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2011-08-09 Funding

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Self-publishing allows us all to publish stuff cheaply. Many authors would like to see their product to look good, however, and thus they need to pay artists, or they want the quality to be even better, so they need to pay editors and layout people. At first, people called this a pre-order. Pre-orders are just that: You order a product and pay for it. The author promises to start working on it and hopes that enough people will pre-order it to make it all worth while.

This is how Frog God Games is still selling their big books. It’s how they sold Slumbering Tsar as well as the Tome of Horrors Complete editions for Pathfinder and Swords & Wizardry. I have pre-ordered all three! By now I’ve received nearly all of the PDF files (some chapters of Slumbering Tsar are still missing), so things seem to be working out. Let’s hope the printed products make it across the Atlantic ocean unharmed. 

Pre-order doesn’t always work out. Frog God Games is run by Bill Webb who was one of the founders of Necromancer Games. Others, with less experience, have tried to do the same thing and failed. As Jim of Lamentations of the Flame Princess says: DON’T DO PREORDERS.

I was bitten by pre-orders myself with the Razor Coast delays. The solution, apparently, is a new form of financing very similar to pre-orders. Using services like Kickstarter, customers promise to pre-order as soon as the funding goal is achieved. Thus, if the author thinks he can do it with $2000, and customers promise to pay at least that amount, then their credit cards will be charged the appropriate amount and one would hope that the project then does what it is supposed to do. But that’s in no way guaranteed.

The only benefit this system offers is that it protects everybody from unpopular projects that don’t generate enough pre-orders. Nobody gets charged when the funding goal is not met. The system does not protect customers from authors getting an awesome job. This is what happened to Nicolas Logue, author of Razor Coast.

I’m not sure what to recommend. I appreciate the ability for authors to fund their projects. I appreciate the services that automate some of the aspects of this funding process. But it doesn’t solve my main problem, namely giving me confidence in the project’s success. We as customers have to share some of the risks.

Traditionally, these two roles are separated. Authors must get venture capital from banks, friends or parents. I think I don’t like the merging of these two roles. After all, banks, friends and parents are usually better placed to get their money back eventually compared to random dudes on the Internet.

What makes this even worse is that sometimes pre-orders are basically the only way to buy the product. In the old days, if you didn’t pre-order you’d just wait for the final product and bought it then. Since authors could not accurately predict demand, they often had enough product to all risk-averse customers.

Sometimes this back-fired for authors. I remember one of the more lavish third party monster manuals for D&D 3.5 was Denizens of Avadnu by The Inner Circle. It was printed just as 4E was being announced. I saw the price fall from $39.95 to $20 to $10. It was terrible.

The physical books by Frog God Games I mentioned above are basically pre-orders only. Apparently the printers will only print in multiples of fifty, and therefore there will be between zero and 49 extra printed copies available for customers that refuse to take any risks.

And yet, it appears to be the only way to get these products made in the first place.

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Summary: Thank you both for the extra info! I'm still trying to wrap my head around this paradigm shift from pre-orders to pledging. Another element I'm trying to place is the importance of the funding goals and the various extras you can . . .

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> ----
> [[gravatar: AlexSchroeder:e33b88db6bc04e1c93db25c702baea28]]
> Thank you both for the extra info! I'm still trying to wrap my head around this paradigm shift from pre-orders to pledging.
> Another element I'm trying to place is the importance of the funding goals and the various extras you can order. These seem to have multiple effects: increase turnover as you sell more, customer loyalty as they get something perceived to be exclusive and rare, a possibility to attract attention as people will talk a lot about available options even though few will buy them, a possibility to claim dedication as people will see to what lengths you will go for your project (if the price is right).
> -- AlexSchroeder 2011-08-09 21:34 UTC



Joe
One thing that is different from what you’re describing is the extras made. Based on the pre-orders, the project founder should order extra. How much extra is hard to say, but if the project’s goal is $8,000 to make 200 copies of books at a $40 pledge level… then the cost to the founder should be more like $20/book. The extra pays for the founder’s time. And that $20/book price should include the art cost.

If the project gets just over $8000 so it just barely meets its goal, the founder can roughly double his order and still not risk any extra money. But he is risking the profit from those 200 copies hoping to make more profit on 400 copies. These extras he can then sell later on-line or at cons if so inclined. And of course he can put the pdfs for sale and do a print-on-demand setup as well.

Further, the print cost likely will go down. Say that $40 has a $15 cost to print at 200 copies. (The other $5—how we got to a $20 estimate—went toward the art.) But at 400 or 500 copies it may go down to $10 per book. Plus, the art cost can be cut down per book because it now is spread across double (or more) the number of books.

So to sum up, a Kickstarter project should have more than just a handful of extra copies after it is completed.

Joe 2011-08-09 15:02 UTC



Keith Davies
For that matter, if I were to do a kickstarter project I would probably plan it to exceed the pledged amounts – I’d be happy to risk profit (but not base cost).

If I figure it would be 20$/copy for 200 copies, and I went with 40$/copy as a pledge (plus ancillary pledge values for PDFs, etc.) then 100 pledges (4000$) would cover my expenses. After that I’m into profit, and if I’m left with a couple boxes of extras to sell at cons or even give away, I’m only out the time and effort I’d put in anyway.

Mind you, I’m not trying to make a living at this, so I’m okay with that kind of return.

IOW, I agree with Joe – for the core product you can probably reasonably expect a fair number to be produced on top of the pledged number. Not the extras; if I only get 10 people wanting the signed and numbered and embossed-with-gold-leaf version I might get an extra handful (for special purposes, gifts, whatever) but I might not.

Keith Davies 2011-08-09 16:25 UTC



AlexSchroeder
Thank you both for the extra info! I’m still trying to wrap my head around this paradigm shift from pre-orders to pledging.

Another element I’m trying to place is the importance of the funding goals and the various extras you can order. These seem to have multiple effects: increase turnover as you sell more, customer loyalty as they get something perceived to be exclusive and rare, a possibility to attract attention as people will talk a lot about available options even though few will buy them, a possibility to claim dedication as people will see to what lengths you will go for your project (if the price is right).

AlexSchroeder 2011-08-09 21:34 UTC

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