I think we're waaaay overthinking the loss leader analogy.
The concept of loss leaders originates in the world of physical merchandise, where there is a (relatively) quantifiable cost-per-unit. In that scenario, it's pretty easy to say that a loss leader is a product sold at or below cost with the goal of encouraging the sale of other products with higher profit margins.
This is somewhat skewed when talking about the digital realm, since it's impractical to quantify an actual cost-per-unit. However, I think the spirit of the decision is the same: they are choosing to sell the PFRPG PDF for well below what they could be selling it for (the price the market would bear/the optimal point of the price-demand curve) in order to spur the sales of other, higher margin items, including the print version of the same book, as well as future splat books, the adventure paths, modules, merchandise, etc.
Arguing about whether it's a loss leader in the technical sense of sold-at-or-below-cost seems like missing the forest for the trees.
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I think we're waaaay overthinking the loss leader analogy.
The concept of loss leaders originates in the world of physical merchandise, where there is a (relatively) quantifiable cost-per-unit. In that scenario, it's pretty easy to say that a loss leader is a product sold at or below cost with the goal of encouraging the sale of other products with higher profit margins.
This is somewhat skewed when talking about the digital realm, since it's impractical to quantify an actual cost-per-unit. .
????
Why wouldn't there be a cost per unit. Presumably as gameprinter points out, you're still paying people to create something for you ...the only difference I can see is that you won't have to sell as many copies and/or have a high price.
There are sunk costs in a PDF product but the only difference is that each copy of a PDF doesn't also have the costs of actual physical production.
Every unit sold would simply drive the cost per unit down until you actually eliminate the creation costs and everything sold after that was pure profit...
Of course, there's the issue of royalties as I know Harlan Ellison always "insists" artists (artists in the sense of creators of art be it books or actal art) should get a royalty style agreement where at the least, if a product proves to be wildly profitable, they get a cut of said proceeds.
Because units are infinite or not countable. There is cost of production but there is no cost per unit. Only if there was such a thing as "rate or intensity of sales" to be measured you could speak of cost per unit. But the rate of sales is so low to ever hinder the sales of other product so it is totally uninteresting to be bothering with for this matter.
While I'm no expert, and I can offer suggested costs for the development of a single adventure module - since I'm working on my own publication, I am running face on to these costs for a module. I've got a sum upwards to $4,000. And we still haven't even calculated the cost of editing, proof reading, and page-layout, all based on hourly rates and variable cost per hour depending on quality and experience.
I see.
How many copies of this PDF do you expect to sell, through what venue, and at what price?
Quote:
Originally Posted by AllisterH
Why wouldn't there be a cost per unit? There are sunk costs in a PDF product but the only difference is that each copy of a PDF doesn't also have the costs of actual physical production. Every unit sold would simply drive the cost per unit down until you actually eliminate the creation costs and everything sold after that was pure profit...
For the Pathfinder RPG, those costs are all "sunk" in the hardcopy version.
The PDF sales from sale #1 should be pure profit. (It's certainly possible that Paizo is counting on a certain number of PDF sales.)
If they decided to sell the hardcopy at $10 a pop, THAT would be a loss leader.
Because units are infinite or not countable. There is cost of production but there is no cost per unit. Only if there was such a thing as "rate or intensity of sales" to be measured you could speak of cost per unit. But the rate of sales is so low to ever hinder the sales of other product so it is totally uninteresting to be bothering with for this matter.
Ok then, the better phrase would be cost per unit sold...Let's ignore pathfinder for a moment....As gameprinter mentions, you still have a cost to produce a PDF so why wouldn't you have a cost per unit sold?
Ok then, the better phrase would be cost per unit sold...Let's ignore pathfinder for a moment....As gameprinter mentions, you still have a cost to produce a PDF so why wouldn't you have a cost per unit sold?
It depends on how many units you sell. The more units you will sell the lower the cost. Of course unit price will affect sales so it gets a bit more complicated. The problem is that you do not really know how unit price will affect sales. You can make an estimation and based on that estimation you may find the most profitable value of pricing. Furthermore timing is a factor that is always important. You could prefer less potential of profits in total but increased potential of more sales at launch and near launch to build up momentum or to grab liquid assets. In case it is not clear, momentum is very important in the competitive economy and especially in a stable market. In short, Paizo is the one who knows what they are doing in regards to their business and we do not.
How many copies of this PDF do you expect to sell, through what venue, and at what price?
Because I'm not the only decision maker on this project, I don't necessarily have hard numbers to offer just yet. But on speculation on prices the publisher I am working with has sold past PDF products.
I'm guessing the retail price for the adventure PDF to be $7.99 - there are two follow-up adventure modules to this mini-campaign arc, so the same for those as well.
Guessing on total numbers, is just that, a guess, because this is my first product, and with the weakened economy, I don't really know. I think a break-even point would be 1000 sales (still just a rough guess here.)
