Wednesday, 13 August 2014

Advice For Independent Projects: 1) Crowdfunding Rewards

After recently participating in the 2014 Nine Worlds Geekfest panel on the indie game life and how to break into it, I thought I'd post some advice on the business, marketing and production side of making your own games. This advice also applies to other industries (indeed my company makes animations as well as games), so hopefully has something for everyone considering an independent project. 

Disclaimer! The advice on this page is free and therefore worth what you paid. I am not responsible for any issues arising from the advice on this page, it is merely suggestion. Nothing here is a rule or an instruction, and we haven’t entered into any agreement. If you want the paid-for advice, drop me a note on Twitter

Crowdfunding Rewards

Kickstarter and other crowdfunding sites have had their fair share of successes as well as modest and sometimes huge failures. Although an incredibly worthwhile avenue to consider for funding, there are a few really huge pitfalls that I see well-meaning but inexperienced crowdfundies fall into time and time again. 

The cost of rewards
Physical rewards! Rewards are usually seen by backers as being the thing they're actually paying for, a sort of pre-order. Check your user agreement, as many crowdfunding sites legally obligate you to deliver rewards. So in that regard they are no different to simply opening up a shop. Imagine rewards as products and your backers as customers and prioritise accordingly.

A backer may think they’re giving you extra money by supporting a bigger reward, but without knowing what the actual cost of that reward is, they may be wrong.

As an example, let's say you've promised a physical copy of your game to backers at a certain level. Here are some potential steps in producing a physical reward compared to digital downloads only.

Digital download
Uploading (time and bandwidth)
Creation of interactive menu and graphics
Hosting and bandwidth for downloads
Blank DVDs
Generating unique download codes
DVD burning
Emailing codes to backers
DVD disc printing or
Dealing with issues/questions
DVD label printing and application

DVD cases

DVD case cover design

DVD case cover printing

DVD case cover insertion

DVD insert design (optional)

DVD insert printing (optional)

DVD insert insertion (optional)

Delivery to your/storage address

Storage if applicable

Padded envelopes

Address mailmerge

Address labels

Printing of address labels (ink and time, or just buy a few sharpies and write them instead)

Address label application

Return address labels (as per address labels)

Padded envelopes

Insertion of DVDs into envelopes

Paper and ink for covering letter

Writing covering letter

Folding covering letter

Insertion of covering letter

Postage cost

Application of postage (stamps, franked labels)

Delivery to post office or courier pickup

Emailing dispatch notice

Dealing with email problems/enquiries

Dealing with “goneways” (returned to sender packages)

Re-sending lost or stolen DVDs (you will have to absorb the cost of this)

Way more than you might immediately assume. You can outsource a lot of the above and I heartily recommend you do unless you have a lot of spare time, but you must factor in time for briefing the third party and communicating regularly. The idea is to minimise surprises! Don't fall into the trap of thinking it's cheaper to do it yourself unless you have costed your time, storage, etc first to get a true comparison.

Time is a cost
Every minute of your "spare" time that you spend on your project is time you could be spending earning money doing something else, so even if you are not physically paying yourself, you still should factor in the cost of your time. If you decide to stuff envelopes yourself, that's time you can't spend online replying to customer tweets or updating your website. If you decide you update your website yourself, that's time you can't spend building your game. And so on. Time is a cost. Plan your time as effectively as you plan your money, because if you run out of time you will have to pay someone else to help anyway. 

GET QUOTES BEFORE YOU LAUNCH YOUR CROWDFUND. I can’t stress this enough. I have seen so many “the rewards cost us more than we realised” laments. This should never, ever happen. Your backers do not want you to go broke for the sake of a colour-changing mug. You have a duty of care to them and their money.
Below is some advice to help you navigate the world of quotes.
  • GET MORE THAN ONE QUOTE. It doesn’t matter if it’s your brother’s mate’s t-shirt company, get a like-for-like quote from three different suppliers. This has several benefits:

a.       You will get an idea of what the industry average for the job is (and so whether that amazing deal really is one).
b.      You will have something to barter with. Get on the phone and say “hey so I really like you guys but this other company is 10% cheaper, can you match that price?”
c.       You have a backup in case your preferred supplier can’t do it.

  • NEGOTIATE. It is expected. See (b) above for a simple script. Your aim is to get the best value for your money. If a company you really want to use can’t budge on price (although it would be very unusual if they gave you their best price first), see if they’ll do the job quicker, or throw in free delivery. If there is no flexibility, find another supplier.

  • ASK ABOUT MINIMUM ORDERS. Do not forget to ask what the minimum order is when getting quotes. This is a common mistake. If it’s high and you are not sure you will sell enough of that particular reward, think of a different reward instead. You don’t want to order fifty t-shirts and only sell twenty in the rewards, or sell a reward based on minimum sales that you don’t meet.

  • ASK FOR SAMPLES. You really don’t want to be surprised by lousy quality when the final product is delivered. If you find it cheap and nasty, so will your backers. Cheaper items are usually sent to you free in the post, but for more expensive items you may have to visit the supplier.

  • ASK FOR PRICE BREAKPOINTS. Any printing company will have price breakpoints, a volume at which the price per item goes down. It is not twice the price to have 200 books printed compared to 100 books. This is because a percentage is for setup, printing plates, delivery which are fixed costs regardless of quantity ordered. So, the more you order, the more your price-per-item goes down. Being aware of the breakpoints can help you make the most of your rewards by allowing you to give a better reward more cheaply (and thereby selling more of it).

  • REMEMBER THE VAT! Quotes are often exclusive of VAT. If you are not VAT-registered, make sure you get the VAT-inclusive price. Otherwise you will have a nasty surprise when you get the invoice. Some items are VAT-free, for example books, printed brochures, leaflets/flyers, so use that to your advantage.

Hope this is useful. Next time I'll be covering how to prepare a budget. Good luck with your project!