Self-Publishing for Beginners

Posted by Imperator • April 26th, 2014

The following materials are from Sanguine’s panel at Midwest Media Expo.

Self-Publishing for Beginners

Anything will sell – the questions are how much, for what price, and how fast.  It’s perfectly fine to make a niche comic or game that will only sell to a dozen people if that meets your sales target. If you’re going to sell to 3,000 people, you have to make something 3,000 people are going to want to pay for.  If you want to make $10,000, you have to sell a thousand at $10 each, or a hundred at $100, or ten at $1,000 each.

The Pareto Principle, also known as the 80/20 Rule, is that 80% of any traffic comes from 20% of the environment. When applied to sales, it means that 80% of your sales will come from 20% of the customer base.

A premium product is expensive and only for hard-core buyers – sell with high margins to the few who will buy it.  Premiums are for that 20% that have disposable income and really want your product.

An economy product is cheap and markets to a broader crowd – sell with low margins and low production cost but to lots of folks.  Economy is for that 80% who have a passing fancy, but they won’t want to spend a lot.

Where Your Product Comes From

Creating is making a product no one else is making and filling the niche.  If the niche is small, go with premium pricing.  If the niche is large, go with economy.

Licensing will get you a product identity people already know and identify with, and you’ll get lots of art and design to use.  There will be expenses and riders, and all licensing agreements expire, leaving you with a product you can’t sell anymore.  Licensing should almost always be economy product – you’re banking on lots of people knowing the brand and wanting a piece.

Imitating is like creating, only more mercenary – it’s following popular trends and making a product that synergizes.  It can be cheaper than licensing and allows you to ditch any unwanted baggage.  Plus your company will own the property.  Imitating should almost always be economy product – you’re hoping lots of people who already like things like your thing will like your thing, too.

Updating is buying an older product and bringing it “to a new generation.”  Re-releasing should usually be premium – you already have the last generation hooked, any sales on top of that will be gravy.

Payment

All talent contributing to the project should be contracted, and in writing.  All contracts should include deadlines.

In-house talent are the members of your own company.  You should file a business agreement with your state; each one varies.  You really want a limited liability corporation (LLC) – this means that your company is only liable up to its own assets.

Anyone not a member of your LLC is a freelancer.  Freelancers will need to be paid:

  • Flat fees treat the work as a single piece. These vary going with the talent of the artist, the materials needed, etc.  Writers are usually paid by the word; artists are usually paid by the full-page (or portion thereof); your contract should state that this is work-for-hire and thus it all belongs to your company – but you can sweeten the deal by including a clause that after 10 years of disuse, copyright reverts to the author.  (This means that if you go out of print or lose interest, the author gets it.).  Artists are usually paid by the full-page; your contract should state that your company has unlimited non-exclusive reproduction rights; don’t expect to keep the originals unless you want to pay a lot more – instead, encourage the artist to promote the artwork separately and to sell it at art shows.
  • Royalties effectively lease the work for a fixed time period.  Don’t consider a royalty period of less than 3 years; shoot for 5.  (Royalties work great for licensed product, which is going to expire over time, anyway.)  If you want to keep your accounting simple, offer a royalty based on manufacturer’s retail price, not on “wholesale cost” – otherwise, be prepared to keep track of what you sold direct and what you sold to middlemen.

Pricing

Ask yourself, “How much am I going to charge for this product?”  For economy products, it’s best to heed the Jackson rule: a multiple of 20 minus a nickel, or a multiple of 20 minus 5 dollars and a nickel – $14.95, $19.95, $34.95, and $39.95. For a premium product, go with big numbers like $59.95, $79.95, or $99.95.

Next question: “How many am I going to sell?”  Logically, the more expensive it is, the less you will sell.

Once you set the final price, you can see a breakdown of how to budget for your product.

Your materials are the pieces of your game, the pages in your book, etc.  This includes the printing costs.  If you publish electronically, this piece drops to 0%.

Your retail mark-up is the profit the store makes by selling your product (if they ever sell it at all).  If you sell direct to customers, this piece drops to 0%.

Your distributor costs are how much your warehouser and your distributor make off each copy. If you sell direct to customers, you will most likely have to take credit card sales, and this piece will actually rise to about 10%.  If you sell electronically through a third party, this piece could rise to 20% or higher.

Your talent costs are how much you pay freelancers to work on your project (whether it’s royalties or fixed amount), as well as any fees for licensees.  If you do everything in house, this piece drops to 0%.