My goal is to sell 10,000 copies, with the possibility of less orders up front, but with positive reviews, more purchases when the second adventure is released will have more adventure one purchases, to eventually reach a 10,000 copy purchase by adventure 3 - again pure speculation here. While I'd love to have 100,000 sales - I'm trying to be a realist here.
My sales venue plans include placing it here in RPGNow, at the Paizo store (part of the agreement with the PFRPG Compatibility License for early printed manual.) Perhaps through RPGDrive-thru as well, Through Roleplayingtips.com newsletter in direct links to the main publishers website and/or my own Gamer-Printshop website - though I am sure I'll have a specific site for the setting on its own, and perhaps sell directly from that site instead.
In the fall I plan to create a splat book to the setting, while providing a free Lite version Alpha PDF, to be released with the first adventure.
These are my plans and perceptions anyway. Does that answer your question, Wulf? (I'll definitely be purchasing your product as well!)
Isn't it true that these days most successful modules sell 1000, and the wildly successful ones sell 10,000? I'm not sure you're likely to see more than 700 or 800 in sales, unless you're on board with a big ol' company like Paizo and what you're doing is about to become a new campaign path.
However, I'm just a failed writer who went into Web Engineering because writing didn't pay enough. So I really have no idea what I'm talking about. I'm just basing my comment upon what I've heard from others, and my numbers could be way, way off.
Isn't it true that these days most successful modules sell 1000, and the wildly successful ones sell 10,000? I'm not sure you're likely to see more than 700 or 800 in sales, unless you're on board with a big ol' company like Paizo and what you're doing is about to become a new campaign path.
However, I'm just a failed writer who went into Web Engineering because writing didn't pay enough. So I really have no idea what I'm talking about. I'm just basing my comment upon what I've heard from others, and my numbers could be way, way off.
Your numbers might be right on, and I'm crazy to think I can get 10,000 sales, like I said, pure speculation in my numbers - I have no real idea.
I'm trying to somewhat "ride on the coat-tails" of Pathfinder, by republishing my initial OGL adventure and all subsequent adventures as PFRPG compatible - in that there are currently no Asian adventure paths, as well as no "Ravenloftian" style adventure paths either (my setting is both really.) With the near simulataneous release of Paizo's system, I'm hoping for some improved launch sales based on that alone - again, I could be completely off-base on this thinking.
Aside from commercial cartography, I am brand-new to this industry as a publisher and setting developer.
Edit: and regarding my numbers for Art costs, upon reflection, much of the art I'm purchasing now won't be in the modules, rather for the splat book, so the art costs are probably much lower and that $4000 total is probably too high - say $1500 total before page-layout is more realistic...
GP
PS: no doubt I will be getting a Lulu.com account for hard copies of the modules, plus I "intend" to create a hard-bound of my intended rules/setting splat - but I don't know that part of the industry yet, so I can't even speculate about that.
Your numbers might be right on, and I'm crazy to think I can get 10,000 sales, like I said, per speculation in my numbers - I have no real idea.
And that, with all due respect, is where you're going horrifically wrong. You obviously haven't done much in the way of even casual research, and that's a recipe for disaster. The notion that a first-time designer is going to sell 10,000 copies of an adventure is pure fantasy, and I don't mean of the D&D variety. (Yes, anything is possible, but you're doing the equivalent of basic a business plan on creating a top tier best-seller the first time out of the gate.)
I understand that this is a very difficult industry to get hard numbers, but you can at least get some basic ideas by seeing what's been said in public forums by people in the industry.
__________________ Ari Marmell
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Mouseferatu
--Rodent of the Dark
And that, with all due respect, is where you're going horrifically wrong. You obviously haven't done much in the way of even casual research, and that's a recipe for disaster. The notion that a first-time designer is going to sell 10,000 copies of an adventure is pure fantasy, and I don't mean of the D&D variety. (Yes, anything is possible, but you're doing the equivalent of basic a business plan on creating a top tier best-seller the first time out of the gate.)
I understand that this is a very difficult industry to get hard numbers, but you can at least get some basic ideas by seeing what's been said in public forums by people in the industry.
And if I were publishing this alone, you'd be quite right. In truth, I'm a just a cartographer with good storyline and setting idea, the actual publisher is Dementia 5 Publishing House, and while small have quite a few products in their stable, and the publisher/author has been in the industry for quite awhile. He was sold on the idea of my project. The person with the real knowledge of the market is the publisher, not I.
I began my discussion to this, based on what I know of the product costs. Wulf asked subsequent sales venue/price questions, and I lack the knowledge/experience to answer it realistically, so I probably shouldn't be doing so now.
