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Old 12-18-2019, 10:39 AM   #1
syncrogt1
 
Join Date: Jan 2015
Default Kickstarter general question about profitability

This is more of a Kickstarter question than a specific CW question but here goes: How can SJG stay profitable with each additional stretch goal that is included in one of the reward levels, if no additional money is being made? Profit would be going down.

I understand that stretch goals drive the overall project $ total higher, and I assume that would drive the price per unit down since more of the same item are being made (larger production run = lower cost per unit, usually, but it usually isn't a linear price decrease.) I also get that some of the stretch goals are NOT included in a reward level, that makes sense. Companies should make money on each item they sell or they shouldn't be in business.

But can a game Manufacturer still be profitable selling $373 worth of game for $140? I am trying to be more informed.
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Old 12-18-2019, 01:17 PM   #2
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Default Re: Kickstarter general question about profitability

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Originally Posted by syncrogt1 View Post
But can a game Manufacturer still be profitable selling $373 worth of game for $140? I am trying to be more informed.
Kickstarter allows us more margin to operate. For games that ship to stores, we go through three layers, each one of which takes a percentage.

* Fulfillment service - takes a % of the total MSRP.
* Distributor - takes a % of the total MSRP.
* Retailer - takes a % of the total MSRP.

With Kickstarter, we have zero levels between us and you. We have expenses, yes, that are not a part of traditional distribution (managing the project, tracking all backers, fulfillment costs to ship to all backers), but those expenses are less than the % the traditional model consumes.

Once a game is no longer on Kickstarter, and goes into either direct sales or traditonal distribution sales, we adjust numbers. Kickstarter backers believe in us and our projects, and they get a deal.
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Old 12-18-2019, 06:58 PM   #3
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Default Re: Kickstarter general question about profitability

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Kickstarter backers believe in us and our projects, and they get a deal.
And most of us appreciate the deal, and really like showing that appreciation!
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Old 12-19-2019, 05:00 AM   #4
syncrogt1
 
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Default Re: Kickstarter general question about profitability

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And most of us appreciate the deal, and really like showing that appreciation!
I appreciate the explanation Phil, thank you. I would hate for my favorite car combat company to go out of business due to a highly successful Kickstarter campaign. I am one of the "most" mentioned above by Whitestreak but the economist/engineer/skeptic occasionally peeks out.

I figured you had it all calculated and wouldn't do something non profitable.
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Old 12-23-2019, 09:28 AM   #5
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Default Re: Kickstarter general question about profitability

SJG has written a few time that they will not be losing money on this KS. We should believe them! That said, they have made a few choices that do not make sense to me.

The first is rolling more miniatures into the core box. Early on, there was mention of the possibility of 36 miniatures. With 8 in the box and 7 sets of 4 each, that worked out, and made perfect sense. Plenty of enthusiastic backers vowing to buy all the extra sets. There are 100s of those people, maybe even few thousand, but lets say 500 (which seems very conservative to me). Double Ace comes with two sets, so that was $40 x 5 (sets) x 500 people, or $100,000 in almost guaranteed add-ons! Pretty sweet!

But then, SJG ditched three sets, deciding to increase the count in each set. Okay, lots of good will (which they did not need, as everyone was already enthusiastic about the value in a Double Ace pledge), but that increases the manufacturing cost of each set (reducing profits) while dramatically reducing what the “all-in” folks could buy from $200 to $80. SJG reduced that $100,000 sale to $40,000. I don’t get it!

Before and at KS launch, the thing I was most excited about was that I was fully expecting to see Cars Wars in the like of Target and Barnes & Noble in a couple years. But now, because of adding a couple more cars to the core set, SJG has raised the retail price to $115. The core set already came with twice as many cars as needed; no one was asking for more cars in the core, no one needed them, and they won’t help move units post KS. (Add-on sets might have had a market, but SJG does not plan for your FLGS to get those.)

