Pie For Everyone, Just Sliced Very Thinly: The Economics of RPG Book Production
  • [UPDATED] Pie For Everyone, Just Sliced Very Thinly: The Economics of RPG Book Production


    This article has been updated with a missing pie chart! Simon Rogers of Pelgrane Press has written an article for EN World which takes a detailed look at many of the costs of producing a roleplaying game product. He includes charts. "Last week Morrus provided a list of word rates paid by tabletop RPG publishers. He gleaned from public sources and in discussion with writers. The question arose – why are the rates low? This article centres on the economics of RPG book production and sales, but I’ll start with a preamble directed at writers and other RPG freelancers."

    Will You Get Your Pie?

    When I mentioned Morrus’ list, one writer of my acquaintance said “a list of publishers who pay reliably would be a damn sight more useful.” While the word rates are fundamentally important, there’s a lot more for writers to consider when working with a publisher than the bare word rate.

    • Does the publisher pay on delivery of final draft, or on publication?
    • Do they pay on time and how much to you have to chase for payment?
    • What happens if they don’t like the work you have done?
    • Do they give you valuable feedback and edit your work?
    • Looking at the other work the publisher has produced – do you want to appear alongside that work?
    • Do they involve themselves in internet drama in which you don’t want to be involved?

    The simple expedient of asking another writer or two in confidence will glean this information. Asking for references is an essential part of the job of a freelancer, and discretely is better.

    Should you Work for Very Little?

    If you want to enter the modestly paid, astronaut-rare ranks of the full time RPG writer, what should you do? First, under no circumstances give up your day job until you command a sustainable word rate, that is words times word rate per day equals a living wage. To begin with, consider working for a lower rate, work hard and professionally and get a good reputation. Chase for money owed without the slightest guilt. Work for free on your own site, or spend your spare writing time creating pitches for publishers you like. Paizo in particular write amazing outlines for their writers.

    Set yourself a time limit of, say, one year. If you are earning your target word rate by then, consider working full time. If you enjoy publishing, sales, fulfilment, handling customer queries, wrangling other creators,dealing with printers, marketing and website design, consider becoming a COP (creator-owned publisher) instead of a writer.

    A Slice of Pelgrane Pie

    Now, in the interests of transparency, I’ll discuss Pelgrane Press’s RPG word rate as of the end of January 2015. Our writers on a fixed rate receive between 3c and 7c a word. As an exception we once paid Gary Gygax 10c for a short article on the Dying Earth.

    In the past, I’ve taken the very easy option of employing a very few talented writers, asking them to write want they want, and paying them what they ask. We’ve supplemented these stalwarts with new writers because our in-house writers are tied up, because of the increasing number of books we produce, and that we want to work with a wider variety of voices.

    A 3c-a-word writer is generally a first-time writer, or at least one who is inexperienced in the field, and such writers will always, always cost us more than a known 5c-a-word writer. We give those new writers time-consuming feedback, hone and polish their work more thoroughly, and take the risk that they will flake or one occasion plagiarise other sources. They require time and attention from our existing writers, who could otherwise be writing. So why do we do it? The answer is development. We are keen to develop new writers to work with us and other publishers – and that, for example, is how Gareth Hanrahan’s already solid writing talent was honed this way and it’s how Evil Hat’s Lenny Balsera got his first RPG writing gig (he tells me). If an enthusiastic writer with a professional attitude, who has done their homework offers us a solid pitch, there is every chance we will work with them to publish it.

    Expanding Pie

    Aside from a fixed word rate, we have also, historically, offered net margin agreements to certain selected writers who were willing to accept the downside of such a deal. These are: a delay in revenue and the risk of a lower word rate delay in payment and it requires them to trust the publisher (us) not to exaggerate our costs. Where we’ve offered this deal, it’s been a choice between net margin and a word rate.

    Net margin is, in principle, straightforward. The publisher adds up agreed fixed costs of production and then deducts those from the gross margin. Gross margin is the total of sales minus any per-unit costs.