Beyond art cost and my personal time involvement, my true investment is almost neglible. I did do six maps in trade with the publisher for his writing/editing staff in this project - so a defined "cost" there, but again, it was my time spent, and the "loss" of commissions I should have gotten for those six maps. All in all, my cost so far is very low. Some investment on the part of the publisher exists, but are costs that I am not incurring.
So really if I sold 200 products, I would still earn some profit, so my numbers previously presented is most likely wild speculation. Since I'm not going into debt creating it, its only a failure, if I sell nothing - or if it doesn't at least pay for itself.
And if I were publishing this alone, you'd be quite right. In truth, I'm a just a cartographer with good storyline and setting idea, the actual publisher is Dementia 5 Publishing House, and while small have quite a few products in their stable, and the publisher/author has been in the industry for quite awhile. He was sold on the idea of my project. The person with the real knowledge of the market is the publisher, not I.
Fair enough.
And don't get me wrong, I hope you do well.
__________________ Ari Marmell
aka
Mouseferatu
--Rodent of the Dark
Despite my imbecillic understanding of the RPG marketplace, I do know that I've purchased crappy modules that had awesome cover and interior art, and conversely missed out on great adventures because the cover didn't turn me on. While I wish I didn't judge a book by its cover - there it is. I am sure I am not alone in prejudging game content based on inferior art.
Knowing this and knowing that Paizo always acquires the best art possible in their products, I wanted to do the same within my first-timer's budget, or lack thereof. So here's where I've spent hard-earned cash - three artist's working on my Kaidan project:
Jan Pospisil, is a fantasy concept artist working in South Africa, she is doing the cover for my initial adventure, which will probably be used elsewhere in the splat, though not as the cover. Here's a link to her art posted on the dementia5 forum, the pre-published cover is in that thread, near the end...
For the beastiary for the splat, as well as one piece used in the initial adventure module, I'm relying on Mark Hyzer, who paints work for WotC's MtG CCG and for AEG - so he's an artist with some RPG cred, a worthy addition to the art staff of Kaidan (my project)... also some 18+ art here for just a warning, only one piece I think.
Finally, I've got a couple maps posted in an EnWorld Art/Gallery forum thread, including the regional map I created and am using for the initial adventure, to see my work in the cartography department...
I just wanted to show that within my non-marketing acumen, I am doing the best job I can in creating a superior product. Whether sales can match my efforts, only time will tell.
Its my contribution to the release of Pathfinder RPG!
Now we're getting into the question of how much each part of a print product cost.
How much of a product goes towards paying the editors and layout guys and the artists...
No idea. But the Rouse stated in a similar thread that the cost of production was quite small for WotC, compared to the other costs. Ie, making a PDF was not significantly cheaper for them.
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Gnoguh, human fighter/cleric (kensei->adamantine soldier)
Carric, elf cleric/ranger (radiant servant->saint)
Torn, tiefling wizard/cleric (divine oracle->sages of ages)
Truxas, human feylock/bard (feytouched->feyliege)
Tagron, human rogue (daggermaster->deadly trickster) 21th level Musings of an Epic Virgin
Guessing on total numbers, is just that, a guess, because this is my first product, and with the weakened economy, I don't really know. I think a break-even point would be 1000 sales (still just a rough guess here.)
That's the sort of info that's useful to know before you invest $4000.
Quote:
These are my plans and perceptions anyway. Does that answer your question, Wulf? (I'll definitely be purchasing your product as well!)
Thank you! I hope to count you among my wildly optimistic target of 200 sales.
Well, I also hope you do well. But be careful. Reduce your costs and your expectations. It looks like you have a good niche product-- but remember you're selling to a niche (Oriental fans) of a niche (PDF buyers) of a niche (Pathfinder players) of a niche (D&D players).
Yeah, I already refigured that number. Real costs: $500 for custom illustration, ?? for me doing my maps of free, ?? for the publisher writing/editing it for free, say $500 to $1000, that's it.
At $8 a purchase, I need 125 sales to break even.
So hopefully I can exceed 125, and do that repeatedly over the course of a 3 part adventure, and proposed setting/splat book, plus a planned 1st - 20th level campaign arc. We'll see.
Thanks for the reality check!
GP
PS: if the initial adventure arc sells poorly, then the splat book is out of the question, though I still may try to create a fairly complete lite splat as a PDF only. If all goes well then I'll move to creating the larger campaign in my line up - of course everything is based on how sales go from the start up.
PPS: because I am a graphic designer, I have experience and I will be doing the layout myself, that too is "free". Our proof-reader has been promised a free copy of the splat, that's her payment. So "other" costs have been factored in as well. Aside from free advertising and forum posting like this, I am "cashing in" on advertising in Roleplayingtips.com newsletter (John Fourr owes me $100 advertising trade for some map laminations I did for him back in December 2008.)
Well I have been told by at lest 1 3pp that they could have got the book by now if they wished Paizo has given some 3pp a chance to have the full rules. Some may have had them for a while I really do not know
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