As part of my Christmas shopping yesterday, I surveyed the local Barnes & Noble, and that visit confirmed my fears. Car Wars 6e is priced well above what the mainstream market will support. I found one game at $100 (Mansions of Madness, and it had a security wrap on it). There were a few good games at $70. There were a bunch of great games at $50 (e.g., Mysterium, Betrayal at the House on the Hill).

I think SJG had less faith in Car Wars than I did, so they priced out of the retail market. I very much look forward to playing! It will still be successful by war game standards. It will still profitable enough. It is a good value for hard core gamers. But the normies will not be playing it, and that to me is a missed opportunity. Munchkin Forever!

Last edited by beetle496; 12-23-2019 at 09:34 AM. Reason: grammar
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Old 12-23-2019, 10:00 AM   #6
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Default Re: Kickstarter general question about profitability

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Originally Posted by beetle496 View Post
Before and at KS launch, the thing I was most excited about was that I was fully expecting to see Cars Wars in the like of Target and Barnes & Noble in a couple years.
The overall market has changed dramatically. Even at $75 -- which would have been, at best, a two-player set -- the game was unlikely to ever make it into any of the mass or specialty stores. We could have tried to force Car Wars into somewhere like B&N, but that would have been a bad move for the game's longevity.

At the moment, our energy is focused on making the game as great as it can be and as fun for the supporters as possible. We'll turn to the future once we have everything complete and under control.
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Old 12-23-2019, 10:01 AM   #7
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Default Re: Kickstarter general question about profitability

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Originally Posted by syncrogt1 View Post
I appreciate the explanation Phil, thank you. I would hate for my favorite car combat company to go out of business due to a highly successful Kickstarter campaign.
We're being careful. It's no fun for any of us if we produce the game and then have to stop making more games.
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Old 12-23-2019, 10:03 AM   #8
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Default Re: Kickstarter general question about profitability

I think a couple of your premises are incorrect - I think it far more likely the plans for the car expansions were changed precisely because they weren't selling, and SJG could see the writing on the wall. A $40 addon was always going to be a tough sell, with perhaps as few as 3 cars in it. And there would be 6(!) of them, giving completionists a major queasy feeling. And an empty wallet after spending $240 on just car addons...so they decided to parcel them out as stretch goals to entice more backers into the campaign, instead, and raise money that way, instead of praying for addon sales.

Two, I think there was about 0 percent chance Car Wars 6E was ever going to be a viable 'mass-market' success. That's just not the state of the hobby market of 2019. There are mountains of product being slammed into the market every week, and the likelihood of one generating enough interest for one of the big retailers to pick it up is remote. I think SJG made the correct decision to focus it on the 'hobby' market. And to be honest, it may not even succeed there. So much stuff is coming out these days, even good games get ignored, and die. That is the true state of the industry in 2019.
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Old 12-23-2019, 11:11 AM   #9
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Default Re: Kickstarter general question about profitability

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Originally Posted by philreed View Post
The overall market has changed dramatically. Even at $75 -- which would have been, at best, a two-player set -- the game was unlikely to ever make it into any of the mass or specialty stores. We could have tried to force Car Wars into somewhere like B&N, but that would have been a bad move for the game's longevity.

At the moment, our energy is focused on making the game as great as it can be and as fun for the supporters as possible. We'll turn to the future once we have everything complete and under control.
You might try for a two player set for the mass market. Or a beginners box (2 minis, the rules, counters, dashboards, dice etc.) Just to get people in the door.
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Old 12-23-2019, 11:24 AM   #10
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Default Re: Kickstarter general question about profitability

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Originally Posted by kbs666 View Post
You might try for a two player set for the mass market. Or a beginners box (2 minis, the rules, counters, dashboards, dice etc.) Just to get people in the door.
At the moment, we're focusing on the Kickstarter campaign. We'll explore other ideas in the future; for now, it's all about completing this project and making it as fun as we can for the project supporters.
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