Kobold Press CEO and Kobold-in-Chief, Wolfgang Baur, is here to give you some insight on the state of the industry!
Kickstarter launched as a business way back in 2009, and that one platform has changed the hobby irrevocably and for the better. The last 15 years have been good for creative folks who produce films, books, or games via crowdfunding.
So, let’s talk about what that looks like, financially. Where does all that money go?
Kobold Press launched the first of its 32 (!) projects on Kickstarter in 2011. For its first project using Kickstarter, the team raised about $15,000 from 386 backers. The company used that money to create a nautical sourcebook and set of adventures called Journeys to the West.
Boy, that feels a long time gone! In 2009, the Pathfinder RPG was the #1 game in the tabletop RPG hobby. Obama was the US President. Kobold Press published a magazine, in paper, with articles and ads. Heck, Kobold Press printed game books in black and white, because I did not yet realize that maybe we could afford color, if we were careful.
Moving on before I turn to dust here.
A Formula That Works
So how are Kickstarter funds raised and spent at Kobold Press? As readers know, the company has delivered every Kickstarter it funded, and there’s a reason why. We treat Kickstarter as a budget for each project, using three steps to ensure that money raised to make games is spent to make games.
Step 1: Fund design and development first.
Step 2: Put the funds in escrow and spend as costs accrue.
Step 3: Count chickens after the game has shipped.
Paranoia, Fraud, and Fear
Given the importance of Kickstarter to the tabletop space, it’s often maligned. New backers are suspicious of pledging to a project, fearful that they won’t get a reward. That fear is sometimes justified! First time creators do flame out, and even established companies struggle with costs and surprises to their hopes. No one offers a guarantee that everything will turn out exactly as a creator (or a fan!) might hope.
Experienced backers know that they can trust certain creators and companies to deliver the goods, based on history (ahem, Kobold Press is one of these). However, even the veteran gamer with a shelf full of cool games may suspect some kind of bookkeeping hanky-panky, something shady. These Kickstarter people can’t possibly be on the level.
Theories about what really happens to Kickstarter money take various conspiratorial forms, such as, “You’re using this money to fund something else!” or “Shipping is gouging!” or even “How dare you give us something for free!” (I swear to you, that last one is true—I’ve gotten it multiple times from people who are upset that a project offers a freebie, either because they already own it or because they want something else to be free).
It doesn’t matter how often game creators try to dispel these myths, they keep coming back. It’s the fear of being taken, ripped off, or ignored. Over the years, I’ve seen less and less of this sort of nonsense applied to Kobold Press, but newcomers and anyone who fails to communicate clearly and honestly with their backers is in for some education on how Kickstarter requires not just raising money and making a great game. It also requires explaining how and when that game will arrive, and what’s in it, and what platforms it ships for, and so forth. You spend a lot of time on communicating, not just creating.
Practical Budgeting and Other Dark Arts
I’ll run through the rough breakdown of a fictional Kickstarter here, and then we’ll revisit some myths about how Kickstarter funds work.
Let’s assume that a charming, delightful creative project called MegaRobot RPG is planned as a crowdfunding effort. It is going to be a hardcover book with associated PDFs and some VTT support. For easy math, let’s say it somehow raises exactly $100,000 from 2,000 backers, each of them paying $25 for the PDF, $50 for a hardcover + PDF, or $100 for a deluxe hardcover + PDF or a hardcover plus a VTT license.
Where does the money go? It goes to the platform, to creatives, marketing, manufacturing, shipping, staff, business expenses, and taxes, of course. Let’s break it down a little more precisely.
Kickstarter
First of all, Kickstarter does the payment processing during the week after the project ends. Because they are the point of purchase, they retain all information about where the backers are, what state or local taxes are due, and so forth. As a creator, you don’t have any information about the backers. But at this stage, Kickstarter passes the funding along, minus a rake of between 9 and 10% of the total. So the creator of the MegaRobot RPG sees a deposit of about $90,500. Money is already heading out the door.
Campaign Commitment
Even creating a Kickstarter campaign means you’ve already spent about $20,000 (or more) to create a game design in manuscript form. You’ve paid a cover artist and interior artists to give it a beautiful look, laid out a preview, and created graphics to show people what the final will look like. Then you pay to promote it with advertising, press releases, and social media. You’ve spent another 20% of your budget making it cool enough to back, (you’re down to $70,000) but so far there’s no game book or PDF to deliver. Because at this stage, the product is still a dream—not yet a reality.
Getting It Press Ready
This is where things can go south. An array of expenses will be involved in moving MegaRobot RPG from creative vision to ready-to-play.
Whether the MegaRobot RPG is edited, illustrated, and laid out with a cool logo by freelancers or by company staff depends on how big you are. Let’s say for Kobold Press, that book has $10,000 of editing and art costs. So, roughly 10% of your budget gets the manuscript ready for press (with a broad definition of ready for press, but I’m doing big strokes here). $60,000 left.
Getting It Made
As a first approximation, you’re going to spend $25,000–$30,000 on printing costs and software costs (meaning an optimized PDF and VTT development). A lot of this depends on page count. A bigger book with more internal links or a core rules system with more software costs is more expensive to turn into digital releases than an adventure. For MegaRobot RPG purposes, let’s say 30% of your budget is manufacturing. Now we’re down to $30,000.