    The writer is then paid a percentage of this figure. In our case, that percentage to date has always been 50%.

    Net margins deals have resulted in word rates of between 2c and 20c a word and the writers benefit from the long tail – the gradual continuing trickle of sales over many years.

    I’m reluctant to enter into such deals now in part because of the time and tedium of calculating the royalties.

    Making the Pie

    Net margin deals are tailor-made to illustrate how the production pie is sliced. I’ll use a low-end example to illustrate a simple case of production expenses and revenue for a product. The example I’ve chosen was published at a time that all work was invoiced by freelancers and was therefore easy to quantify. I never charge for my own time. It doesn’t include copy editing (which was haphazard – or I did it – which amounts to the same thing) and any unexpected expenses. The figures are accurate but I’ve adjusted dates and titles for the author’s modesty. Because this was for one of our settings, the writing was work for hire – that is we acquire the copyright. (Rights is perhaps worth another article in itself.)

    Let me introduce Pitching Kittens from a Van, a thrilling supplement for the Satsuma RPG.

    In 2010, an unknown writer approached me with a well written and solid adventure for the Satsuma RPG. The writer had already playtested his adventure three times, and asked if I’d be interested in publishing it. The writer said it wouldn’t be ready for at least six months for extensive and in-depth further playtesting. He exhibited a professional attitude, had done most of the work already, so I thought I’d offer him the choice between a word rate of 3c or the risk of 50% of net margin. The writer, someone who was not reliant on writing income, took the latter option.

    Another six months later after rewriting external playtesting, and external playtesting, we had a book ready to be laid out.

    Our fixed costs for this book were simply art and layout. Now they’d also include 0.5 to 1c a word of of copy editing and development.

    We were charged $230 for art (a front cover, four quarter pages and a full page mono interior) and $100 layout (which used an existing layout template).

    Slicing the Pie

    The book was 20000 words, give or take. The PDF version was $14.95, later, we added a print version at $19.95. This was in part to see if releasing a PDF then a print version would affect sales, contrary to our established view that if you release the print version first, you maximise your revenue.

    Here is an annotated version of the most recent royalty statement.


    Venue Units Gross Net Sale % Dollars
    One Book Shelf 50 $ 747.50 $ 485.88 $ 485.88
    Mail order PDF (US) 25 $ 323.75 $ 307.56 $ 307.56
    Mail order PDF (non-US) 20 £ 199.00 £ 189.05 $ 278.01
    Mail order Print (US) 45 $ 897.75 $ 707.85 $ 707.85
    Mail order print(non US) 40 £ 518.00 £ 403.22 $ 592.96
    Retail Sales 195 $ 1,090.67 $ 491.43 $ 491.43
    375 $2,863.69
    $ 430.00
    After Costs $2,433.69
    50% $1,216.85
    Rate $ 0.06
    One Book Shelf are Rpgnow.com and dtrpg.com pay their publishers 65% of the headline price, and we allow 5% for card charges and refunds on our mail order site. You can also get an idea of the horrors of margins through distribution 38.5% of retail, and 25c a unit. The cost of printing this books (350 copies) was about $1500. We thought that was a good estimate of print sales for a couple of years.




    What can we see? First, the writer has received 5c a word after a long, drawn-out wait. Pelgrane’s net margin was just over $1200 after four years, and investment of $2000 in printing and art and excludes the cost of Beth and Cat’s time in dealing with this book – an hour here for a reprint, then minutes here for customer feedback and marketing, plus storage, miscellaneous shipping. We still have $300 tied up in stock. So, this is what the pie looks like, excluding these Pelgrane costs.



    A Bigger Pie

    Let’s take a quick look at a hardback – Ashen Stars. It was our biggest and most expensive project then to date, and it was released before Kickstarter. As we pay freelancers long before publication, it required an up-front investment of some $15000. It required extensive rewriting with two rounds of extensive playtesting – so Robin also had to put in a long-term effort before he was paid. Then were able to start our pre-order – print only – which enabled us to pay for the print costs of some $12000 before release.

