Distributor Questions

[GregS]

Greetings all,

As we near the release of Valherjar I am speaking with more and more retailers and distributors about carrying my product.  The problem is, everyone makes ominous references to defining my terms, but no one seems willing to give me a legitimate point of reference as to where is reasonable to start.

After sitting through numerous GTS lectures, searching the forum (and other sources), and asking everyone I came in contact with, I've come up with some kind of basic idea...but I'd love some of the veterans on this board, who are always so marvelously candid, to set me straight.

Also, let me preface this by requesting that we avoid the "do what works for you" answers.  I'm trying, as much as possible, to operate on a generally accepted industry model, if such a thing exists, and am more interested in hearing what the average/preferrable concepts would be.  

Terms:  It seems, in the majority, that the wholesale model to distributors sits at 40% retail.  Is this number firm or should I expect it to vary from client to client?  

Minimums:  Another nebulous point, I've heard stories about minimums being as high as a couple hundred or as few as 5.  What's a reasonable place to sit?

Returns:  Defects not withstanding, should I incorporate some level of return polilcy for overstock or simply keep the minimums low?

Finally, as always, and opinions, points of wisdom, or other help is gratefully appreciated.

Thank you very much!

[Valamir]

Slightly tangental to your actual question Greg, but have you considered using a fulfillment house like Key 20 Direct to handle your relationship with retailers and Distributors?  They handle all of my distribution as well as rep the game at Cons and the GTS and the like.  

They do take a cut, but its a pretty reasonable one given how much headache they save me and the fact that they have now built a relationship with most of the major distributors.  

If you are going to go through distribution rather than direct only, I'd strongly suggest checking with Key 20 (et.al.) first and only try to do it yourself if you really don't like the cost.

[GregS]

Hi Ralph (et al),

I am absolutely intending to use a fulfillment house...assuming one will take me.  

Though I am proud of my product, and at least one major distributor agreed at GTS to carry me (it made my show), I have received mixed responses from FHs.  One, in fact, told me "I don't care what you're product is, if all you're doing is RPGs I don't want to carry you.  No money in it."

Now, of course, that was an individual incident but I'm planning for the worst and hoping for the best.  On that note, I would LOVE to hear people's responses about how various FHs have treated them, etc., but since I have to have a talk with the afore mentioned distributor next week I thought I'd square up first and beg someone to house me later.  ;)

Thanks for the suggestion, though!  I appreciate you bringing it up.

[Ron Edwards]

Hello,

All kinds of things to talk about here ...

1. Yes, the standard payment from a distributor is 40% MSRP. This varies considerably based on your relationship with them over time; for instance, the typical payment I receive is is 45%. (Three-tier jargon: you call the other side of percentage "discount," as in, 60% or 55% discount respectively for the last two values I stated.)

2. Fulfillment houses vary extremely widely, especially now. We should discuss this in detail, as things have changed drastically since I last reviewed the situation in April 2003. I have a lot of good things to say about Key 20, but I'd rather not bias the discussion without at least explaining my preferences.

3. I'm not sure what you mean by minimums ... quick clarification?

4. I suggest practicing full return policy. If the retailer can't sell it, then he gives it back to the distributor and gets his money back. If the distributor can't sell it, he gives it back to the publisher and gets his money back. This might strike people as horrific, but think a minute - anything else is basically a license to print and distribute shit. I mean that. You're the publisher and owner. If it doesn't sell, it should be your loss.

Passing on unsaleable shit to others without any recourse for them except to eat it is a remarkably successful tactic in the short term. It is, however, ultimately not about you gaining success for producing and supporting a good game which people play.

That's one of those ethical-choices things.

Best,
Ron

[jdagna]

You can check out my website and follow the business at the bottom (or go straight to it at http://www.paxdraconis.com/technicraft).  Normally it'd be at technicraft.com, but I'm having issues with my web host... don't get me started.

Anyway, if you go into the catalogue section, you'll find a PDF order sheet which specifies all of my standard terms, which are based on asking other people what's standard, with a few little tweaks for my own needs (like a lower-than-average minimum purchase).

As for going with a fulfillment house... I'm not convinced it's a good idea.  My games are only carried by distributors after much blood, sweat, tears and pestering.  A fulfillment house won't do that for you, not with the tenacity you'll do it for yourself... and if you have to do all the work to get carried anyway, you're just paying for overpriced shipping.  