Shipping
You never make a profit on shipping. People hate shipping (including me!), but physical rewards cannot escape shipping costs here on the Material Plane.
If you ship primarily to the US and Canada, about 1,300 hardcovers currently costs roughly $17,000. Six months from now? Maybe more. Maybe not.
If you have a substantial number of customers in the EU or Australia, shipping is significantly higher, even if you have a local partner in those countries helping you out (by the way, those local partners also need to be paid).
Ideally, you built that into your original estimates. Better still, you reduced your risks by charging shipping separately (once you know how expensive the required packaging and postage are). Maybe you underestimated shipping because rates went up, or your book had an unusual kind of packaging and high returns. Call it 12% of your budget for shipping. $18k left.
Once your number to print is set, you’ve mailed the last copy to backers, you’ve locked down all the licenses and press copies and author copies and you’ve paid out every invoice from a partner firms—what‘s left over is SHEER PROFIT.
Death’s Traveling Companion
Oh wait, no taxes came out yet.
How much? The percentage is a complete mystery at this stage. Depends on your income and your accountant. Save what you can so this doesn’t blindside you. Maybe it’ll be less than 18%?
After The Campaign Is Over
This is why Kobold Press puts crowdfunding money into an escrow account, and the company doesn’t use a project’s funding for any other projects until it ships. Because while crowdfunding means lower costs and higher quality for customers, costs vary depending on the price of paper, container shipping, tariffs, art, rush edits, and even advertising. Your estimate is just an estimate when you launch. You find out the true cost later and you need the money to cover it when costs show up.
On the upside, crowdfunding helps market the game to customers who might not have heard about it otherwise. And it helps a publisher figure out how many to print. Traditional sales through distribution is a little more of a guessing game.
The Secret—Revealed!
This then, is the secret big reason Kickstarter is better for publishers than traditional distribution. After you fund the MegaRobot RPG on Kickstarter, even if it all pencils out to a profit of $0 (and some do much better than that!), you can still be ahead because the company now has a product where the expensive part is already paid for.
You’ve got a few hundred or a thousand hardcovers to sell to latecomers and game stores. You’ve got a PDF for sale on the MegaRobot Store and DriveThruRPG. Maybe you’ve got a VTT title on one or more platforms. Those are not entirely profit either, but you don’t need to fund the product’s creation on the back of those sales, so you pocket a lot more for each one you sell. This is often where a company actually makes money.
About those Myths
Let’s loop back around to the conspiracy theories: “It’s a scam” and “it’s funding someone’s vacation” and “shipping is gouging.”
Is the campaign a scam? This usually comes from people who really don’t want to feel they’ve given up any money that comes with risks attached. Even if the risks are low, they are uncomfortable with late delivery, a book not to their standards, etc.
In every case, I highly recommend these customers DO NOT BACK a Kobold Press Kickstarter campaign, such as the current Monster Vault 2. It will make you anxious and unhappy that you must wait or unhappy that the interior art is by an artist you don’t love, and you’ll make support staff miserable with demands for special treatment and so forth.
For these customers, I encourage you to buy games at your local game store. Hold the book. Skim it. Smell it and flip through the pages. Then decide if the thing is worth it. You’ll pay more than if you got it from Kickstarter. But you have a chance to consider your purchase in advance and feel secure that you’re getting what you want. Crowdfunding might not be for you, and that’s ok.
Is shipping gouging? Oh, I wish! Shipping is a break-even prospect at best. The Kobolds often lose a little money on shipping. We mail replacements for missing and damaged copies. The support team spends time hand-holding new backers through filling out a shipping survey. I get ulcers thinking about tariffs, VAT, and broker fees. I rub random lamps in case a genie lets me wish up an easier solution. But unless and until everyone abandons print, we’re stuck with it.
Rest assured, we want you to get your rewards quickly, safely and with minimal hassles. The best case scenario is that it goes smoothly, it gets done, and we don’t have to think about it anymore.
Does the money get funneled elsewhere? This one is true, kinda, sorta. We keep all funds in escrow until they pay for creation, manufacturing, shipping, taxes, salaries, etc. Anything left over about a year after a project ships sometimes does get rolled into paying the upfront costs of the next project. Not a vacation, but sort of a free weekend.
Profit from Book A might help pay for a cover artist on Book B a year later. Or it might not. But for Kobold Press, the only time funds from one project move to another project is AFTER the first project ships. That’s the only way to be sure that backers of the first project get their rewards, and the thing we set out to make, gets made.
The Light at the End of the Tunnel
It’s a journey to get here, but I hope I’ve shed a little light. That’s all for this month. Now, did I mention we have a Kickstarter running? Monster Vault 2 has 300 new, inventive monsters for any 5E game. And it includes interesting new “tech” for encounter creation like monster bundles and escalations. It includes a free PDF, Field Guide to Monster Hunting, which lets you carve up monsters for crafting, for spell components, and for sale after the working slay is done. We’re pleased with it. Please do check it out.
I welcome your support in making new and wonderful and beautiful tabletop games, this month and every month.
Until next time!