    So, four years later, this is what the pie looks like across the entire print run plus PDFs. A huge chunk of the Pelgrane margin has been sunk into a new print run, which I hope will pay for itself by the end of 2017.



    Bigger Pie, Bigger Pieces

    What can we take from all of this?

    In many respects it’s quite simple. The reason publishers don’t pay freelancers more money is because their fixed costs per book are high, and writers are the main expense.

    First, sales are low.

    Publishers are selling too few books at too low a price to sustain a higher word rate.

    The price of RPGs has hardly moved in 15 years. This is because there are plenty of publishers willing to produce books with very slim margins, or even at a loss, because this is a hobby business, and they just want their games out there. Demand has certainly increased, but while the RPG pie is bigger, it’s sliced into thinner pieces. Unit sales have not changed much for most products.

    Second the retail price is low.

    Some of it (I think) is that the market is now educated to expect low prices. $40 for a book which gives you, say, 20 hours of enjoyment seems to me like a bargain, but roleplayers who will cheerfully throw down that much on a PC game, will baulk at a higher price point. The market continues to be price sensitive. Not only that, but there are vast quantities of decent, free stuff out there.

    Third, there are an unlimited number of people desperate to work for free or for lower word rates. And some of them are good.

    I don’t feel guilt paying well paid professionals who work on RPG stuff as a hobby lower rates, or offering them net margin. I am much more concerned about people who write for a living. It’s peculiar, but I feel bad employing desperate people.

    What can we do as publishers?

    (I am speaking here not as a starting-out creator publisher, though some of this applies to them, too.)

    First, sell more books to up our margin per copy. I’m not being facetious, that is our goal for this year. We’ve spent too much time producing award-winning, excellent books and too little time selling them. Everyone wins if we sell more books.

    Second, use Kickstarter, and factor in living wage rates for all freelancers, and be open about this. Kickstarter seems to open up contributors generous instincts. Where someone would inhale at a $40 price point for a book, they will scrabble to support their favourite creators with higher pledges. We can make that more clear in our stretch goals.

    Finally, I think that there is a market for a Fairtrade-style mark which promises a minimum payment per word, per art piece, per page of layout, with fair terms to all contributors. I’d like to hear from freelancers what they think is reasonable, bearing in mind the figures I’ve published and their own needs. I will then stare narrow-eyed at last year’s figures, consider my employees, and see what I can do.
    Comments 31 Comments
    1. Jeremy E Grenemyer's Avatar
      Jeremy E Grenemyer -
      This is pretty cool. Thanks to Simon Rogers for taking the time to lay this all out.

      Having skimmed it once, I think I will read the article in full later when things are a little more quiet at home, because this is a lot of information to digest.

      While were on the topic of RPG production economics, one of my favorite articles about RPG costs is by Sean Reynolds: Why RPGs Are Not Too Expensive.
    1. Dioltach's Avatar
      Dioltach -
      I'm curious about the large piece taken up by "Cost of art and layout", particularly relative to "Cost of writing". Do artists command such high rates compared with writers? This hardly seems fair, particularly as writing is very much product-specific while artwork is mostly more generic. Or is it just that visual appearance is more important for immediate sales than the minutiae of the writing?
    1. Morrus's Avatar
      Morrus -
      Art is expensive, yes. Sadly, that is true even despite the fact that many artists are very underpaid. When I commissioned art for What's O.L.D. is N.E.W., I spent about $25,000 in total over the three hardback books.
    1. Psikerlord#'s Avatar
      Psikerlord# -
      Very interesting read!
    1. Kramodlog's Avatar
      Kramodlog -
      I'd love to see article like this one from Owen K.C. Stephen. He made PDFs only products and a lot of them were very cheap (1$), yet he managed to make a living out of it. Granted he did publish one PDF per week for a while.
    1. RichGreen's Avatar
      RichGreen -
      Excellent article - thanks very much for sharing, Simon.
    1. Hussar's Avatar
      Hussar -
      Wow, $ 1200 after four years. Yikes. That's brutal.
    1. Blackbrrd's Avatar
      Blackbrrd -
      I think the review section of this site is a great way to increase sales. I read Calidar in Stranger Skies in a thread about why one should play in Mystara. I checked out the kickstarter (which had gotten funding) and finally bought it due to the really good reviews it had gotten. The reviews mentioned that it was a good read, which overcome the lack of support for the system I would potentially use to run it (5e).

