slashed dramatically for smaller products, even reduced to zero for tiny ones.
  • Editing, Revision, and Layout – massive increases in efficiency. Assassins Amulet took months to write and weeks to edit. Some savings are offset by learning curves and new format requirements, and there can also be a large up-front investment in software – that can be spread over multiple products. Overall, editing is 10-25% of the production cost that it used to be. But these efficiencies affect both dead-tree and PDF products.
  • Printing & Binding – non-existent in an electronic product. Can be as much as the first three categories put together in the case of a dead-tree product. Quality of paper and binding makes a big difference, and this is a per-page cost, so the more art and white space, the more it costs. Print-on-demand adds to the editing/layout budget but eliminates this factor.
  • Distribution – very cheap for electronic products, still very expensive for dead-tree. Distance is not a factor in the first case, is a major factor in the second.
  • Marketing – often cut too deeply in budgeting. Can be as much as the printing costs for a major dead-tree product – for a while. Electronic Marketing is possible but is usually under-budgeted and overvalued. A lot of small e-projects allocate virtually no budget for marketing.
  • Management – the smaller the other costs, the smaller the project, the smaller this component is as a percentage of the total. Otherwise the same for both product types.
  • Administration – mostly this is a project-based overhead. Unaffected by the publishing format.
  • Taxes – the bigger the budget, the more likely this is to be a major factor. Can be 40-50% of the cost of a major dead-tree product – if it sells enough. Less likely to be a factor with PDF production, and may well be a smaller one, because electronic products can be one-man self-employed projects that fall into the category of personal taxes. Expect to spend money on professional advice at the start and spread the cost over multiple projects.
  • Legal – as per taxes. Mostly a per-project overhead.
  • General Overheads – time based, size-based. The bigger the project, the more this rises as a percentage of the whole. However, if you produce a LOT of products, this can be spread over them all – forcing an organization to grow.
  • Profit margin – can be a little, a lot, or simply whatever is left over. In general, the more of a product you expect to sell, the smaller the per-unit profit margin can and should be.
  • Commissions – Every time a dead-tree product changes hands from producer to customer, expect the price to inflate by 30-50%. That’s reality. Every time an electronic product changes hands between producer and customer, expect the price to inflate by 10-17%. And expect there to be few such handovers.
  • Remainders – between 10% and 15% of the production costs of a dead-tree product – if you produce 5-10 per year. The fewer you produce, the more variability. A totally non-existent double-whammy for electronic products. Print-on-demand offers the best of both worlds – for the price of an extra commissions factor. So WOTC will probably never use print-on-demand but smaller game companies might.

The scores (estimated, and using writing as a unit cost of 1):

  • PDFs etc: Small: 1.9888; Medium: 3.4465; Large 5.7065. Adding Print-on-demand: Add 0.565,1, 1.75 respectively.
  • Print-on-demand: 4.52; Medium 8.03; Large 12.265
  • Dead Tree: Small: 19.205; Medium 30.682; 45.862.

In compiling these estimates, I’ve tried to factor in the amount and quality of the art used and other typical factors. If you’re producing an atypical product, or have thought of something I haven’t, Your Mileage May Vary.

Profitability Impact

This is largely a function of sales. Because they have bigger distribution and more markets (bookstores etc) in which to sell, Dead-tree products can be 100x as profitable as a PDF of the same size. They will have a larger profit margin, and will reasonably expect to sell more copies. But the risks are also 100x as large, and the need to sell product month-in, month-out, is also 100x as large. Some of the costs and risks can be minimized with cheaper production – less art, less color, poorer binding, cheaper paper – at the expense of an unknown degree of loss of sales.

PDFs, on the other hand, have much smaller risks, are much faster to produce (typically days or weeks instead of months, months instead of half-years) and a far greater percentage of the money goes straight back into the producer’s pockets.

The sales targets for success are relatively proportionate to the square of these numbers. A dead-tree product with a net unit cost of 45.862 needs to sell 8×8=64 times as many copies as the equivalent PDF (costing 5.7065) to be considered as successful. (In fact, it’s probably higher, but that’s a fair baseline). Selling 1000 copies of such a PDF is roughly the equivalent of selling 64000 copies of a hard-covered dead-tree book. Selling 100 copies of a medium-sized PDF product, like a 10- or 20-page module or supplement, is the equivalent of selling 8000 copies of the same module or supplement as a dead-tree product. At the end of the day, after expenses, the creative staff get about the same money, either way.

Most people recognize these ratios – approximately – almost instinctively. And that impacts directly on value-for-money considerations, and buying decisions, when it comes to PDFs.

The Value-for-money of PDFs

In general, different standards are applied to PDFs as are applied to dead-tree products when it comes to assessments of value-for-money. There is room for a huge debate about whether or not it should be that way – and I can argue both sides of that question to a standstill – but that’s neither here nor there.

