Kickstarter Lesson #201: A Step-by-Step Guide to Pricing Your Core Reward – Stonemaier Games

Kickstarter Lesson #201: A Step-by-Step Guide to Pricing Your Core Reward

A successful crowdfunding project combines a lot of different elements into one cohesive package. If you do 9 things out of 10 right, sometimes that 10th thing might make a huge difference.

That 10th thing is often price.

Usually if there is a problem with price, it’s because it’s too high. It might be a fair price, but that doesn’t necessarily make it the right price to attract thousands of backers. This guide will mostly try to address that issue, though of course this is just my opinion.

But the flip side is if you price your core reward so low that you lose money. If my recommendations below result in a price where you are losing money on a per-unit level (manufacturing cost + shipping subsidy), please ignore my advice.

Step 1: Determine your manufacturing cost per unit for the minimum print run. The idea is that this cost should decrease if you make more than the minimum, but by adding stretch goals, the cost will actually end up staying the same. Example: $10

Step 2: Calculate your MSRP. This stands for “manufacturer’s suggested retail price”–it’s the sticker price for the product post-Kickstarter). This will vary from industry to industry; for example, in the board game world, MSRP is usually 5x or 6x the manufacturing cost. In general, you’re also going to want to look at the MSRP of existing products on the market that have very similar components–the perceived value is crucial. And keep in mind that your core reward may not be exactly the same as the retail version of the product. It may include promo cards or other content, which should definitely be factored into this MSRP calculation. Example: $50

Step 3: Remove 40% of the MSRP. This may seem steep, but keep in mind that you’ll be selling the product to distributors post-Kickstarter at a 60% discount. Example: $30

Step 3: Add the shipping subsidy. This includes all costs associated with shipping a game, including pick-and-pack, postage, and freight shipping to get it to the fulfillment center (or to you if you mail by hand). Most creators in the US offer “free” US shipping, which means they’ve built the shipping fee into the reward price. That subsidy is then deducted from all of the international fees charged to backers (i.e., if the subsidy is $8 and the total cost to ship to Malta is $25, the shipping fee for a Maltese backer is $17). Example: $38

Step 4: Look at similar crowdfunded products. Research what other creators have charged for similar products. Take this information lightly, though, because those projects may not have priced their rewards correctly. It still helps to be aware of that data, though (again, perceived value is important). Example: $35-$45

Step 5: Finalize the core reward price. For me, this usually means to 9-ify it (round to the nearest 9). If this would add or deduct more than a few dollars, though, I’ll round to the nearest 4 or 5 (it’s not an exact science). Example: $39

Using this formula and estimating around a $10 shipping subsidy, here are my recommended Kickstarter core reward prices per MSRP (for lower-cost items, shipping can often be lower than $10, so just use the above steps):

  • $30 MSRP: $25
  • $35 MSRP: $29
  • $40 MSRP: $34
  • $50 MSRP: $39
  • $60 MSRP: $49
  • $70 MSRP: $55-$59 (at this point and beyond, I’m assuming the size and weight of the product is requiring a higher shipping cost)
  • $80 MSRP: $65-$69

These prices allow for $20-$30 profit on a per-unit level. Of course, you have Kickstarter and Stripe fees, art and design, freight shipping, and other ancillary costs to factor into your overall budget, and you might use most of that profit to simply make more retail versions of the product.

But I think you’ll find that your chances of Kickstarter success improve significantly if you offer an appealing price, and an appealing price still offers nice margins for you because you’re selling directly to the consumer.

***

As a backer or as a creator, what do you think about these steps and the resulting prices?

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63 Comments on “Kickstarter Lesson #201: A Step-by-Step Guide to Pricing Your Core Reward

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  1. What do you think is the best Incoterm to use when selling to retailers and brick and mortar stores locally and abroad?

  2. […] A Step-by-Step Guide to Pricing Your Core Reward […]

  3. One thing that strikes me is the importance you place on rounding up to 9 on your prices, how do you factor that in with the fact that Kickstarter auto converts prices for backers in other countries, or is it just something you don’t worry about? For me as a UK backer if you make every price end in a 9 dollars I’ll see it as something else anyway. I understand the value of rounding down to a 9, a game that costs 19 dollars seeming much better value that one that’s 20 but I always find the idea of rounding up to 9 odd, that a game costing 19 dollars would seem better value than one costing 18. Or is the idea just that people don’t factor in the rounded up value so you can ask for it without upsetting anyone?

