Setting a Price Point for Kickstarter
There are few decisions that will more seriously affect the long-term prospects of your game’s success, and in turn the success of your business than setting the price point of your game, both on Kickstarter and then in whatever passes for retail. In attempting to do so you’ll hear a lot about things like MRSP and landed cost and there is a good deal to this vital decision that needs experience and understanding. I don’t have a whole ton of that, but I’m here to offer what I’ve got.
MRSP and Retail.
Usually referred to as MRSP (maximum retail selling price) or more often in the UK as RRP (recommended retail price) either way, this is the official price that you’re saying your game will be sold at in whatever passes for retail post your Kickstarter. The traditional calculation for MRSP is five times the landed price of your product. The landed price is what it costs for you to get the game made and delivered ready to go out to retailers or even direct to customers. So, if it costs £2 to get your game made and in your hands its MRSP should be £10, traditionally. In this case a retail store would buy the game for £5 and a distributor for £3-£4. This is, for various reasons, a pretty meaningless number for most Kickstarters.
The first reason that its pretty meaningless is that the majority of Kickstarters who fund won’t make it into retail to any significant level, certainly most first projects launched in 2020 onwards won’t see a retail release. The second reason is that Kickstarter creators are not generally working in the traditional retail pricing method, that’s why they’re on Kickstarter. If you’re in major distribution then that landed cost is the price that your game lands up with your distributor at, if you’re a small-time creator it’s the price that it arrives in your spare room or garage at. Getting it from there to a distributor and still making a profit from the gap between 20% and 30-35% is likely to see you losing money on each unit at distribution.
The biggest reason that its meaningless is that mentioning MRSP on Kickstarter is far less of a good idea than it used to be a few years ago for a few reasons, including but not limited to:
· Regular Kickstarter backers get probably 50% of their games from Kickstarter, they don’t compare Kickstarter prices to retail prices, they compare them to Kickstarter prices.
· Regular Kickstarter backers also know that many Kickstarter games never make it to retail and that so a game being X% cheaper than at retail is about as relevant as them being X% cheaper than the price you intend to sell the game for in Narnia.
· Buying a game on Kickstarter is a different prospect from buying it in a Store, due to waiting times, higher risks, lack of proper reviews. Lower prices and higher risks are the payback of backing on Kickstarter, and this is now such a well-recognized exchange that referencing MRSP on any but the biggest projects starts to make a Creator look like they’re not familiar with how Kickstarter works.
If you’re a creator publisher on Kickstarter, you’re best off putting MRSP out of your mind for now. If you get through the Kickstarer breaking even and have some stock to offer in distribution or retail or if your print runs get big enough you might be able to sort out a price that will make distribution viable, but until that arrives calculating an MRSP and working back to a Kickstarter price will only cause more troubles than it solves.
Kickstarter price, I’d suggest, should be something a little different. Manufacturing costs plus profit, divided by minimum print run size, then your goal should be your print run's landed cost. This will generally end up with a point where around a third of your print run sold will see you funded. This means that at the end of your Kickstarter you could be down by your pre-production costs and haven’t made any profit, but that you have enough stock to generate both, it also means that you have a far higher chance of funding than if you put your goal as your full production price. You could, of course, clear that whole print run and make more during the Kickstarter, in which case you should have cleared your production costs, made profit and more so, since the increased print run size will see your production costs drop. It should also see your game available at a lower price than standard retail for a game of similar size and type without you needing to come up with an MRSP and then arbitrarily knocking percent off until you reach a number, you’re happy with. If you’ve done your homework with quotes and research this will result in a naturally competitive Kickstarter price. There are, however, some caveats with this method. This first one is, you won’t make money doing it.
Now, there are exceptions, if you’ve got a cast iron distribution contract of some kind or are part of a distribution company, or if you have a smash hit for whatever reason, you’re all good. But generally, this method won’t see you with money in pocket. What it will give you is the basis to run your own small game design and publishing company. If you keep doing it and build up a following and reputation, you’ll probably start seeing something like a respectable profit around two or three years in with this process, which isn’t that far from most traditional business models.
It has been noticed by many commentators that prices on Kickstarter are trending upwards, and pulling closer to their retail equivalents. Now, there are most likely a range of reasons for this, to do with prices on small production runs climbing as manufacturers learn to make Kickstarter work for them and retailers lowering prices in competition with online retail. Its likely however that this is also due to Kickstarter Creators coming to realize that there’s not a pot of gold at the end of a successful Kickstarter and their seeking to have a better chance of covering production and profit within the actual Kickstarter process resulting in raised Kickstarter prices and either raised goals or a greater possibility of funded and cancelled.
I suspect that a goal including production and profit with an attractive unit price at Kickstarter is unlikely to be successful for the standard small or first time Creator, and I strongly advise against false goals and the cancellations they result in.
Is cheaper better?
So far so good, calculations of Kickstarter prices versus retail prices are all good, but there is an important question, as to if a cheaper game is a better game to launch on Kickstarter. The assumption is, yes, of course, but that might not be the case.
There is actually a balance point between hooking backers and making profit here. On the one hand, it’s easier to get people to back your game if its cheaper, but in turn its easier to make profit if your game is more expensive. To put it another way, if your game costs £8 to complete and get to a backer and you make £2 profit, that’s quite a big increase in the relative price of the game. However, if it costs £18 then the game would probably tolerate you making £4 per unit. Comparatively there is almost no relative increase in price as the creator aside from the fact that higher price games tend to take more storage, but unless you’ve filled up your garage then most storage locations won’t charge massively more for a larger game relatively speaking than a smaller one. On the other hand, advertising costs are largely static and the drop off in backing levels with rising costs that results from no additional advertising across projects are largely set on a bell curve to even each other out. As such, it can be considerably easier to make a profit on a more expensive game than a cheaper one.
In short, a game that costs £2 is extremely tough to make profit on, one that costs £200 is tough to make a sale on, and somewhere between the two is a good place to aim for. That said, putting up a ten card game for £101 is not going to be a winning strategy, and jamming a ton of minis into a game that plainly doesn’t need them is an increasingly tricky prospect. Which is to say, a higher end version of a given category of game with a better sense of value and a higher price point is a better prospect for a profitable Kickstarter than a version with minimal components and minimum viable product. As a rule of thumb, here are some category breaks:
· Cards and counters only – Up to £20
· Boards, central or player – Up to £40
· Minis or other extremely high-end components – Up to £80
· An utter crap ton of minis – Up to £160
To be clear, I’m not suggesting jamming minis into a card game, or charging £20 for card game whatever its production costs. However, I would say that if you’re skinning out cards to get down to a £15 price point or cutting player boards down to large cards to get into the £20 bracket, seriously consider allowing a higher price point for your game, it could do you more benefit than harm.
How do you feel that price trends on Kickstarter are moving? What’s the general price range of games that you back, or the most that you have or would go up to? Do you judge Kickstarter prices based on retail prices, or based on Kickstarter prices?