Be prepared to send lots of free copies, and continue to follow up with the buyer until they finally cave in and buy your stuff.  In one case, it took six months of followups after a buyer promised to buy something before they actually did.  (Oh, and it doesn't hurt to get your fans to pester stores so that they can in turn pester the distributors from another angle).  Plus, once you get that sale, you have now established a direct contact with the buyer and know the person by name.

The fulfillment houses make the argument that distributors can buy your games more easily through them without having to make an expensive committment, etc.  But I just don't see any distributors in the industry saying "Oh, look, another RPG.  Let's buy a few copies to see what happens."  If they're not interested enough to buy 30 copies (a typical minimum order, and more than my minimum), then I doubt they're interested enough to buy 3.  And... if they don't have to make an investment in buying the games, they don't have to make an investment in selling them either.

Anyway, this is mostly based on my gut feelings about the biz (and about human nature), and it seems largely true.  However, my experiences with fulfillment houses are limited to Wizard's Attic - they shut down before they carried any of our products, but had us on their lists long enough to make sure that all of the distributors have incorrect information about our products and company info.  So, yeah, I'm a little unimpressed.

[Luke]

Hi Greg,

Can you give us a little background on the support of your game to date? What's the format? How long has it been in print? What kind of con exposure have you given it? Are you already supporting your own direct sales (from your website)? Are you actively promoting the game on the web?

Distribution is nice, but for me, it's a secondary point.

-Luke

[GregS]

Wow!  Lots of great replies.  Thanks to all.

Moving on to specific responses...

Ron:  Thanks for the insight, and I would love to shift the focus to your current thoughts on fulfillment houses.  In response to my last question, minimums, I meant in regard to minimum orders from distributors and the terms there of (i.e. to qualify for free shipping, etc.).

Luke:  This is my first game, and first foray into this business, and it will be available for retail at the begining of november.  It's a hardcover 288pg rpg.  We are currently developing an elaborate website that will offer more support than most I've seen, we have good marketing in place and will be expanding it as the months progress, and generally seem poised to make a good launch impact.  

Justin:  Thanks for your input and linking to your terms.  It was very, very helpful.  My only thought, in terms of the limited promotion a fulfillment house brings, is that while it may be expensive, it gives me three significant resources.

The first, and most simple, is some smidgen of additional marketing.  While, yes, they won't be actively advertising my game, they will be supplementing my efforts.  It's probably not worth the money, per se, but it's extra exposure.

Secondly, and most importantly to me, is that it will give me an extra little it of respectibility.  It's one easier step towards the distributors carrying me.

Finally, they'll wearhouse and fill orders for me.  As a guy looking at storing my 2000 books in my garage, and spending X hours of every day trying to fill orders and run to the post office, the opportunity cost seems reasonable.

But that's just my thoughts...I would love to hear from you all on the idea of fulfillment.

Thanks!

[Luke]

Greg, do you have a licensing deal or anything? Have you already gone to press?

If I were you, and I wasn't publishing a big name licensed material I wouldn't got to press at this juncture. I'd use POD and PDF to get your game out into the market and tested.

2000 books is A LOT. You're looking at 3 years of stock if you're game's hot. If it's not... that's a lot of  dead trees.

Can you tell us your reasoning behind your decision to jump in neck deep?

-L

[Valamir]

I think 2000 books is a huge mistake unless you have a licensed property that you can be reasonably certain will attract that kind of existing fan base interest.

From an accounting perspective consider all that money you spend on your printing to be NON deductable.  Printing is not an expense.  Printing merely transforms 1 asset (Cash) into another asset (inventory).  Since for accounting purposes $8000 spent on books means the books are worth $8000 you haven't incurred any expenses at all.

Until you sell them...or mulch them and write them off as a loss...which is typically what happens to small press guys who print thousands of copies.

For reference my second print run of Universalis was 750 copies and after just about 2 full years I'm starting to run low on stock.  And I consider the game to be fairly successful...and profitable.  It also wasn't 250 pages long which made 750 copies reasonably cheap.

Beware the lure of low per unit costs its a trap.

[Ron Edwards]

Hello,

For some perspective, Sorcerer's first printing in July 2001: 1250 copies. Sorcerer's second printing: 1000 copies. It seems to sell through in about a year and a half; the second printing is moving steadily as the first and if anything, a little faster.

