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:
- Eclipse Phase core rulebook PDF: not EER because it's available in print.
- Lack: Not EER because it was commissioned and subsidized for and by the core rulebook.
- Continuity: EER; it's only available in PDF.
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.