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The $1K Company

by
 
You do have a choice in starting a company-- do you want it cheap, or do you want it good? I covered "good" last month, and that's really the path I recommend to anyone interested in starting a game company. But who listens to advice, eh?

Some people have a different driving motivation. They want to get their idea into print. The profit is not their primary motivation-- being published is. So "cheap" becomes the best path. Naturally, of course, their idea is great enough that millions will fall in love with it and they'll make scads of money (or so their wishes go). They are, in a word, a Vanity Press.

Now, there's nothing morally wrong with vanity presses. Indeed, fine and enduring work has come from such critters. But if you're starting up, it's very important to decide if you're a vanity press or a company. The difference is easy to spot: the goal of a vanity press is to put items into print. The goal of a company is to put items into print in order to make money. A simple extension, but crucial.

One reason it is crucial is because, as the axiom goes, "the best way to make a small fortune in the gaming industry, is to start with a large fortune". If you're going to go the business route, as I said, I covered that ground. If you're doing this as a vanity press, your primary goal is probably very different. Your primary goal should be to not spend more money than you can afford to lose.

If you're a vanity press pretending you're a gaming company, you'll easily spend $20,000 without noticing it-- printing 2K copies of your first product, making flyers, booking tables at Cons, joining GAMA, getting a professional web site, buying advertisements in all the magazines, setting up an office, sending out mailings, calling distributors and retailers, and so on. But if your goal was just to get in print (rather than run a professional company), you'll be out, oh, about $19,500. There is a better way.

First, step back, breath deeply, and analyze your motives. Are you doing this just to publish, to get your ideas out? If your goal for your company does not include the words "market share", "line development", and "return on investment", you're probably tending towards the vanity press. So stand up (really-- stand up, I say. It'll help). Look at yourself in a mirror. And say out loud, "I want my game published, and am starting my own company to do so. I am a vanity press."

There, that was easy, wasn't it? Now we can move to how to do this, without losing your shirt, while still keeping alive the possibility that your idea really is the breakout wunderkind of this decade and will make you millions. Welcome to "the 1K company".



Step one, get $1000. Expect to lose it all-- you might not, and you might make a profit, but if you start out considering it as 'spent' you'll sleep better at nights.

Get Capital

  1. $1000, lay it on the line


Step two, make yourself look like a business. This will take 15% of your capital. First, check out the rules for your state for filing a "Doing Business As", or DBA. This is basically a way of having an official business name, even though you're just an individual. It also means that checks and contracts in the name of your business can be cashed by you. And it's spiffy.

You'll need a simple logo, so slip a graphically-talented person twenty bucks (aka 'pizza money') to make one. Remember, unlike a single game book or such, a good logo is something that you'll have to live with for a very long time, so you want to keep your logo-designer happy. Then, get some business cards printed-- you probably can't afford ones that include your logo, so go to your local office supply place and get a standard template one made.

Print up around 200 flyers that promote your game. You'll want these to give out at cons, hand out at your local game and comic shop, and put on the main board of your local university. And, if you get any queries from distributors or retailers, you can send them your flyer.

Finally, join the GPA, or Game Publishers Association. The primary two reasons for you to join are: you get access to their members-only email discussion list, and you can (if things are going well enough to provide an extra couple of hundred dollars) be part of their GPA table at Conventions to actually sell your product there. So, information and a way to sell games, certainly worth the $20.

Looking Like a Business: $145

  1. logo ($20)
  2. business cards ($20)
  3. DBA filing (under $75 in most states)
  4. 200 flyers to pass around ($10)
  5. GPA membership ($20)



Step three, print your game. Okay, first you have to write it, but we're assuming you did that already, or why else would you be starting your own publishing house? Next, get it edited. No matter how good you are, you cannot edit your own writing-- you're going to have to find a second set of eyes to look it over. Then, get someone with design skills to lay it out. Since we're doing this on the cheap, we'll assume you find friends for all of this.

Get color cover art done, again by someone willing to do it in return for the exposure. Depending on how well you're set up with gear, you may have to send it to a service bureau (Kinkos or someplace cheaper) to do the color separations, i.e. scan it and print out a separate b&w sheet of each primary color, for the printer.

