Stretch Goals are a continually complex issue for independent game designers and they revolve around a couple of tricky to calculate issues, namely production scales, hidden profits and reasonable unit prices. I’ve written about this issue before but feel that it is significantly complex enough to take a further investigation, this time I’m going to try to go into some detail over common problems with finding the room to fund Kickstarter stretch goals.
Scale and Unit Price – Tiny runs
Firstly, the issue of entry unit price and small scale. There are a handful of manufacturers that will produce print runs of 500 games, GameCrafter is an excellent example. However, the unit price for a game from GameCrafter at a 500 game print run can easily be ten times that of the same game from a manufacturer with a minimum 1000 game print run such as LongPack. The result of this is that if a game presents itself with a goal sufficient for a 500 game print run from GameCrafter, and they receive orders enough to require a print run of 1000 from LongPack they will have a significant amount of spare revenue to cover stretch goals, the first step of economy of scale. This is generally a false economy for two reasons, first and simplest, a print run of 500 games from GameCrafter will generally cost more than a print run of 1000 of the exact same game from LongPack, so budgeting for a GameCrafter run of 500 is a generally pointless engagement, if 500 orders are necessary to reach a game’s goal then it should be budgeted to print with a company such as LongPack. The only way that a GameCrafter print run would make financial sense would be for a game with a goal predicated on 100 backers, at which point they can move to printing with LongPack when they reach 400 backers, but doing so would not allow them to offer Stretch Goals since their available unit price would be taken up in printing. With that strategy the first stretch goal on a project needing 100 backers would trigger around 500 backers, which is too far away from the initial goal to be useful as a drive for backers.
The second reason for not budgeting for a GameCrafter print run in such a situation is that unit price is a huge part of funding on Kickstarter. While GameCrafter is fantastic for promotion and prototype printings and keeping a Kickstarter Goal low on speculative small projects it significantly raises unit cost over printing with a firm like LongPack or even Panda, potentially stopping a project from funding, much less overfunding enough to reach stretch goals.
Economy of Scale – Standard print runs
The more usual economy of scale comes from when you hit a second cycle of your print run. So, 1000 games might cost £10,000 at a certain standard, but 2000 as a longer run costs £18,000 and so on up. As such when you hit 1001 backers you need to print 2000 copies and each copy goes from costing you £10 to costing you £9 and you can spend that £1 per copy to put in something cool, like better card stock, linen finish or a plastic token or two. This can run into two sorts of problems.
The most significant is that some manufacturers don’t offer reductions at greater numbers. LongPack, for example do not offer this as standard, a run of 2000 costs twice what a run of 1000 costs. Panda does offer a reduction at a greater run, but their price for the first 1000 will be significantly higher per unit, so again, taking an option that allows for economy of scale could hamstring you from ever reaching your goal, and for a Panda run to undercut LongPack you’d need to be printing a lot of copies, enough that setting a first stretch goal at that point would defeat the purpose.
The other issue is one of calculation, but remains a serious one. Kickstarter allows backers to pledge without reward and most campaigns will have a range of levels and possibly shipping charges. As such calculating a Stretch Goal level in money terms that will actually correlate with a number of copies printed can be near impossible. If a money goal triggers a Stretch Goal thanks to being bumped by shipping costs or add-ons and that Stretch Goal only makes financial sense if it coincides with triggering an extended print run, it can add up to serious costs.
Hidden Profits and Free Gifts
So, where does that leave a designer who is unlikely to hit a print run over 1000, but expects to get past 300? In short, if they want to offer Stretch Goals, in a position where they will find it extremely hard to leverage economies of scale to do so. The main option is to spend a percentage of your profit on Stretch Goals, how this is seen is very much a matter of personal perception and a little bit about the form they take. So for example, if a game breaks even on its printing and distribution costs when it reaches its goal then there will be a point after its goal when it breaks even on its sunk costs and a little further on where its making profit. For a business venture to break even before day one is a huge deal and a massive achievement, and so its not insane to use the first bit of profit you get to return yourself to a state of breaking even by buying your backers a big thank you present as your Stretch Goal. Certainly, if you overfund sufficiently to sell out your entire first print run you should have made profit that’s acceptable given the amount of work put into your game and Kickstarter if your unit price is reasonably calculated. As such if you just earned a significant chunk of money in a 30 day period giving a little of it away to the people who made it happen would not be unreasonable.
On the other hand, if there is a particularly spicy Stretch Goal it could lean into the place that people could consider ‘hidden profit’. For example, a magnet catch box is a popular stretch goal that can easily cost as much as £2000 on a print run of 1000 over a standard telescoping box. A goal with a £2000 difference can easily be the line between success and failure for a small to medium sized Kickstarter but taking a £2000 hit in profits as a free gift can be the difference between a print run being worth doing or not. The solution will often be to set the unit price at £2 above what would be considered a reasonable minimum and a Stretch Goal that if reached will return the project to a point of breaking even in order to put out a higher grade of product. Before that Stretch Goal is reached the game arguably has £2000 of hidden profit stashed away at a point where the print run sells out, which can be seen as a questionable choice, though it should be said that the point where the print run sells out can easily see that ‘hidden profit’ chewed up by storage costs if the game is not selling at an accelerated rate. Of course, if the goal is reached there’s no hidden profit any more, and if the goal is reasonably early and something that the creators honestly always wanted and intended to reach I don’t personally consider it questionable practice.
So in conclusion, for a small to medium independent Kickstarter producer Stretch Goals may well need to be gifts directly from your pocket to your backers in order to be set at a reasonably reachable level. This doesn’t make them a bad idea or outside of your reach, and if you do well enough to be able to leverage economies of scale be prepared for that. The thing to be aware of is not to put out a project that sets an unrealistic goal and so fails to back because its too busy trying to leverage economies of scale not necessarily available to small projects. Remain realistic about the tools at your disposal and the possibility of success will see a matching raise in reality.