These standards differ, to some extent, based on size, and price. What’s more, the standards are also different if the product has to be printed in order to be useful. I don’t care how pretty a map tile is on the screen, what I’ll assess value-for-money on is the standard of the printed end-product.

So this is where it starts getting complicated. To cut through the fog, I’m going to look at each size of PDF separately – and subsection those as necessary.

The Amateur Press origins

The PDF industry can, if we’re honest, be traced back to an Amateur Press origin. All these GMs with their homebrew house rules sitting at a typewriter or an early word processor, waiting for their dot-matrix printers to spit out their latest stroke of genius.

If you were arrogant enough, or sure enough that what you were writing would be of value or interest to others, you might work up the nerve to submit your work of genius to Dragon magazine, or The Space Gamer, or Pyramid.

For most people, though, the distribution would have been either strictly local, around your own game table. The next step up from that was to publish a self-funded fanzine, either irregularly or regularly – the 1970s/80s equivalent of a blog. In the 70s, you would probably have used a stencil and run off 30, or 50, or 100 copies at your own expense. These would have been given away free, or (at most) you would charge costs-per-issue. The thought of making a profit from them was pie-in-the-sky.

Some enterprising people got together and realized that if they took copies of each of their fanzines and bundled them together, stapling them into one big volume, they could make their own work more desirable – value for money was a compound effect. These were generally known as APAs, or Amateur Press Associations. In Australia, the biggest RPG APA was Alarums & Excursions, and it collected about 40 amateur fanzines on the subject, of between two and ten pages each. Most of these were produced with stencils and typewriters. Some were even hand-written, though that was relatively rare.

In the later 80s and early 90s, the more technologically inclined may have taken their original plain-text documents from their primitive word processors and uploaded them to a bulletin board so that other computer users all over the world could download these 1-2K documents and see how brilliant you were (or weren’t). Current E-zines like Roleplaying Tips are the heirs to that legacy, their modern-day incarnation.

The desktop-publishing boom of the later 90s didn’t seem to have a huge direct impact on RPG materials, for some reason – at least not in Australia. I suspect the problem was the limited distribution mechanisms available. It may have been different elsewhere, but the primary impact appears to have been secondary – developing the tools that eventually became WYSIWIG word processing and the Portable Document Format or PDF.

Then came the world-wide-web and it all moved online. Suddenly, distribution was global, and the search engine was your friend. The documents themselves were still mostly plaintext, because embedding fonts was a huge pain in the posterior (I know, I looked into doing so). The only way to produce a high-quality PDF with embedded fonts, etc, was an A$1000 piece of software from Adobe. But you could take that plain text, and use some standard high-quality fonts, and turn it into a web page.

The problem was that web pages were ephemeral. They came and went with great regularity. A few sprung up that did nothing but archive material by others, leaving a legacy of their contributions behind when the original website vanished into the mists of the internet. Often hosted at universities, these persisted as long as the student responsible studied there – then these started to vanish as well. (There are a few left, often without a web front page, accessible through FTP, but they are becoming few and far between).

Drive-through RPG and RPGNow and a few similar sites took these amateur productions and monetized them. To start with, some were still plaintext documents, but the PDF was becoming more accessible as a format – and with it, enhancements in quality. Nevertheless, when it comes to tiny PDFs, the quality standard by which products are judged are those of a cleaned-up fanzine or a single blog article.

At the same time, PDF scans of larger dead-tree products began to circulate illegally. In time, some dead-tree game companies started to release and distribute electronic versions of their products, a trend that is continuing, even accelerating. So the larger a PDF is, in page count, the more likely it is to have the same production standards as a high-end dead-tree publication. And, in between, there is the middle ground.

That is the context within which the profitability, and perceptions of value-for-money, have to be assessed when we’re talking about PDFs.

Tiny PDFs

Anything under 10 pages I consider to be a tiny PDF. Most are half that size or less. These will typically cost $1-2 each. There may be a single piece of artwork, or there may be none – but that art won’t generally be of a very high quality. The standards applied are strictly about content functionality. Because the price is so low, I’ll often take a flier on something that sounds interesting.

These are often publications that the creator would have produced anyway. All GMs are creative, of necessity, and that creativity usually spills over. About half the price covers expenses of production, and the other half is total profit for the creator.

The typical post here at Campaign Mastery averages 2-5000 words in length. That’s the same size as these products. And I knock out two of them a week.

2 per week x 50 weeks a year x $1 each = $100 – selling one copy of each. If the minimum wage is about $500 per week, x52 = $26000 per annum – and that’s roughly right for Australia – you need to sell 260 copies of each to make the minimum wage.

Not going to happen.

Selling between 10 and 100 copies of each, with the average about 1/3 of the way through that range – call it 40 copies in a year – gets you to $4000 a year. That’s a part-time wage supplement, but don’t give away your day job.

Because the value-for-money standards are about perceived functionality of content and nothing more, it doesn’t take very high perceived value to make the purchase worthwhile to the customer – as I said, I will often take a chance on something that sounds interesting. And if it turns out that the product isn’t useful, I’m only out a dollar or two – no big deal.