Now sign up with a printing-on-demand shop. Currently, Lightning Printing is a popular one for actually making the darn thing. They'll run you about $300-$400 to print the first twenty-five books (their minimum order), which means you'll want to sell each of those for at least $16 to make back that cost.

Printing on demand is essential for keeping down costs, since printing is usually the biggest chunk of outlay required in advance when starting up. With the low buy-in of on-demand, each subsequent book order is substantially cheaper (since you're already set up in their presses). So after you sell those initial 25, you can get more copies printed as orders flow in, and each copy will only run perhaps $4 to print. This, then, is how you make your profit.

Let's step back a bit. A professional game company generally has to charge about 5 times an items cost in order to at least break even. This is because the typical retailer gets items at 50% discount, and distributors get 60% discount (plus you pay shipping). Plus they have other expenses to worry about. So if you were going through the regular sales chain, you'd be hard pressed to make money at $16/per book less 60% and shipping. Except you're not working the chain, and you're not printing in advance. You print when you have a sale in hand, and you get to keep almost all of the money you take in.

So printing on demand really helps with small runs, and it's how you'll stay afloat and not lose money. After all, even this scheme is spending half of your capital-- and printers always get paid first. Using this scheme means you're well positioned if your book is a runaway success and you suddenly need the capability to print, oh, 5000 copies-- LP can still do it. I don't want to sound like a commercial for them, but they are a good avenue that other game producers have been trying.

Oh, and pop off and file for a copyright on your book, just to keep things tidy. It's only $20 at last check, and of course the SBA or the Copy Myths page can help.

Printing: $435

  1. writing (diy)
  2. editing (diy)
  3. layout (diy)
  4. proofing (diy)
  5. final printing ($50)
  6. color cover (diy plus $40 to get color separations)
  7. Lightning Printing, 80 pg (est $325 for first 25)
  8. copyright ($20)



Step four is the way to get the game to customers, and customers to the game. You now have a business and a product, and for this third crucial step of reaching customers, we'll use the Internet via the world wide web. This is your distribution network, and we'll be spending about 20% of our startup money to get it set up nicely. We want to do this the homebuilt way: looks great, but built cheap. We'll assume you already have local internet access with email. So the next thing to do is get a website.

RPG Web Services will give a bare-bones setup off RPGnet for $48/year. Since you're doing a game, this is a cheap in. It's not much space, but you don't want much space-- this is a vanity press, not a thriving online community. And you get to be on a game-related site, which helps in getting readers.

You can always expand if you're bringing in the cash, but the name of this game is (for the moment) "cheap". You can hunt around for less, but remember that most free sites do not allow business, or charge extra for business, so make sure you check their policies before signing up.

One way or another, let's assume you've gotten your web space. Say it's www.rpg.net/MyGameCo. A very inspired name, no doubt, and also your DBA alias... remember DBAs? Here's where they help make things look professional: members.aol.com/joe/joesgame just doesn't carry authority.

Now you can decide if you really want to look slick, and have your own domain: www.MyGameCo.com, say. This involves two expenses. First, you have to plunk down $70 to Internic to register it for the first two years. Having done that, you can now get that custom domain virtually forwarded onto your existing site via any number of services, which run around $50. We've had good luck with Seagull, and finally added that ability to RPG Web Services.

This means that email to czar@MyGameCo.com will go to you, and that people entering the web address www.MyGameCo.com will get automatically shunted to www.rpg.net/MyGameCo. It's a darn sight cheaper than actually maintaining your own machine for a domain, and works (from a marketing standpoint) just as well. Your business cards and all promotional literature need only reference www.MyGameCo.com.

Now that you have the address worked out, you need a page. Design it yourself, or farm it out to your best friend's cousin's co-worker who does web design 'real good'. Yes, you get what you pay for, but we haven't let that stop us in this, have we?

Finally, you'll need to sell your book. To do this, you need to be able to accept credit cards. The extra hassle of having to mail out a check, simple as that may seem, will eliminate the majority of your purchasers. They want instant gratification, and you'd best give it to them.