Also, have you decided on a printer yet? Have you considered the difference carefully between traditional and POD? Are you getting hardback only because retailer solemnly assured you you must? (Note: I publish a hardback game; there are reasons to do it, but do you know what they are?)

Would you like to discuss bidding for printers and how it's effectively done?

Best,
Ron

[GregS]

Man, but this is getting interesting.  Scary, but interesting.

Alright, a bit of background on myself and Valherjar.  When I first came up with the questionable idea of entering the RPG industry, I began in what I thought was the most logical place: by ghosting the GAMA Trade Show and sucking up all the knowledge I could.  Coming from a strong business, but game unrelated, background I felt that looking at the "pros" and then modeling a plan of attack based around their success and failure seemed the best way to go.  As a rational and logical businessman I felt you could apply many of the universal concepts of marketing and development to this industry.  Boy, has that turned out to be wrong.  ;)

Unfortunately or fortunately, depending on how you look at it, this led me to a number of courses of action that now predicate what I -think- is in my best interest.  In that time I paid a lot of artists a lot of money, invested more than I'd care to recall on research and development (including going to both GTS and Origins with a booth exclusively to do market research), and did my best to produce a product that I thought could slug it out with the big boys, all the while attempting to maintain my distance from my perceived failures of the industry.

The result of all this, for better or worse, is where I now sit.  I have a ton of great art, a whole lot of text, and a game that has received incredible retailer and distributor response.  But, of course, that doesn't necessarily equal sales.

My estimates on printing were based on what I was told at the time, by the GTS pannels as a whole two years in a row, which was that any half way decent game would sell 2000 copies in the current market, especially if it had high production values and a decent marketing campaign. So all of my subsequent plans were based on that turnaround.  All of which, needless to say, the Forge seems to make me regret.

Where I proceed from here, then, is somewhat of a new question.  Do I go to print?  If so, at what quantity?  PDF publishing seems like an intriguing concept, but I have already spent a ton of cash on mainstream marketing, and so feel like I would lose all of that by not reaching out to retailers in at least some conventional way.

But, that doesn't mean y'all think it's the best idea.  I would love to hear what the Forge thinks collectively, even if I won't like it, as it's not too late to save me from the biggest potential mistake of going to print.  As always, any feedback, suggestions, or ideas of where to go are appreciated.

[Ed Cha]

Most distributors will not bother with you if you don't have a complete product line-up. I would say you'd need to print at least one book every other month to get their attention. Otherwise, they won't likely care about your stuff, especially the way the market chews and spits out RPGs today. A lot of fulfillment houses will not take you either, if you don't have at least a few products coming out each year. Why should they bother setting up an account for you when you're not going to make them money?

If you're going it alone, I wouldn't print 2,000 copies unless you're willing to sit on the stock for a few years and you know you've got a great product AND you're willing to promote the hell out of it. Something like 500 or less sounds more reasonable for you. It all depends on what your game plan is and how long you're willing to sit with the stock though.

After you get your 40%, you're going to have to pay your fullfilment house at least 15%-18% of that, then you've got to pay for shipping costs, warehousing, packing fees, convention expenses, and so on. Unless you sell in the thousands, you're not likely to break even. Instead, you'll likely get bled dry left and right even if you sell well.

The 40% rate is alright for big print runs, but not so for small print runs. I don't know what your product is, but it sounds like a new setting and that's, without doubt, a small print run.  

The RPG industry is a really tough business, the way the numbers work out. But there is hope at the end of the tunnel...

I'll have a big announcement soon about a new approach that should change the business model for independent publishers....

By the way, if you have a presentable PDF of your manuscript and you think it kicks ass, PM me and I'll take a look at it for you. I just might be able to help you get started and do it profitably, too.

[Ron Edwards]

Hello,

Ed, most of the active Forge members who publish have rejected the entire model that you describe, and profited greatly by doing so.

What you describe is the party line, what a publisher learns by going to GAMA and hearing what retailers and distributors have to say. Some of it is valid from their point of view, and some of it is leftover rhetoric that never worked anyway. I suggest taking an extremely skeptical approach, which it sounds like you've done.