Two Caveats
I said that sales of 260+ copies, on average, weren’t going to happen – I have to add a couple of caveats to that statement.

Caveat The First
The first caveat is Marketing. Most of these tiny PDFs receive little-to-no promotion. If you can invest some money in marketing a series of them, it might just be possible to double or quadruple sales – getting you close to that minimum wage. If 1-2% of these products is a smash hit that sells 500-1000 copies, and you produce 100 a year, that’s 1-2 bull’s-eyes. Marketing could double the number of bull’s-eyes, or more.

If you could get 10 products a year out of 100 to sell 1000 copies each, that’s an average of (9×40+1000)/10 = 136 copies, average. You need those 10 products a year to sell 2500 copies each to achieve an average of 286. That puts you well over the top of the minimum wage – so long as you keep writing.

Caveat The Second
The second caveat is accumulation – of both product and reputation. Accumulation of reputation over a period of years increases the number of sales of any product. Ian Gray and I are so taken by the various Mongoose products that we’ve bought over the years that we will buy any we come across, sight unseen. I feel almost the same way about FFG’s Legends & Lairs series.

Accumulation of Product is all about the accumulation of residual sales. Let’s say that after the first year, sales of any product drop to a steady 5% of what they were when the product was new. That’s 8 per product per year thereafter, or 800 a year. Since all the costs have been paid for in the initial flurry, except for the ongoing distribution cost, that means that of every $2 transaction, $1.76 is income. So that 800 sales a year is the same as 1408 sales in the year of release. The shortfall – discounting improbable hit products of unpredictable sales – from simply releasing new product is about $22000. And $22000 divided by 1408 is 15.625 years.

Now throw in the occasional big seller, and the effects of a growing reputation, and it should be possible to go from zero to earning a minimum wage in a decade – provided you can keep churning out two products a week for year after year.

Medium PDFs

Quadrupling the size of the PDFs brings you into the medium-sized territory. That’s between 10 and 40 pages, and usually closer to the higher end of this scale – 25-35 pages. These will typically cost about $5 to $7 – which means $2 to $3 in the pocket of the creator. These will usually have some cover art – some of it great and some of it poor, though they may not.

Tiny PDFs of maps and art also fall into this category, and this price range, because it usually takes longer to create a piece of reasonable-quality art than it does to write enough words to fill the same space.

You don’t have to be a genius at math to realize that on the face of it, this size of PDF is less profitable than smaller ones would be. You’re making $2-3 on something that takes about 4 times as long to create.

What’s more, the standards of production and content expected are considerably higher. So it could conceivably take five or six times as long to create.

Why on earth would you do it?

In a word: profit.

At this size, you have to sell a lot less product to get to that minimum-wage goal. Two of these a month selling 40 copies is the same as six-to-eight small PDFs selling 40 copies. At this page-count, print-on-demand starts to become viable, adding a relatively cheap extra sales platform to your arsenal. Sales on this size of product are easier to ramp up than sales on a long series of tiny PDFs because you don’t saturate the market as much – making people less inclined to tune out your advertising. If people find your product interesting, they are more likely to buy in the expectation of some depth to the subject matter – so average sales will probably be higher, anyway, maybe 60 copies a month instead of 40. You are no more likely to have a runaway success than before, that’s still 1-2% – but the scale of what you get with a runaway success can be several thousand copies, perhaps as many as 5000. And finally, those residual sales? Not only would you expect those to be higher, but after the first year, profits on them are MUCH higher.

Regular visitors to DriveThruRPG and RPGNow will have noticed their “copper sellers” and so on – how many have stopped to mentally observe the page counts? It’s rare to find anything smaller than 20-30 pages being a really good seller.

In the long run, it becomes possible to do this for a minimum wage at this scale (though just barely) – whereas with the tiny PDFs, it really is impractical. It will still take years, though. More likely, you would be able to do this part-time and supplement your income with another part-time job.

In order to achieve this, though, you are giving up a hefty percentage of the casual purchaser – maybe half, maybe more or less. And, as I said earlier, the standards of quality are expected to be a lot higher. It’s a trade-off that takes you from amateur to the fringes of the professional ranks.

Ironically, this is the size at which value-for-money is least important as a consideration. It’s cheap enough to get the occasional purchase on a whim, and cheap enough also that the potential for value is more important than the actual value at the end of the day. If you buy one and it’s not useful, you won’t be all that happy about it – but you won’t be overly distressed, either.

Big PDFs

Quadrupling the scales gives us the 50-160 page range, and now we’re into serious head-to-head comparisons between dead-tree products and PDFs. If the typical price of the dead-tree product is about $80, the ratios of production costs show that the price of a PDF equivalent should be around the $10 mark – but because we tend to equate something that size with a price that low as a bargain, anything up to $20 tends to be an acceptable price tag.