One company, CCNow, does online credit card storefronts for a flat 8% of the purchase price, no other fees. It has to be something tangible, which a book certainly fulfills. And since our model here is 'low initial cost', this fee fits nicely: you only pay after something sells, and you're pocketing 92% of your book's purchase price, less shipping. Whichever service you use, you want to keep any monthly or set-ups fees as close to zero as possible-- even if it means paying a higher percentage of the sale. This is so you have good cash flow, i.e. you aren't spending money until you are receiving money.

Getting Wired: $218

  1. internet account with email (how are you reading this?)
  2. website ($48)
  3. internic ($70)
  4. forwarding ($50)
  5. design it (free, or $50)
  6. CCNow.com (free, 8% surcharge)



Step five is marketing. We've handled administration, production, and distribution. The last bit we need is ways to boost recognition and sales of your game. For this, we'll devote 20% of your startup money and a lot of your time.

We already have the internet end set up, and the usual internet promotion rules apply. Which is to say, the infrequent post to the appropriate newsgroup and perhaps a few relevant email lists is a good idea. And, of course, if you spam any elists or post to over a half-dozen newsgroups, you deserve every bit of pain and suffering that the furious net community will heap upon you. Remember, the point isn't just 'get the word out', it's to set your image.

After all, you didn't go through all this trouble of setting up a vanity press just to alienate the internet gaming population. You have a logo, a company name, a classy site, and a good product, and you have to back that up with responsible marketing. This means three things:

  1. Write formally, not colloquially, as if it were a press release,
  2. Use a spellchecker and have someone proof it for grammar, and
  3. A light, consistent touch will beat spamming and overkill 10-1.

I can't emphasize that enough. There is a school of marketing that says "Get the NAME OUT! YELL! SCREME! USE BAD WRITING BUT MAKE SURE EVERYONE KNOWS HOW K00L YOUR GAMEZ ARE!!!@!@". This sets a certain image for your company, though-- you'll get infamy, but no sales. It's not enough that people know you exist-- they have to like you enough to buy from you. You're a new product, after all, and you have to win them over.

Or, put simply, compare sales of "Senzar" with "Tribes". Enough said.

Our marketing plan here consists, in addition to internet promotion, of attending one of the big gaming conventions. This is best determined by what's closest to you, and any of the following are possibilities: GenCon, Origins, GAMA Trade Show, ESSN, GenCon UK, DragonCon, DunDraCon, or anything else (in no particular order). I stuck the GTS in there because, with small print runs, one of your best audiences is other game writers and developers (who are known to buy new stuff, and to sometimes review it).

Not factored into the plan, but worth considering, is reviews. If you send review copies, you may get good promotional value. Or you may not. You're better off if you know a reviewer for a specific publication than just sending a copy blindly to an editor, but the latter route does have some value. In particular, use email to query the editor before sending a copy, to see if they accept unsolicited items. Some review avenues include InQuest, Shadis, RPGnet, Pyramid Online, KoDT, Fractal Spectrum, RolePaper, and likely others.

Working the Street: $200

  1. Attending One Big Con (GenCon, DragonCon, whatever) (free admission in return for running games, $35/day shared hotel room for 3 days, $20/day food for 3 days, $35 gas to drive there) (don't get a booth-- run games, etc)



Congratulations. You're now a publisher. After three months, you can reassess your goals. Perhaps you are now a millionaire. More likely, you're not making a living, but maybe pulling in enough to maintain a motorcycle, or go out for dinner each week.



Postscript: Just to go over the lineage of this plan, this scheme was developed in 1998 and is being used by two companies already. It's sort of like the banned M:TG one-turn-kill of channel-lotus-fireball. For those familiar with the early days of "Magic: The Gathering", the combo worked like this.

You take your fancy deck and start the game with 20 life points (your $1000 starting capital). On turn one, you put down a Forest (the basic business plan). You then put down a Black Lotus (getting your web site up) and use it for red mana. Using these, you then cast 'Channel' to drain your life down to just 1 point left (printing your book), giving you 21 mana. You then cast 'Fireball' (aka great success with your book sales) for 20 points of damage to your opponent, winning the game. Not surprisingly, it takes a bit of luck to get this combo to come out on the first try. But if it works, it's beautiful.

Good luck,
Sandy (sandy@rpg.net)

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