Best,
Ron

[Tav_Behemoth]

Do I go to print?  If so, at what quantity?  PDF publishing seems like an intriguing concept, but I have already spent a ton of cash on mainstream marketing, and so feel like I would lose all of that by not reaching out to retailers in at least some conventional way.

By all means you should go to print; that's been your strategy all along so you're optimized for it. PDFs are a whole different beast. You have lots of options re: PDF:

1- sell your work as a PDF right away to build interest in the print book (often based on the assumption that folks will still want a hardcover so you won't lose sales to PDF buyers)
2- sell your work as a PDF 3-6 months later (often based on the assumption that people will buy the PDF or the print, but that the print book's sales lifetime is already over by 3 months so losing sales to PDF is not a concern)
3- treat the PDF and print as two components of the same thing: apply the purchase price of the PDF towards buying the book direct from you, and/or let print buyers download the PDF for free
4- give the PDF away to build interest in Valherjar, trusting that people will be interested enough to pick up the book

Personally, I'm doing #3 to grow the PDF market, drive customers to my website, and deliver more value with each purchase. Lots of folks around here will tear apart the assumptions in #2; and some variation on #4 is a potentially powerful approach for a new RPG and new world.

I don't think POD is right for you - you've invested heavily in production values, and so skimping on printing expenses will waste that investment since the print quality of POD/digital press can't yet match traditional presses.

One idea about print run: find a printer who will separate the setup costs from the incremental costs, keep the setup after the initial printing, and then sell you more books later at just the incremental cost. Then print the minimum # of copies called for by your distributor/consolidator/direct sales projections. This way you don't get stuck warehousing too many and are set up to meet demand later by printing more at just the incremental costs.

I'm a newbie, though, so doublecheck my advice against other's - I'd like to discuss effective bidding for printers, Ron!

[Luke]

I don't think POD is right for you - you've invested heavily in production values, and so skimping on printing expenses will waste that investment since the print quality of POD/digital press can't yet match traditional presses.

I have to disagree with Tav. Greg, you said you spent "a whole lot of money on art", what does that mean? Full color, I assume? That's problematic, since it jumps your cost up, but it's not a wholly bad thing. I see art as a long term investment and something you can mine over time.

You can quite feasibly do a BW "art light" version of your piece in POD, get people interested, get the bugs worked out, and then turn around a year or two later and knock our socks off with a big glossy book.

I am a print fetishist; I love printed matter. So in no way am I advising you not to go to print. What I, and a couple other folks here are trying to say is you have a host of options available to you in the modern print rpg market.

You don't have to do the "dive into the concrete pool" model anymore. Using POD and PDF publishing you can walk in slowly and learn a lot from your mistakes.

Every new glossy, indepedently published game that comes out expects the rpg world to turn and gasp, ooh! ahh! But it's far more likely that no one bats an eyelash, someone tears apart your art because they think it's amateurish, distributors give it a pass, and you're left to promote your game from your garage because you love it so much.

Tada! ::crickets::

It happened to me! I printed a thousand copies of my game at a traditional press. If I had my druthers, I wouldn't do it like that again.

If you haven't hit the con circuit demoing your game, if you haven't been promoting it vigorously on rpg.net and pen-and-paper.net and gamingreport.com, I wouldn't got for the "small" traditional print run.

A lot of your perceptions of the game are going to change as it meets the public. I suspect, and I could be wrong, that you'll actually want to revise a lot of it. Ron hit the streets with a MS word printout of Sorcerer and made everyone he met sit down and play the damn thing.

So, unless you're release an rpg tie-in with licensed material, or you already have a fanbase of a thousand strong, I'd consider alernate methods for your initial release. In all honesty, what's the rush? Is a year of going to cons with a POD version and meeting cool people going to ruin the timeliness of the release?


Just a quick end note about Tav's comments:

One idea about print run: find a printer who will separate the setup costs from the incremental costs, keep the setup after the initial printing, and then sell you more books later at just the incremental cost. Then print the minimum # of copies called for by your distributor/consolidator/direct sales projections. This way you don't get stuck warehousing too many and are set up to meet demand later by printing more at just the incremental costs.

Please tell me where you have found this magic traditional press, Tav! This is the impossible dream for press work. Typically, minimum set up is 1000 pieces, and even then most printers won't do that little.  I've found that the per unit cost for printing 500 pieces on press is just too high.

-L