If you can write two or three of these a year, you can do fairly well out of it. Once again, it’s easier to use marketing to ramp up sales, and the scale of success for the occasional hit is even higher – up to perhaps 7500-to-10000 copies – and the residual sales are even juicier. More importantly, and the reason for that $20 price tag, it gives you room to employ discounting as a serious incentive in promotion and marketing. If the product costs you $10, plus $3 on the marketing, to earn you $5 at the end of each sale, you can drop 25% off (to $15) in a sale and still make not only that $5 but a couple of extra $ on the top.

Here’s the reality: If you see a product in this page size priced at around $7-8, it is below cost – or the costs have already been paid for by a dead-tree edition. If you see a product priced around the $10-12 mark, it’s at cost. And if you see one priced at $15-$20, the author is trying to make a living out of his writing – and more power to him.

Eating into all this profitability is the perception of value-for-money. At $20 for a PDF, and a page-count somewhere in the 80-100 page range, I’m not only not going to consider the product if it is not interesting, I’m going to assess the quality of the content, and how likely it is to be useful. I’m happy to invest that sort of money in something I can use time and time again; but each percentage of uncertainty about that reusability erodes at the likelyhood of converting interest into an actual sale.

Eye candy is very pretty, and can be genuinely inspiring – but at this price scale, perceived value in the content is going to come roaring back into consideration in a very big way. There is a delicate balance to be maintained – too little eye-candy makes the production look cheap and raises questions about how much the darned thing is costing (i.e. it undermines the perceived value for money), while too much looks like padding out the content (again undermining the perceived value for money).

This is also a scale at which a relatively small change in price – a couple of dollars – can nuance those value-for-money expectations. If the product is art-light but only costs $15, the page count promises a higher return in value for the investment. So the solution to the problem of too-little art is to drop the price a little (while staying within the overall profitability window).

I buy PDFs of this size about as often as I do a physical product of this size. The standards of perceived value for money are comparable, despite the 4-1 or more ratio of prices. The profitability of the product to the producer is often roughly comparable, as well.

The big return is in residual sales. While your initial sales will be depressed to some extent, they will be slower to tail off, and will remain higher than they would have with a smaller product, even allowing for substantial discounting – dropping the price to $8-12 after the first six months to a year, for example. Remember that after 12 months or so, that’s all income and it will persist for years.

Very Big PDFs

Once you go above the 160-pages or so, you’re into the terrain of the Very Big PDF. I’ve seen these priced at anywhere from $25 to $125. Page-count alone can remove print-on-demand from consideration unless you deliberately subdivide your PDF into a bundled product.

But here’s the thing: To buy one of these, even at the $25 price, I have to be darned convinced that I’m going to get something worthwhile out of it. I’ll check multiple reviews. I’ll expect a free sample – and that sample had better include something that’s usable outright, and not just a set of incomplete samples that might be useful if they were complete.

If I’m releasing one of these onto the market, I’d want to be darned sure that I had my marketing plan lined up and ready to go. Day 1, this happens. Day 2, I do this. Day 3, I do that. And so on, all the way through to about day 100. If I’m going to be spruiking its value on websites and blogs, I’m going to want the list of targets spelled out and in clickable form.

At 300 pages, this is the size category into which Assassin’s Amulet falls, and I’ll be talking specifically about it in a little while. At $20, it seems like a very fair price – a bargain, in fact – and that was the perception that we wanted it to have.

Check out the free sample from RPGNow if you’re interested in knowing more about Assassin’s Amulet).

Per-unit costs vs Amortized costs

The larger a product is in page count, regardless of publishing format, the goal is always to try and spread the costs out over as many copies as possible. Some costs can’t be minimized this way, they are a fixed $X per copy or per page. Some costs such as production overheads can be amortized over several copies. The real difference between dead-tree and electronic publishing is that the costs of the latter are smaller, with a greater percentage of them going to creators – but the dollar value at the end of the day is much the same in terms of income to the producers.

If you were to compare the value for money of a physical book – say, the DMG, or Pathfinder core rules – with the value-for-money perception of a copy of the same product in electronic form costing the same price, you might expect them to be the same. Some game companies do, and it’s a colossal mistake to make. The correct comparison for anything other than teeny-tiny PDFs is about 4-1 in price.

The customers aren’t dumb; they know that electronic publishing is a LOT cheaper, even if potentially a lot less profitable when sales are added up at the end of the day – simply because the market for PDFs is smaller than that for physical rulebooks (though its growing, and this won’t always be the case). Any attempt to charge the same price for a PDF as you do for a physical product simply makes the company seem greedy or stupid (to give them the benefit of the doubt), and therefore makes both versions seem overpriced – even if the actual perceived value-for-money of the physical product was reasonably good.

Print On Demand

I’ve mentioned print on demand a number of times in this article, and the reason is because I think it’s a game-changer. It offers an increasingly-viable means of generating a physical product for a price approaching that of an electronic one, plus postage and handling.

That’s because the product IS essentially an electronic one until it reaches the final step in the production process, which has been moved to AFTER the point of sale.

