Hey, we reached the magic  in the Stuff to Watch
thread. Do we want to discuss it here?
Posted By: J. Walton[Distro 3]
Yeah, I was just talking in detail with Elizabeth about this because I may have a commercial product next year. Neither the IPR or Design Matters model seems to make the most sense for debuting a new game that you expect to sell 50+ copies, just because you lose so much money either on IPR's retailer cut or the DM profit-sharing model (like Gregor last year with 3:16), unless the other profit-sharers are also debuting hot new games. I would be really interested in seeing some threads about the best way, business wise, to debut a new product in a way that will actually make you some money.
Well, I'm hoping to make money with my new release. The Con knows this and can charge appropriately (the numbers show that there is indeed an opportunity to make money), so a 10x10 booth costs about $1600. When you figure in other booth expenses (e.g. furniture, storage, transport, and the ability to take credit card, which is a must) your budget will be about $2000-2500. Let's say $2500.
So, me setting up my own booth and selling 100 copies of a book at $20 each is going to get me $2k, which is $500 short, AND I'm now out 100 books where I paid for the printing. Say each book costs me $4 that's another $400 down, for a total loss of $900. Huh. Seems a stoopid idea. But I do have my personal presence to con goers. My booth has just my stuff.
IPR is a potential solution for me too. They take 56% of the cover price and I get 44% BUT I don't have to pay anything up front for a booth myself. They're the ones taking on that cost (and they get it back out of the 56% they take for every book sold). 100 copies sold like that gets me $880, out of which I need to pay the $400 printing cost. So I could be looking at a profit of $480. It's "only" $4.80 a book but it is profiit. You are in with a large collection of other books on the booth though. Will you sell 100? What about 50? That gets you $240...
A Design Matters model is another potential solution. We all pay an equal share of the booth, which for 7 people, say, would be $360. To make a profit I need to get back my $360 booth fee plus the cost of any books. If I sell fewer books (50, say, like 3:16 did on the DM booth in 2008) at $20 then we have $1k in the pot. If we all do equally well (and that's a big if) then we all get $1k out, which gives me a profit of $440 (i.e. almost the same as IPR) by selling half as many books. In fact, as long as the payout is above $560 (i.e. the booth makes $4k) I'm not losing money. Other effects of a booth like this are that I have a bigger and more personal presence on the con floor. The money back might be more than you personally contributed or it might be lower. I like to think of it as insurance. We're all in a hole for $2.5k and the first aim is to get out of the hole together. It's best served by matching people up with the right books rather than just pushing _my_ book. We've shown that you can make money at GenCon and you can be mutually supportive.
The booth takes a cut of something other than a fixed 44%. What if everyone just got a flat percentage taken out of their sales to cover the booth cost? For Design Matters this year we'd have all paid about 50% of our sales as "booth fee" if we'd done this. Note that this %age is higher than the return from IPR.
We all equally pay for the booth and take what we can make. In my view this model is hurt by the varying numbers of sales. People burned one year with low sales simply won't chip-in the following year to be burned again. It can also be a bitter experience when booth mates make wildly different amounts of money. One booth mate gets $100 on a $300 buy in (and is out of pocket by at least $200), while another gets well over a grand and skips cheerfully away.
Someone kindly lets me put my book on their booth and gives me 100% of my sales. What's in it for them? It might just be that we do this for community effort, personal friendship or to ensure a great book is present for sale on the con floor. This is the awesome scenario but I'd contend that it's not a long-term solution. It also works best for small numbers of books. I doubt anywhere is just going to allow me to sell 100 books and get all $2k year after year. GenCon (rightly, IMHO) wants its cut. Is that cut paid by whoever has the booth (IPR) or by me being part of a booth (Design Matters)? Or some other solution?
Any other ideas?