Pricing for Niche Electronic Titles

January 3rd, 2011 § 10 comments

A disclaimer: I wrote most of this post before Adamant Entertainment announced they were re-pricing all of their PDFs at $1, or what Gareth dubbed the “app-pricing” model. I think the approach is interesting, but this post is not a “response” to his decision … although I am incredibly curious as to how it turns out, of course!

If you are publishing a niche RPG—material not compatible with Dungeons & Dragons or Pathfinder—you should maximize your profits by not underpricing your exclusive electronic releases. An “exclusive electronic release” is material not available in print (not including true Print on Demand, but including short run printing) or that don’t have costs subsidized in a substantial way.

So, by way of example:

A PDF or other electronic title sold on OneBookShelf (DriveThruRPG/RPGNow) gives the publisher 70% of sale price (65% if the publisher is not an exclusive vendor). This means a five dollar title leaves the publisher with $3.50; a two dollar title $1.40.

I think that Eclipse Phase has proved that low price points on electronic core rulebooks can lead to a raise in the number of sales—enough to make up for the difference in per-unit profit. Customers are interested in saving 10 bucks (typical RPG electronic core rulebooks are 20-25 or even more, while Eclipse Phase is 15) and much more willing to try a new game if it’s inexpensive—but supplements are most often sold to existing customers, people who already like your game. They already perceive themselves as invested* (time, money, emotion) in your game, and so a difference of a few dollars is less likely to make a negative impact in your sales. However, it can make a big difference in how much money you have to invest in the projects … And the amount of profit you end up making.

An Eclipse Phase PDF project like Continuity has a total budget of $800. It breaks down like this:

Writing: 200 (5000 words at four cents a word)
Editing: 200 (this covers a copy-edit and dev-edit pass from Rob Boyle. He deserves a raise on this.)
Layout: 100 (I do all the layout and maps in-house.)
Art: 300 (2 to 3 pieces, playing the same as we pay for artwork destined for print.)

There is no budget for “other stuff” yet … so for example, in Continuity, the audio files we included came out of the art budget.

This means that we need to sell 229 copies of a $5 exclusive electronic release to break even. Priced at $2, we would have to sell 572 copies just to break even. What if we sold 572 copies at 5 bucks? Profit of $2002—enough to fund two and a half more releases. Now, our exclusive electronic releases aren’t making huge profits yet, but we are breaking even relatively quickly—and we have a formula for, at the least, supplying the fanbase with a steady flow of material!

* I try not to use the words “invest” or “invested” when talking about my hobbies. I feel that it’s too loaded. But that’s a personal thing.

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§ 10 Responses to Pricing for Niche Electronic Titles"

  • But what if you sold 1600 copies at $1? We can play the “what if?” game all day, but I don’t think there’s magical number faeries that’ll come down and somehow make the folks who’d not buy it at $5 suddenly NOT buy it at $1. Do you not have the faith in your product to believe there are just under 2,000 people in the world who’d want it if they could get it for a buck? Is the marketplace that’d really allow impulse sales for such things not there or do you just not think its worth it to 2,000 people?

    That, in a nutshell, is what bugs me and has always bugged me about the pricing of post-paper production RPG product, a kind of inherent, pained subtextual assumption that if it needs $500 to break even, it’s somehow easier to convince 10 people to pop $50 for it, harder to convince 50 people to pop $10 for it, and near impossible to convince 500 people to drop $1 on it, in direct contravention to every other resource on Earth. It’s truly magical thinking of the self-destructive kind.

    Honestly, if you can’t convince 500 – 1000 folks in an industry like this your book isn’t worth $1, stop doing it. Stop trying to write to turn around the next book and stop writing, because you don’t have the faith in your product to get it out there. Maybe you’re right in that assessment; maybe there really aren’t 1,000 folks who want your work at all. Maybe that’s the real problem and you ought not to spend north of $500 on a book’s development. Maybe the market segment you’re trying to mine for cash simply isn’t there. But I can guarantee, if its not there for a $1 investment, its not there for $10.

    I recognize that I’m a unique member of the market; I have a brand new, first day order commitment for a copy of Perfect, which I bought at the $25 PDF+Book price point. But I’m not normal and basing sales costs on what I’ll pay is a fool’s game; that’s how you stay in the boutique and the niche.

    I think Adamant’s really onto something in the sense that a goodly chunk of aps on the iPhone and Android rolling out at $0.99 – $2.50 are really man-hour valued at a lot more than $800, and they’re making a profit. Impulse purchase with a good vector for reaching that market likely to buy is a big win, there. It’s a space with a lot more potential than what the industry’s been doing in RPGs which is resulting in the slow strangulation of the hobby as a whole, that much is empirically obvious to see.

    If what you’re doing ain’t workin’, do somethin’ else. Pricing in the zone you’re advocating above isn’t working. Doing it harder won’t help.

  • Adam says:

    Alex: There’s a lot that I could reply to, there, but for now I’m just going to leave it at this: All of our electronic-only stuff is breaking even relatively quickly (within a couple months) and making us money. It’s working. Could it also work in different ways? Probably.