It used to be that print-on-demand had page limits, and was only about soft cover publishing. Those limitations have largely been erased over the last few months. I have seen POD services offering hard covers, and POD services offering products well over the old 100-page-or-so limit. I haven’t seen both from the same vendor, yet, but the market is moving fast.

Perceived Value vs. Actual Value

It’s probably worthwhile to discuss the differences between perceived value and actual value for a bit.

Actual value is a function of how much utility you get out of a product – how often you use it, how indispensible it is when you do, and so on. But there are no fixed standards that you can point and use to measure this. Instead, the standard is also a perceptual phenomenon.

You buy three or five or ten game products, and the average of their perceived actual value becomes the standard that you use to measure the potential value of future purchases.

Right away, there is a double standard and an element of fuzziness. The core books from any game system are, by definition, supposed to be at the heart of the system, the common touchstones, ubiquitous – and that gives them a fundamentally higher perceived actual value. Then there are world settings like Ebberon or the Forgotten Realms or Faerun – are these core books or game supplements? By which standards do you judge them?

Then there is the question of player vs. gm – sourcebooks that one finds irreplaceable might be worthless to the other. Throw in personal tastes, and customers looking for sourcebooks to shore up areas in which they might be weak, and it becomes apparent that my standards of actual value will be different to yours, which will be different to the next player or gm over. The best any reviewer of a product can say is that “I found this sourcebook to be useful/useless and here is why” – permitting the reader of the review to form his own opinion, according to his own standards, of whether or not the product represents value for money.

On top of that question comes the issue of the difference between actual value and perceived value as a basis for decision making. The first is a standard – now shown to be very loose and fuzzy – of actual usage, while the latter is about preconceptions and anticipation.

Everyone who buys anything regularly – whether it be toilet paper, music, or RPG products – has bought something that looked promising but turned out to be worthless, or at the very least, extremely poor value for money. Equally, we have all bought something cheap or heavily discounted because it didn’t look all that promising, only to discover a hidden gem.

So, what can be done drive up the Perceived Value of an RPG product? And does this translate to an increase in Actual Value?

Production costs

The bedrock foundation is the actual production cost of the product. This is the minimum price that a game company can charge for the product and break even. In a heavily-remaindered physical item, it can be a negative value, or close to it, because it’s costing the company warehouse space, earning them nothing, and the price of production has already been written off as a loss – so that anything you can get for it is a windfall. When this is the case, you would sell it at a pittance, or give it away, or simply have it destroyed.

A comparison of the retail price demanded with the typical price of a product indexes the expectations of this particular product against the personal value-for-money standards that you have developed.

The role of utility

A product can sound good, and even look good, but it’s worthless unless you actually use it. I don’t care what the actual page count is, if I’m only using 20 pages of a game product then so far as I am concerned it’s value is that of a 20-page sourcebook – depreciated because of all the dead weight that the rest of the book represents.

This is where the differences of perception between different GMs, and the differences of perception between player and GM have their foundation. And it reveals one of the cleverest, and most subtle, marketing tricks used by Paizo to make Pathfinder the success that it is today.

The Core Rulebook, as Greg pointed out in the comments to part 1 of this article, contains the equivalents of both the Player’s Handbook and GM’s guide in the one volume. This not only drives up the page count, it reduces the value of the overall book to both players and GM by incorporating a substantial chunk of material that is only of value to one of them – lowering expectations of value-for-money for subsequent game supplements. In other words, it makes the Core Rulebook appear to be more of a bargain while simultaneously lowering expectations – a very difficult trick to pull off at the best of times.

Vanity Upgrades

Ian Gray uses the special anniversary PHB that was brought out with the fancy pseudo-leather cover when he’s in one of my 3.x campaigns. He claims that he bought it because it incorporated all the errata up to the date of publication – but there was an ordinary edition at the same time that was just as up-to-date, and the errata had been pretty much all cleaned up in the previous printing, anyway.

Vanity upgrades have been used for years to market products. CD and DVD booklets are prime examples. They don’t add anything to the utility, but they do make the product prettier – at a price. Because you can actually see the extra price manifest in a physical difference to the product, you are predisposed to value the content more highly.

Immediate vs. Delayed utility

Of course, there are two different types of utility. There’s stuff that you can use immediately, and there’s stuff that will eventually be worthwhile but that can’t be used right away.

Market research has shown that immediate utility is typically valued over delayed utility, even if the ultimate value of the two is comparable. The reason relates to the psychology of need.

Advertising exists to generate a perceived need in the mind of the potential customer, and to then suggest the product being advertised as a solution to that need. It’s all about immediate gratification. The difference between immediate and delayed utility is analogous to the difference between a cheaper, disposable, product and a longer-lasting equivalent – unless the longer-lasting version can successfully be positioned as solving a broader immediate problem, the cheaper disposable product will outsell the more expensive one every time.

It’s to reinvent the “need” that razor-blade manufacturers keep changing the design of their products – so that they will no longer fit in the old handles, and we have to buy new ones.