      So, awareness that a product exists and a way to check if it is good is something that can really drive sales in my opinion. Getting reviews that separates the good from the bad is a way to drive sales. I would much rather spend 100$ on four good adventures than 50$ on ten bad adventures.

      So @Morrus if you want to help the industry as a whole, keep promoting the review section and I think it will really drive sales and get a lot of traffic to this site. You have already managed to get more reviews here for some products than on rpgnow where the product is sold!

      I actually started designing a review site for rpg products (I even got a domain for it), but I wondered how I could get traffic to it, and a review site without reviewers doesn't really work. I was thinking that in addition to regular short reviews, the site should also have a bit longer presentation of products. More like articles than user reviews.
    1. MoutonRustique's Avatar
      MoutonRustique -
      This has been the best article I've read about the business-side of RPGs in over 25 years.

      Thank you!

      Incredibly clear, informative and concise. Well done. My hat is off to you.
    1. Adam Jury's Avatar
      Adam Jury -
      Quote Originally Posted by goldomark View Post
      I'd love to see article like this one from Owen K.C. Stephen. He made PDFs only products and a lot of them were very cheap (1$), yet he managed to make a living out of it. Granted he did publish one PDF per week for a while.
      I'm pretty sure Owen was also freelance writing for other companies during all of that time.
    1. Kramodlog's Avatar
      Kramodlog -
      Oh yeah.
    1. Lee Singleton's Avatar
      Lee Singleton -
      What I find more interesting about the article and telling (as a retailer myself), that despite many people's claims that retailing is dead and people shouldn't bother with retailers any more that even though your margins are less, your number of units sold is over 50% for this simple small adventure and that the number of PDF sales is around the 25% mark, which shows that people still like the dead tree product.

      I realise it's only 1 product, but I think, when talking about your sales, you could probably do even more to help grow it at the retail level.

      From a retailer perspective (and purely academic thought process), I would love to see what these percentages (units sold) are across many different lines and companies. For instance something like 5th edition is currently all retail channel (no pdf's on offer), Black Onyx oWoD/ NWod nothing via the retail channel because they go the other way to the extreme.

      Lee
    1. Pelgrane's Avatar
      Pelgrane -
      Quote Originally Posted by Dioltach View Post
      I'm curious about the large piece taken up by "Cost of art and layout", particularly relative to "Cost of writing". Do artists command such high rates compared with writers? This hardly seems fair, particularly as writing is very much product-specific while artwork is mostly more generic. Or is it just that visual appearance is more important for immediate sales than the minutiae of the writing?
      No, they really don't. Artists get paid poorly, too, and there are even more artists approaching us than there are writers - an average of one a day.
    1. Pelgrane's Avatar
      Pelgrane -
      Quote Originally Posted by Hussar View Post
      Wow, $ 1200 after four years. Yikes. That's brutal.
      Overall, our margins are very slim, which is why we are concentrating our energy on selling more books this year.
      However, If I'd shown the figures for an early Trail such as Graham Walmsley's Purist adventures, it would look quite different, and our core books do much better, selling thousands rather than hundreds.
    1. Pelgrane's Avatar
      Pelgrane -
      Quote Originally Posted by Lee Singleton View Post
      What I find more interesting about the article and telling (as a retailer myself), that despite many people's claims that retailing is dead and people shouldn't bother with retailers any more that even though your margins are less, your number of units sold is over 50% for this simple small adventure and that the number of PDF sales is around the 25% mark, which shows that people still like the dead tree product.

