So I'm presently losing sleep over how to price pledge levels for the upcoming Wizard's Academy kickstarter. Fundamentally the problem is this: I would like to charge the lowest possible price that leads to the game still shipping, to maximise the number of people who get to enjoy the game (This is my main motivation for being in game design, over industries in which people actually make money and don't get talked down to at parties). However after a point a lower pledge level makes the campaign less likely to succeed in which case nobody gets to play the game, so today I'm going to review the things that go into setting the price of the pledge level and talk about some solutions that I and other creators have used in the past.
Firstly, a pledge isn't a pre-order. Someone backing a KS is buying into an idea, taking a risk on it being made reality and (in some cases) volunteering to be a part of shaping it. A pledge can make something happen where it'd otherwise never have occurred, a pre-order can't do that. So the reward level for a pledge needs to be less than the final MSRP (and the MSRP should be protected for some time after the game ships). However it's also possible for a game to be funded on Kickstarter and do poorly afterwards. So there's our first constraint: The pledge level must be reasonable if few copies sell afterwards, but the MSRP must be higher while still being reasonable.
Secondly, some costs are fixed over an entire project. If we've spent $20,000 on art and make one game then we'd better hope that someone wants it really really badly. If we make 20,000 games then each one only needs to cover $1 of the art budget. The pledge level (and therefore MSRP) needs to be set before we launch the campaign - therefore before we know how many people really want it.
Thirdly, some costs vary with the number of games made. In making 404 doubling the number of games that we made would only have increased the price by 50%. So to some extent the manufacturing price is unknown before launching the project. I like to try to counter this issue using stretch goals, if we fix the manufacturing cost at the lowest print run for my calculations and it later turns out a larger print run reduces that cost we can increase it again by adding more stuff to the game. This means more stuff in the game and makes the spreadsheet tidy.
Fourthly, Kickstarter campaigns are more successful when they have lower goals. Paradoxically very few campaigns would have funded if their goal had (at the start of the campaign) been set to the amount they raised (at the end of the campaign). This gets complicated because lower prices means higher goals - here's why: If we go back to our previous example of $20,000 on art, let's say it costs $30 to manufacture. Suppose our goal is to break even on the KS and make any money on post-KS sales (though really it's almost always okay to select a goal that represents a loss on making the game) then if we're aiming to make one game our goal (and sole pledge level) is $20,030. If we're aiming to make 20,000 our goal (at $30 a game) is $620,000. That's a pretty significant difference.
Fifthly and finally (I can probably talk for longer but I enjoy alliteration and I don't think we'll get to fourteen), there're expectations based on other games. It's possible to sit down with a spreadsheet and come up with a number that's absolutely fair in terms of what a game costs to make and what comes out of it - but if that number isn't similar to other games with comparable components the campaign isn't going anywhere. This is tough on small publishers when compared to companies that enjoy vast economies of scale, but it's real and there's no way around it.
So setting a pledge level and goal for a campaign is really tricky to do in advance of the campaign beginning. If you know how many copies you'll need to make then it'd be a doddle to set a reasonable reward level and if you were forced to adopt a particular reward level you could trivially calculate how many supporters you need to make the game - but the factors are so codependent it's hard to know where to begin. I think for now we've had enough of problems: Bring on the solutions!
Last time around I ran the 404 campaign by working out the level at which running the Kickstarter was superior to not running the Kickstarter. By that point we'd already invested about $15,000 in the project so if we ran a Kickstarter at a $14,000 loss it was still better than packing up and going home. I took that level and generated a graph of number of backers vs pledge reward and then looked for points that seemed like a reasonable price for the components on offer and an achievable number of backers for a first time project. That generated the pledge level and funding goal. As it turns out things went fairly well, 404 228% funded, we made that game at a point that it was just about worth making (from an economic standpoint - from a personal standpoint it was worth making in its own right)
Other creators do it differently. One piece of advice I've seen so often that I can't attribute it to anyone in particular is to make your MSRP five times your manufacturing cost. If that number seems unreasonable then your manufacturing or game is unreasonable, go back and fix it until the MSRP is five times your manufacturing cost. Once you've got an MSRP you can subtract a bit to generate a sensible reward tier and generate everything else from there.
It will surprise nobody to learn that Jamie puts fairness first. His KS lesson on the subject emphasises fairness - set the MSRP based on other published products of a similar nature and work backwards from there (The 5x rule also gets a mention, but it's more of a sanity check).
With Wizard's Academy I did a calculation that I've not seen recommended anywhere, but that was interesting to do. Rather than starting with the cost I gave it a whirl starting with the level of support. A quick calculation on "What if we got the same number of backers as last time?" produced a result of "We'd need to ask for about £60 for each game" This number works for the other measures, it's comparable to other games with similar components, it's about 4x the manufacturing cost (An' as mentioned earlier smaller publishers need to work with smaller margins) and got an alright reaction when I passed the preview page around a few KS advice groups.
So why lose sleep over it?
Well, there's so much guesswork going on there. 404 was a much cheaper game, is it fair to say that if we can interest some number of people at £28 that we'll get the same number at £60? But it's a much nicer game, we've put so much more into the art and there's so much more everything (Hundreds more cards, dozens more minis, it even has more boards and rulebooks than 404) maybe we'd do better. Generally a second project is more credible than a first and does much better - but then was the first really a first given 3DTotal had run Kickstarters (even a game KS) before? What happens if I plug in 50% more backers, ooh we could drop the price somewhat, I'd love to do that. Then again we're at 4x manufacture and the advice is 5x would we already be chancing it at the price we're offering? There must be a reason that other creators have sat at around this mark with similar projects.
I'm afraid I've brought more questions than answers this week. Or at least the questions about which of the answers I've talked about have the most merits. It's good to put down many of the considerations and suggestions I've come across in black and white. My thoughts still spin round and round but I'm sure that by the time we're ready to go I'll have come up with a system that feels like it's fair to everyone involved - in a world where the rules are sufficiently obfuscated that the strictly better options are impossible to identify that seems like the best anyone could hope to achieve.