The 95 cent phenomenon

Psychologically, there seems to be a big difference between $9.95 and $10. There is a smaller but still real perceptual difference between $9.99 and $10. In fact, it doesn’t matter much what the $ amounts concerned actually are – the .95 or .99 are the important part.

This scales, as well. That’s why car sellers price their cars at $32999 and the like. Would Assassin’s Amulet have sold better if we had priced it at $19.95 than it did at $20? I don’t know, I really don’t.

The Psychology of Price

I’ve touched on this already, but the fact is that price itself has its own direct impact on perceived value.

It’s human, but if we pay a high price for something, we need it to have a high value to justify that expense in our own minds. So the theory holds – but I have to admit I’m not completely sold on this one.

The inverse situation, on the other hand, is easy to demonstrate, as the following cautionary tale will demonstrate – even if it is a slight diversion from the topic at hand.

The Ausworld story

In 1999 and 2000, I was part of an ambitious attempt by a company called Ausworld Pty Ltd. This is the story of that project.

The goal was to provide Broadband internet access through dial-up modems, guaranteeing a maximum connection every time.

For the benefit of a modern audience, used to lightning-fast broadband on tap, a little context: the theoretical maximum connection of a 56K dialup broadband connection – the best going at the time – was actually 48Kb (that’s 48,000 bits a second, each bit being an eighth of a byte. A 1KB text file has 8000 bits. A 32KB graphic has 256,000 bits. A 500K hi-res graphic has 4,000,000 bits.) If you didn’t have a state-of-the-art modem, one that was less than 6 months old, the theoretical maximum was 33.6Kb!

But, in practice, you would rarely achieve this. A 56K modem might get you a 32K connection, if you were lucky – but more often would give 28K, or 24K, or even 16K if you were unlucky.

At 16KB usable, that 500Kb image would take 250 seconds to download to your computer screen – a bit more than 4 minutes!

Compare that to the 100Mb connection I now use, which could grab that same image in 0.004 seconds, at least in theory. In practice, overheads and route switching and slow connections elsewhere in the system mean that it’s probably closer to 4 seconds. I can live with that : )

The goal, then, was to use a state-of-the-art router to connect a hundred or so dial-up accounts directly to one of the two T1 underwater cables which between them (at the time) provided all internet connection to Australia (aside from some minor satellite connections). By adding more routers, we could divide that internet backbone connection amongst half a million customers and guarantee all of them a perfect, 48Kb, connection, every time.

What’s more, because we were using state-of-the-art technology, straight out of the laboratories of companies like Ericsson, the cost was going to be incredibly cheap to run (though it wasn’t cheap to set up in the first place – the router cost more half a million on its own).

From Bookkeeping to Network Engineering

I was originally brought on-board to design and implement the bookkeeping systems that would track usage of the bandwidth, print invoices, receipt payments from customers, and so on. But one of the people employed by the project failed to deliver the programming and configuration information needed to make the system operational – being careful to avoid naming names, you’ll notice – and the primary systems engineer and I had to step up to the plate.

We had expected the infrastructure and software to take 3-6 months to complete; because neither of us was an expert on what we were doing, and had to grope our way along, it ended up being 18. There was no operating manual for the router – we were writing it as we went! This delay ate into the budget for the project, which would have a critical impact on its ultimate outcome.

Sidebar: IPv6 vs. IPv4

This project was also the first implementation in Australia of IPv6, which is only now gaining momentum for a wider implementation. That shows how far ahead of its time the systems were that we were developing.

IPv4 and IPv6 are internet protocols. They describe how information is to be requested over the internet, broken up, and sent from the source back to the requesting computer.

The internet as we know it now is built on IPv4, which has a number of shortcomings. It was first designed back in 1980, and simply wasn’t designed for all the things we have very cleverly manipulated the internet into doing in the 32 years since. As a result, many of the things that we do – from streaming video to encrypting secure websites for e-commerce – are far less efficient than they could be (the wonder is that they work at all).

IPv6 solves these problems. It also has security benefits, solves (for at least the time being) the problem of the internet running out of IP addresses, and has a whole host of other advantages. The Wikipedia page listed above has a whole section devoted to comparing the two.

The Ausworld Price Comparison

At the time, a typical dial-up account cost about $30 a month. While some accounts were unlimited in the amount of traffic you could use at that price, others limited your bandwidth after a certain amount. There were on- and off-peak rates. Australia’s biggest internet provider had a number of plans – their “Power Plan”, for “Power Users” cost $39.95 a month for 40 hours of connection. Many charged a premium if you exceeded certain bandwidth limits.

Compare that with what Ausworld was charging – it’s significant. With a 900% profit margin, the highest we could justify charging, our charges were 1 cent a minute or 20 cents a megabyte, whichever was lower.