      I realise it's only 1 product, but I think, when talking about your sales, you could probably do even more to help grow it at the retail level.

      From a retailer perspective (and purely academic thought process), I would love to see what these percentages (units sold) are across many different lines and companies. For instance something like 5th edition is currently all retail channel (no pdf's on offer), Black Onyx oWoD/ NWod nothing via the retail channel because they go the other way to the extreme.

      Lee
      The main point of retail for us is that we couldn't easily do beautiful hardback books or acquire new players without retailers. That's why we do FreeRPGDay, and why we've signed up to the Envoy demo program. For some lines (eg 13th Age) retail is very much more important.
    1. Lee Singleton's Avatar
      Lee Singleton -
      Quote Originally Posted by Pelgrane View Post
      The main point of retail for us is that we couldn't easily do beautiful hardback books or acquire new players without retailers. That's why we do FreeRPGDay, and why we've signed up to the Envoy demo program. For some lines (eg 13th Age) retail is very much more important.
      I agree that it is especially helpful in acquiring new players to your products (something I think Wizards of the Coast often get overlooked at for doing within Internet Forums). (Of course I would agree, I'm a retailer :-)) I also like what you do for supporting us (via 13th Age and the Bits'N'Mortar project etc and one of the reasons I was happy to back your latest Kickstarter, The Dracula Dossier, at Retailer Level.

      Obviously I think and wish everyone would do more for retailers (I'm greedy like that) and have a host of wants that I wish publishers would do (and not all of them are be more like WotC, though I wish WotC would do more too).
    1. Pelgrane's Avatar
      Pelgrane -
      Quote Originally Posted by MoutonRustique View Post
      This has been the best article I've read about the business-side of RPGs in over 25 years.

      Thank you!

      Incredibly clear, informative and concise. Well done. My hat is off to you.
      *bows* I will write more stuff about stuff if Morrus deems it worthwhile.
    1. Henry's Avatar
      Henry -
      For me, the message is old news, but the specifics are both nice to see and invaluable when debating with others on the lucrativeness of the industry. You always hear the old jokes ("How do you make a small fortune in RPGs?", etc.) but having the actual story of someone making it work despite small margins, copyright violations, increasing costs is fantastic. Thank you again, and thanks for employing three of my favorite people (Robin, Ken, and recently Kevin)
    1. CardinalXimenes's Avatar
      CardinalXimenes -
      This a an extremely interesting article with a great deal of useful information in it. It's particularly worthwhile to see some of the cost structure of another small publisher, one who goes in for full-color books with high-end production. The costs on some of those books seem brutal to me- $15K in production cost for Ashen Stars, for one. I can see how it could work out that way for a 300-page full-color game by a nameworthy author, but I can also see how it would be hard to make a lot of money with it. My own b/w interior games average about 175 pages and yet cost me only around $3K to produce, with POD sparing me from any capital investment in printing.

      I've always been very hesitant to go in for high-end production values because I'm just not sure the ROI is there. I just don't feel confident that a $10,000 investment in lavish art is actually going to return me $10,001+ in additional sales that I'd not have otherwise made. I'm sure there's some kind of premium for full-color glossiness, I just don't know that it's going to be sufficient, and I'm very leery of sinking large amounts of capital into finding out.

      Of course, this spring I expect to be running a Kickstarter for a small product explicitly to pay for that kind of fancy dress, so I can somewhat alleviate my ignorance. The product is a mercenary campaign supplement of essentially the same character as my other campaign supplements, so I'll have a good comparison baseline between it and the earlier b/w products. The Kickstarter itself is apt to distort things, though, since that's going to catch a lot of eyes that the earlier products didn't get a chance to play for. Still, I should be able to sift a few hints out of the resultant sales data.
    1. Ranes's Avatar
      Ranes -
      Thank you, Simon. That was an insightful piece; you have my respect for your attitude to your writers and other collaborators.
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