For those who don't publish their own books, it's hard to understand exactly why money might be a problem. After all, we're selling a book for nearly $46, so we should be raking in the dough! But let's start looking at the real numbers.
First of all, those books cost something like $8 each to print ($46 - $8 = $38). Then you have to consider that the MSRP is not what the FLGS owner pays for the book; depending on where they order from, they get between a 50% and 60% discount on the cover price. That means they get to buy a $46 book for something like $20, paying their employees and utility bills out of the difference. So now we're looking at something like $20 - $8 = $12 profit per book.
But hold on... on larger orders, retailers get their orders shipped for free, and those shipping costs are often passed on to the publishers whose product was in those big boxes (either directly or indirectly). Plus, the consolidators and distributors also take a small but noticeable cut of the net profits; this can be anywhere from 5% to 20% when you add it all up, including stocking, setup, and credit/collections fees. Depending on who's distributing your books, that $20 can turn into something as low as $15 before you can blink, and $15 - $8 means we're looking at something like $7 net profit per book, instead of $38. That's a big difference. By no means am I denigrating the people who run these companies -- they have to make a buck or three, and based on the way this model works, in my experience everyone has been fair, honest and upfront about costs (or has at least tried to be). It's just a huge mental hurdle to not sink into depression while you watch $46 wither away into $7.
A larger issue for a small publisher is the unforeseen and sudden costs that jump up and bite you when you're not expecting it. For example, what about all those shipping costs? Remember that we shipped the HELLAS books overseas to a port, and then shipped them from the port to a warehouse, and then we had to ship them from that warehouse to another warehouse. Outside of the logistical nightmare this poses, and the big hit to momentum (since there's a gap in availability), there's also the matter of escalating costs. A thousand books isn't like sending a letter to your grandmother with a Forever stamp, and you can't fit a thousand books in a Priority Mail box. No, here it involves big trucks with hydraulic lifts on the back, and it costs lots of money. And that money starts to add up. $500 here, $1000 there. It gets to the point where you consider renting a truck and driving them yourself, except you'd have to take off work, and by the time you add in the cost of gas it turns out you're not doing any better that way, even if it is an opportunity for a road trip.
And what about the money paid to artists and writers and editors? Jerry and I do our best to pay freelancers promptly, and never once (to my knowledge) have we failed to pay someone for their work. Most good people and companies endeavor to do the same. But when you consider the margins, it's easier to see why some companies can only afford to pay a half cent a word, or $10 per image, or often slip past 90 days when paying out, or (in worst case scenarios) fail to pay out at all before they go under and vanish. And what about marketing? When you're running a tight ship, there's often no budget for such things, and you have to rely on word-of-mouth and industry cred. You hit the podcast circuit. You get Chad Underkoffler to review your book. You rub Fred Hicks' blue hair for luck. You get Andy Kitkowski to pose behind your booth.
You do whatever it takes to eke out a few more sales, and you hope for the best.
This is to say nothing about the current state of the economy, especially here in the United States. With a recession on, and unemployment up, there's simply less money to go around, and for HELLAS to launch in mid-2008 when there were a whole slew of economic crises waiting in the wings... Well that was just unfortunate, but also unavoidable. Sometimes the gods like to have their fun, I suppose. And we're not alone, I think. With how easy it is to do nowadays, it seems likely that more and more people are considering trying their hand at self-publishing, at the same time as there are likely fewer people willing to consider spending their money on that publisher's goods.
By this point, you're beginning to understand why those who work in the industry like to say that "the fastest way to make $1 million publishing RPGs is to start with $2 million."
The above are all rough numbers (and I'm sure there are publishers and creators who will comment here and say that their numbers are a bit different), but I'm equally sure that they're not very far off from the general truth. Even if I'm off by a few dollars, the fact remains that this is not an industry in which one gets rich -- at least not quickly. For example, my Ninja Burger 2nd Edition RPG quietly sold right around 1000 copies (in print and PDF) between the very end of 2006 and the very start of 2009, about 500 per year. Chad Underkoffler's Zorcerer of Zo sold 526 copies in its first year. The awesome indie phenomenon Spirit of the Century, sold just over 3300 copies between the tail end of 2006, and the first quarter of 2009, which if my math is correct is about 1500 per year (averaged out).
By the way, kudos to people like Chad Underkoffler and Fred Hicks (whom I mention repeatedly here because we're familiar with each others' work) for being so transparent with their numbers; both of them frequently release sales figures in their blogs. I think this sort of thing goes a long way towards helping indie RPG publishers develop realistic expectations, and can only help the industry. Gone are the days (if indeed there ever were such days) when anyone could sell 5000 copies of a book in a year. There are fewer stores to sell them, and costs are higher, and there is of course WOW to compete with now; Gary and Dave didn't have CRPGS and MMORPGs to worry about, back in the day. This is not your father's RPG industry, and if you're thinking about getting into self-publishing, you should know that from the start. Also you should change your mind. Maybe study engineering, or computer programming.
