How do you figure out how many games to publish? And why does it matter?
There are a few ways to come up with this number, but you should do your homework, because getting it wrong can really screw you.
Make too many, and you've locked in your money. And you'll also have a garage full of games.
Make too few, and you're leaving money on the table. Meanwhile people who would have bought your game, if there was one on the shelf, have now bought a different game.
Maybe in six months when your next run is done and shipped, they might be interested in buying one then. If they haven't forgotten about your game or moved on to the next new hot game.
In a practical sense there are two approaches, okay, well, three, to use to determine how many games to produce.
1. Make something up. (AKA "WAG" - or "wild-assed guess).
2. Economic/financial approach. How much money do you have to spend and other factors.
3. Market driven approach. How much market demand is there over a certain period of time.
This approach is more common than you may think, even with big corporations. Sometimes it stems from "there's a certain sales figure we need to hit for the company to reach a certain growth goal, so that's going to be our sales forecast." Have fun with that.
2. Economic approach.
Today I listened to On Board Games podcast, and Donald was interviewing game designer Andrew Parks regarding his crowdfunding campaign for his game Canterbury.
Andrew's goal was to use his Kickstarter crowdfunding campaign to publish the game. He also wanted a quantity of games to sell into distribution and retail. Selling through those copies would then provide his seed capital to continue his publishing business.
When asked how Andrew arrived at his number for how many copies to print, his response was that it was based upon economics.
In other words, after gathering his printing quotes, he knew that to have 1,000 copies would make the per unit costs very high, and that doubling that print number would drastically reduce his per unit costs, and also provide him with around 1,000 copies to sell after satisfying his crowdfunding backing commitments.
Andrew used an approach that is sound and viable for a lot of reasons and most importantly, it does mitigate some risk on his end. (Nothing wrong with that).
But what is the true market demand for Andrew's game Canterbury? What if demand is really 5,000 for the first year? Or even worse, what if demand is 500?
3. Market driven approach.
To find market demand, or produce a market-driven forecast, you need to perform market research. Commonly you'll ask your retailers, sales people, and distributors. You can ask your marketing staff to do some research. You can find out ballpark figures for what other games have sold.
This is tricky and takes a fair amount of time. At a certain point, you are going to have to say "this is close enough" because it's not going to be 100% accurate, and opportunity costs for your time are going to come into play.
After you've come up with your basic sales forecast, using one of the above methods, it's relatively easy to plug that number into a budget spreadsheet and model out a few scenarios, like the ones below:
Stormy: what does your budget look like if you only sell half of your sales forecast? How much will this hurt your overall financials? What is the impact long-term?
Sunny: what does your budget look like if you sell all your games in the first year? How much (if any) overall profit will this yield? Will selling out leave you with enough money to make another print run - assuming there's enough demand?
Cloudy: what if you sell 75% of your inventory the first year? How does that impact your development schedule for expansions? Do you still make a profit?
Spending time playing with these scenarios is an excellent way to plan, and you'll get to see how inventory impacts your overall budget, cash flow, and capital.
If you do scenarios for year 1, year 2, and year 3, all based on a set of predictions, you can start to see how things may play out, and it's a powerful way to make some decisions or base a strategy.
If you want "advanced" lessons on forecasting, budgeting, or financial planning, there are many great resources. Here's a site I found that will help you with forecasting.