A dollar an hour is 100 cents for 60 minutes. We were charging 60 cents for the same connection time. Typically, in a month, a power user might download 25 or 30 Megabytes. Taking the higher number, you get about $6.00 under our pricing plans. So, for high-level usage, we were offering $40 worth of internet usage for about $6 – and it was costing us about $0.60 in costs to provide.

(In actuality, because of the setup expenses, it was going to cost us about $3, most of which was going to be used to pay off the technology – it was an overhead that was being distributed).

At those prices, we calculated that we needed only 100 customers to break even, each month. Anything over that was all gravy.

The price of delay

As I said, the delays ate into our budget, leaving virtually nothing for proper marketing. We didn’t really consider this a handicap when we finally had everything working, though; at our prices, we were sure that our services pretty much sold themselves, certainly enough to get that initial 100 customers. We printed up about 20,000 cardboard bookmarks and started handing them out at railway stations.

How many customers did we get? One, and that through a personal connection.

Feedback on the ground

The common perception we encountered was that our prices were so low, there had to be a hidden catch. A half-reasonable marketing campaign would have addressed the problem. We could have tripled our prices and then slowly dropped them as customers over the resulting 34 minimum came on board.

But, by the time we found out, it was too late. Our budget was depleted, bills needed to be paid, and the operation folded. One more month would have made the difference. An extra $5,000 for a serious marketing campaign would solved the perception issue. We could have offered a money-back guarantee.

No Price exists in a vacuum

There is a saying, “when it’s time to railroad, everybody railroads.” The corollary is that when it’s not time to railroad, you’ll have a hard time getting anybody on board one of those “damn fool dangerous contraptions”.

Ausworld was offering modern broadband prices and technology before the man in the street was ready to accept them. It’s that simple, when you get to the bottom of it.

Lessons for RPG Pricing

There is a lesson here for Game manufacturers. “If it seems to good to be true, it probably is” – so says conventional wisdom, and (most of the time) it’s good advice. The reality for game makers is that they have to charge a credible sum for their products, or they will have an uphill battle convincing people to buy their wares.

The Profitability Curve

If you lose sales for having prices too high, and you lose sales for having prices too low, then you have a curve of some kind, with an optimum pricing point, or even a couple of different optimum points.

Looking at that a slightly different way gives the following very interesting trio of curves:

Of course, various factors like the 95 cent phenomenon would distort these pretty curves. What’s even more interesting is what happens when you think about the impact of increased perceived value for money on them.

  • Sales for a given price go up.
  • Profit per sale for a given price goes up.
  • Net Profit goes up by more than either of these increases alone, because these two increases compound geometrically.
The Value of Extras

The most obvious way of increasing the perceived value for money is to include extras. That’s hard to do with print products, though it can be done with shrink-wrapping and splashy stickers proclaiming the extra on the cover. It’s easy to do with electronic products that can be bundled into a zip, or with some method of distributing them to people who sign up for free updates to the product – which gives you a ready-made subscriber list for marketing future products to.

The last is the approach we used with Assassin’s Amulet.

The Scope of Assassin’s Amulet

The thought process behind what became the eventual shape of Assassin’s Amulet was to make sure that everyone got value for money, whether they were a player or a GM.

We also wanted to be sure that there was some content of immediate value as well as some content that would provide residual, long-term profits.

We wanted to avoid, as much as possible, content that would provide only one-time value, and to focus on reusable value. Even the map around which the entire sourcebook was oriented was capable of reuse, with multiple variations provided for each part of the map key – and advice on how to apply these variations in a consistent manner. I estimated that you could reuse the map about 100 times before all the possible variations that we had provided would be reused.

We deliberately targeted all varieties of campaign level, with content that was useful at low levels, content that was useful at mid-levels, and content that was useful at high levels – and we even had some content that was designed to span the entire length of a campaign.

Any idea that any of the three authors had for content was thrown into it, on the assumption that half of whatever we provided would be dead space to someone. It’s no coincidence that the sourcebook is priced appropriately for a volume of half the size – we were deliberately going for the “value for money” sales incentive.

At every step of the production, the goal was to set a standard that approached our theoretical ideals and then strive to achieve that standard. That includes the production of extras. Where traditional presentation methods wouldn’t meet our ideals, we tried to invent new ones, and it was in the extras that this really showed up. Even the number of extras was exceptional:

  1. A 300dpi full-sized version of the map (spanning multiple sheets of paper);
  2. A 600dpi full-sized version of the map (spanning multiple sheets of paper);
  3. A 300dpi full-sized version of the map that obscured internal details from players;
  4. A PDF containing the map sliced to fit A4 pages instead of letter-sized pages (18 pages);
  5. A PDF, “A Player’s Guide to Legacy Items” (17 pages)
  6. A PDF, “The expanded GMs companion guide to Legacy Items”, which was annotated with additional advice and behind-the-scenes info (26 pages)
  7. A PDF Player’s version of “The Shield Of Madrassias”, one of the Legacy Items from the sourcebook (15 pages);
  8. A PDF Player’s version of “The Mask Of Seriphides”, one of the Legacy Items from the sourcebook (20 pages);
  9. A PDF Player’s version of “The Crown Of Thorns”, one of the Legacy Items from the sourcebook (16 pages);
  10. A PDF Player’s version of “The Spiked Gauntlet Of B’rrastis”, one of the Legacy Items from the sourcebook (18 pages);
  11. A PDF Player’s version of “The Cup Of Dewarr”, one of the Legacy Items from the sourcebook (17 pages);
  12. A PDF Player’s version of “The Armor Of Atrisses”, one of the Legacy Items from the sourcebook (17 pages);
  13. A PDF Player’s version of “The Lantern Of Tevariers”, one of the Legacy Items from the sourcebook (21 pages);
  14. A PDF Player’s version of “The Shortsword Of The Shahd’rah”, one of the Legacy Items from the sourcebook (20 pages);

Plus, of course, the free sample version.

Nor was the intention to stop there. We had another 8 items planned that ultimately had to be shelved when Johnn began to wind down his involvement here; I had to choose between compromising Campaign Mastery, giving up on the sequel to Assassin’s Amulet, or giving up on the other freebies – at least for now.

The hard realities

It’s time to start bottom-lining this article. I have a whole list of points to make but I’m going to try and get through them as quickly as possible.

promo vs production

The hard reality is that people budget for production and don’t leave enough space in the budget for adequate promotion.

damned if you do, damned if you don’t #1 – Art

I worked damned hard producing the art for AA. There’s a lot more in there than was originally intended – simply to keep the art levels consistent throughout the book, because it looked unbalanced with only some chapters having extensive art. For about three weeks, I was producing three pieces of art a day – and was totally exhausted at the end of it, in fact it took more than two months to recover from it.

The hard reality is that if you don’t include art, your product can look cheap; and if you do include art, you have to either produce it yourself or pay someone else to do it, which can cost so much that your profits get completely wiped out. And if you do it yourself, as I did, there will be quality control issues; there’s some art in AA that I’m very proud of, and some that I worked very hard on and that still doesn’t look right. All I can say is that I did the best work I could in the time available.

The big mistake we made was committing ourselves to a publication date before the editing, layout, and art was finalized. Once we announced the forthcoming release here at CM, we had only so much material to expend in blog posts and articles at Roleplaying tips to generate buzz – and if we faltered, the buzz would die down.

damned if you do, damned if you don’t #2 – Freebies & Samplers

These take time to produce. And I’m the first to admit that we probably went overboard when it came to AA – but we were looking to provide a reason for people to keep talking about the product.

The problem is that this is dead time – unless it directly enhances the sales of the main product, its time spent creating for no return. You can minimize the negative impact by planning and creating these as you go, but most people aren’t that organized. And even when you are, it consumes time that could be spent on creating something else that earns money.

The more your product costs, or exceeds expectations, or is unusual in some way, the more you need these – but they are always a drain on your creative time and energy. So if you think a free sample is good, and especially if it persuades you to buy the full product, tell somebody. Tell the publisher. Tell the author. Tell someone else who might want to take a look. Let people know that the freebie has done its job – or they might stop including them.

Its All Compromise

With so many competing considerations, compromise is inevitable. With Assassin’s Amulet, we compromised as little as possible and while it didn’t fail, it wasn’t the roaring success we were aiming for. With Ausworld, there was no compromise at all, and it DID fail at the final hurdle. Certainly, the next game product I release will be compromised in various respects as a result of the AA experience and learning what is practical and what is not.

The Impact Of Kickstarter

Offering some sort of salvation from these problems is the phenomenon of Crowdfunding, through sites such as Kickstarter. The ability to raise the funds that you need to see a project through is a breakthrough. It offers a new purpose to freebies that has an immediate return to the creators. They can immediately see what’s popular and what’s not. I know Kickstarter say they are working to correct that limitation – but progress has been slow.

The only complaint I have about Kickstarter is that you have to from the US to use it. There are other crowdfunding sites, but none have quite the cache of and reputation of Kickstarter and are going to struggle that little bit more to achieve the same ends.

Feedback is gold

Finally, I want to reiterate a point I started to make a few paragraphs ago: feedback is like gold to a games publisher. If you don’t tell them what you like and what you don’t, they will either assume that nothing’s wrong unless sales are abysmal – in which case they can change all the things that were working and miss the real problem.

On top of that, there’s the fact that writing of any sort – whether it be a game product or a blog like this one – is hard work, and a very lonely pursuit at times. Sometimes you can wonder if anyone’s really listening, especially when no-one comments except the spambots. We all have days when we feel like tossing it in; without the occasional piece of encouragement, there is always the risk that someone will yield to that feeling. So if there’s a game product you really like, tell the creators!

So there it is – a comprehensive review of why game products cost what they do, why they might not be as successful as they could or should be, the role of perceived value for money in the purchasing decision – and why no game product will ever be exactly what you might want it to be.

Related Posts with Thumbnails
Print Friendly