But seriously, I want to emphasize strongly that despite all that griping, neither Khepera nor aethereal FORGE (nor, I am certain, ASMP or Evil Hat) are financial failures, or indeed failures of any sort. We make money at this, over the long run. We just don't make a LOT of money, and certainly not easily, through traditional channels. None of us is living in Beverly Hills, and just last month I had to cut my maid service back to only twice a week. Jerry had to sell one of his yachts! Really, though, I think unless you're a tier 1 or tier 2 publisher who can get your books into Borders and Barnes & Noble (such as WOTC, White Wolf, Paizo, Steve Jackson Games, and the like), you're probably in the same boat as we are. And if you're not and you've figured out the shortcut to the end of the rainbow, please let us know.
That's why we attend conventions, where we tend to do very well; people seem to enjoy playing HELLAS, and every time Jerry runs a demo we sell a few more books. Since we're selling those copies directly, we earn a much higher net profit for each of them ($38, versus $8). And if you sell out at Gencon like we did, that represents a tidy sum that can help pay off a big chunk of the printing costs, or pay for the next book down the road, or feed Jerry's children for a few weeks. Conventions have associated costs, of course: booth costs, plane tickets, and most importantly the often exorbitant hotel costs, especially in Indianapolis; $130 a night x 5 nights x 4 people = mindblowing. I've heard tales of game publishers -- and not small ones, mind you -- maxing out their credit cards to pay for hotel charges. This is all to say nothing about bail money. But if you are good at hawking your wares (and that means not sitting in chairs and playing Solitaire like some people do in their booths; you know who you are), it's easy to offset costs and make a profit at a convention. It also helps if you have a booth babe painted blue, like we did.
There is also the magical place called the Internet. If we sell books through IPR (Indie Press Revolution), for example, the percentages and fees are friendlier than other channels since there's at least one layer (and often two) cut out of the standard distribution chain. Any time you can cut a link out of that chain, it helps a lot. If we sell books through Amazon.com's Marketplace, or Ebay, or some other website where we get the order and ship the book direct from our own stock, we can net something like $35 per book, depending on where it's shipping to -- almost on par with selling that book at a convention, but with zero extra cost. If we sell PDFs through DTRPG or IPR or YGN or Lulu or e23 or the like, we get 65-75% or more of the sale price as profit; less net than selling a book, but also far less expense. I know that this is a reality that distributors and brick-and-mortar retailers aren't necessarily thrilled about, and I appreciate that they're trying to make a buck. But, alas, so am I, and I have to do what's best for me and mine, as well as my customers.
The point of this entire diatribe is this: there are ways to make money at this, and we have made money with HELLAS. Those ways of making money are just not always easy or obvious, and they're not necessarily the traditional, old school ways of doing business. The new ways are often very DIY, and they take some degree of effort and a little bit of luck, and realistically your best chance is to shotgun your product and put it out there through as many channels as you can, and then invent some new ones. Some can afford to lock into an exclusive distribution relationship with one of the big distributors, moving hundreds of books at a time in exchange for higher fees and a lower net profit per book, but these are generally established companies who know (or at least believe strongly) that they can move those larger quantities. If you're a smaller publisher with less product, it's often safer to sell your book in a dozen different ways, and maybe in the end move less product at a higher net profit per book. You have to make that decision: more copies, more profit, or something in between?
So when you consider all that, why do we do it at all? Why did Jerry and I spend 30 months, and thousands of dollars, and six weeks in a Portuguese prison, and blood and sweat and more than a few tears, to create and publish a book that for us will be a tremendous success if we ultimately only break even on it? Why do we continue to publish RPGs in an industry where selling a thousand books is considered a rousing success? Where distributors routinely advise smaller publishers to only print a few hundred books at a time? Where if you're not WOTC or White Wolf or a handful of other large companies you're lucky to make a few dollars net profit on all your efforts? Where the success stories are fewer and fewer each year, and many of the behemoths of the old glory days are but shadows of their former selves?
Why did we publish HELLAS: Worlds of Sun and Stone? Why are we currently finishing up work on the next two books in the HELLAS line and discussing our next project together? Why am I now selling a game called Vox and already planning the next two supplements? Why don't we stop while we're ahead behind?
Because for all the pain and turmoil and struggle, for all the crazy shipping mishaps and typhoons, we love what we do. We love playing games, and we love creating them, and we love when people buy our games and tell us how much they enjoy playing them. It's love, pure and simple, and it has been since 1974. I think just about any indie publisher you ask will say the same thing. It's love.
And that's why when Jerry sends me that next email and says "Mike, I have an idea for another role-playing game. Interested?" I'll have just two words for him:
"Hell yeah."