For example, if you plan to sell 3,000 copies of a board game at $39.95 each, you’re looking at a gross budget of $119,850.

Materials

11,985.00

 (up-front expense)

Talent (art, writing, etc.)

10,786.50

 (up-front expense)

Retail Mark-up

65,917.50

Distributor Costs

7,191.00

Profit

23,970.00

 (income)

$39.95 × 3000 copies =

$119,850.00

In this case, before you go to press, you’re going to have to pay the talent and the materials – so you’re going to have to put $22,771.50 … and then when all 3,000 have moved, you can expect to get $1,198.50 back.  That 1% net gross is called the profit margin.  When you hear business-people say “the margins are thin”, that’s what they’re talking about.

Remember that when you’re putting your product together, to exceed any of these percentages, something else has to give.  If your materials and talent costs add up to more than 19% … you either have to take something out of another slice, or you’re going to lose money.

Production

Electronic printing has the lowest material cost – effectively zero to make duplicates.  However, consumers will also demand lower prices. Since you don’t want to skimp on talent, and since your materials were only 10% in the first place, this means lower retail mark-up and distributor costs.

Print-on-demand is expensive and works better for premium product.  You won’t need to put as much money down – usually a fixed set-up fee, then a cost per unit.  Many print-on-demand businesses will also distribute for you.

Mass printing will have lower margins, but you’ll also need warehousing for all your stock.  There are brokers who will do this for you.  If 10% of your product goes into the production cost, then the more you print, the cheaper your per-unit will be, but the more money you’ll have to lay out in the first place.  Mass printers will want 50% of their costs up front, and then 50% before they even deliver.

Marketing

Start a mailing list about your product. Get a web page and a domain.  (Unless you have the talent or resources for full-time web design, put up something simple.)  Get a blog and post updates.

Conventions are great for growing awareness. Go to conventions, and get a table or booth.  Take out advertise­ments in convention programs.  Have a freebie giveaway at your table, like candy or buttons or something.  Conven­tions are fabulous for premium products. For economy ones, have a gimmick to make them buy then and there, like a 10% discount or some extra add-on.  (If you sell at full price at the conventions, your customers will be too tempted to just go home and buy it later … if they remember.)

Advertising is expensive, but can be well worth it.  Going by the model above, every $1 you spend on advertising needs to generate at least $1 in revenue – and your profit is only 20% of your product’s price. For example, If you spend $1,000 on a full page ad in a magazine, you should expect a sales spike of $5,000; if your product sells for $39.95 each, that means that 126 people who read the ad need to go buy it.

Other Hints

Games must be tested to destruction.  Be prepared to throw each and every line of your first product away if you have to.  Remember, if you’re going to sell a thousand copies, you’re making a game that has to be playable for a thousand people. Never make a game you wouldn’t play yourself.

Your projects should be SMART – Specific, Measurable, Aggressive, Reasonable, and Time-tabled.  Don’t say, “I’m going to make a game and sell it!”  Say something like, “I’m going to sell 3,000 copies of my role-playing game in two years, starting on June 1st!”

Deadlines are very important. Always give your freelancers precise deadlines.  Be ready for the “whooshing” noise that deadlines make as they go by, but have them anyway.  Remember – your project’s not behind schedule if there was no schedule in the first place.

Get a business card for a lawyer.  You probably will never need to call one, but have a number ready in case you do.  If someone threatens you with legal action, give them the contact info for this lawyer and then stop talking to them or about them, forever.

Get your first product and the two supplements done before you even go to press. Release them in the summer, six weeks apart.  If you get three books out over one summer, you will completely amaze the hobby industry.

Treat everybody right.  Consider putting “kill fees” in your contact that say you will pay 10%, 25%, or 50% if your project stalls.  If you rip someone off, the Internet will hear about it.

With production costs decreasing and direct-sales increasing, some people will tell you there’s too much stuff out there and the market is glutted.  If you self-publish, make something no one else is making, or make something better that what everyone else is making.  Take calculated risks.

Get the full version of Adobe Acrobat, and write everything to PDF.  Use whatever programs you want for your layout, but put the finals of everything to PDF.

The race is long, and in the end, it is only with yourself.  Look back two years, five years, ten years, twenty years, and take pride in what you’ve done.

Reference

Last update: 24-Apr-2014
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