    And I should also note that since our stuff is CC-licensed, people can legally grab it from a file-sharing site or from a friend for the price of absolutely zero.

    We’re interested in doing some “pay what you want” experiments and we’ll roll those out this year.

  • Joe Mcdaldno says:

    Hey Adam,

    I have a short game called Gun Thief, that I’ve been selling for $3. That price point was chosen for a reason: after Paypal fees, I’m left with enough money to buy my daily coffee.

    Anything less wouldn’t feel rewarding to me as a designer or an artist. For me, one requirement of publishing is that it feels emotionally rewarding, on the level of individual sales. I need to feel good about each sale, otherwise my relationship with my own publishing goes toxic, quickly.

    Selling 10 times as many copies of Gun Thief at 40% of the price I’m selling them for now… would feel less rewarding. They wouldn’t feel like satisfying sales, they’d feel like hollow money.

    Maybe that’s just me, but I think there’s a nugget worth extracting there: price factors into a dialogue about what a work means – for authors, for publishers, for customers.

    To be clear: I say this just to add another dimension to the conversation.

  • Devon says:

    I’m all for a bargain. Things that sell for $1 are very tempting and it’s easy to talk myself into getting them.

    However, they have very little value. The perceived value of something that sells for $1 is usually less than that, I would say.

    I think Joe has a good point. As the creator, what value does it have to YOU? What would YOU pay for it? I think that’s a good starting point. The price a product has says a lot to the consumer about how much the producer values the product, and I think it also influences how much the consumer values it.

  • Eddy Webb says:

    A $1 PDF feels cheap. That’s okay for some stuff, but not for everything. For everyone quoting the App Store mentality, they’re missing the fact that Square Enix launched a $15 RPG title in the App Store (which is still $5.99 right now), and games like Carcassone are still $9.99. Bigger, higher-quality games can command higher prices, and would be seen as defective if priced lower.

  • Mikael says:

    I’m also interested in hearing how Adamant’s experiment will work out for them, but it’s worth noting that the PDFs they sell are either core rulebooks (like ICONS) or supplements to mass-market products (d20 / Pathfinder). With that potential market size, it’s possible to let market forces work its magic. But when your audience is already limited, you can’t assume that pricing a supplement cheaper is automatically going to lead to increased sales.

    So, I sell you a vacuum cleaner, right? And then, I pitch you an attachment which will let you clean keyboards easily. If the attachment is very expensive, I won’t see a lot of sales. If it’s reasonably priced, most people who have a need to clean keyboards will buy it. If it’s dirt cheap, for the most part it’s still just those who have a keyboard cleaning need who will pick it up. And importantly, if my attachment is not compatible with other vacuum cleaners, I’ll see no further sales of my supplemental attachment than I had sales of vacuums to begin with.

    RPGs and RPG supplements are even less suitable for impulse buys than vacuum cleaner attachments, because it takes considerable time and effort reading them and implementing their use. An iPhone fart app takes 30 seconds to purchase and install, and is immediately available to you with no further effort required. But when I scroll through the list of Adamant PDFs, and see a bunch of neat ones at a low-low price, I’m reminded of the time investment required, and it’s enough to deter me. If, on the other hand, I was already heavily invested in f.ex. Eclipse Phase, this time investment would not be of any concern to me.

  • Adam says:

    Anecdotally, the apps I use and games I play regularly on my iPad are almost all more than a buck. The priciest being OmniFocus at $39.99, but there’s also GoodReader, Instapaper, various board games like Carcasonne and Settlers of Catan.

  • Think your math is off in this part:

    “This means that we need to sell 229 copies of a $5 exclusive electronic release to break even.”

    If you are using Paypal or any online money service you need to account for the percentage they are charging you for the service. RPGNow.com would be 30 to 35% of the total sale, while Paizo.com would be only 25%.

    “Priced at $2, we would have to sell 572 copies just to break even. What if we sold 572 copies at 5 bucks? Profit of $2002—enough to fund two and a half more releases. Now, our exclusive electronic releases aren’t making huge profits yet, but we are breaking even relatively quickly—and we have a formula for, at the least, supplying the fanbase with a steady flow of material!”

    Most PDF don’t sell 500 copies. Take a look at RPGNow.com Metal rating list — http://www.rpgnow.com/metal.php — Gold is 500 or more sales and there are only 71 Gold level products out of the thousands that are there.

  • Adam says:

    Louis: OneBookShelf cuts us a check every month, doesn’t pay us by PayPal. We went that way for exactly that reason — saving a few bucks on the PayPal fees.

  • Adam says:

    Oh, and something minor to bear in mind: the Metal lists on RPGNow and DriveThruRPG are different; so counting OneBookShelf as a whole there are 152 Gold-level products.

    (Since the PDF/electronic versions of our print books are divided into the PDF-only release and the PDF+Extras Hack Pack, we lose out in some appearances on the top lists because our sales are split between the two products.)

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