    In relation to the MSRP it seems weird to multiply a cost by 5 just to reduce it by 40% again. Given that KS has asked projects to stop quoting MSRP do you still think this process is relevant? I would have thought that the cost of production for a unit, plus profit would set your KS price, then adding 60% before factoring profit would set your MSRP price? Is there a specific source for multiplying the manufacturing cost by 5/6?

    1. It’s an impressive model, but I’m not your customer. :) Value is the intersection between the resources expended to make the product and the money a customer is willing to spend to buy it. You know one side of the equation (though the production cost seems quite high), and I’d recommend that you talk to your target audience about the other side.

      1. Jamey, I didn’t expect your answer for some reason. Thank you for it. the biggest resource to make it is time. Since the model is handmade, it takes about 2 days to make, from here is the price tag. Having 10 orders at once can shorten the time. What did you mean saying: “talk to your target audience about the other side”. Thank you very much indeed.

  4. Jamey, what price I should set for a limited edition of paper models if my handcrafted production costs are $530 of an article, plus case $60, plus shipping $60 (total=$650). Can I get your price idea? her is the link of actual item: https://etsy.me/2WavgOa
    Thank you

  5. I have a card game that I’ve created and the manufacturing costs including shipping to me will cost just over $9000 which means each game comes out to $10.00 but when I add the MSRP and take 40% off it still comes out to $30 per game. My game is just a box with 300 cards not unlike cards against humanity except the box is smaller with fewer cards and yet they sold theirs for much less on kickstarter and so have other similar card games. I need help, this is my first attempt at this and I’ve been working very hard for years to get it to this point but I don’t know what I’m doing in regards to how to price it and what to account for. I feel that $30 is too much or am I wrong?
    .

    1. Jesus: I would suggest that you get a quote from a different manufacturer–that price seems really high for a card-only game. If you cannot find a lower price, I think $29 is a good KS price.

      1. Thank you so much Jamey, I appreciate your help immensely. I found the company that worked on cards against humanity which is AdMagic and that’s the quote they gave me but I’m going to start looking for others. The designers who worked on my game said they could do the work for us but I’m not sure I’d like to go that route. Do you think I should let the designers assist with that or should I do it on my own? Also does anyone know of any good manufacturing companies. Our game is a movie trivia game but it’s just like cards against humanity in the sense that it’s a box with a rule book and 300 cards.

  6. […] Kickstarter Lesson #201: A Step-by-Step Guide to Pricing Your Core Reward […]

  7. Hi Jamey, do you now recommend not to mention MRSP and just focus on the higher VALUE number as that is what the Scythe KS pages does?

    Are there any manufacturing wastage costs? For example: Your game needs 20 black-jack sized cards but the manufacturer only has sheets of 54. Do they throw out the unused part or try to create new decks with it for other copies of the game? If they do create new decks do they charge you extra in labor costs?

    P.S.
    You’re other MRSP article fooled me. The one about Mississippi judges and pecan pies. Very funny and nice writing style by the way. Setting up the backwards and bureaucratic scene with the old lady’s glasses was a nice touch. Ticking the wine check-box :) LOL I’m glad I don’t have to go through that.

    1. Thanks Gerald! I had fun writing that original MSRP post. :)

      I think it’s good to let backers know that they’re getting a special price on the game, but not lock yourself into an MSRP by putting it in the uneditable area of the reward level descriptions.

      There are often some wasteage costs when creating a game, but you rarely see them, as they’re build into the quotes your manufacturer will send you. It does help to use most of each card sheet if possible (and if you do separate some cards from the card sheet, there is typically a small additional labor cost, though it’ll be built into the cost of those components, so you won’t see it).

      1. “lock yourself into an MSRP by putting it in the uneditable area of the reward level descriptions.”

        I didn’t think of that. Yes, that would be horrible. Special price sounds nice, nicer than value.

        Also thanks for card wastage tip.
        If I ever submit a game to Stonemaier I will make sure to include a standout pecan pie component to satisfy Game Design Tenet number 10, and to guarantee the game qualifies for a MRSP of seventy Mississippi dollars.

  8. Jamey, thank you for the fast and wise response and for providing the two post links.

    I read both posts and they definitely helped provide food for thought concerning navigating distribution.

    I value how you have made your past Kickstarters about the backers and community. I plan to do the same and will keep them in the forefront of my mind when making MSRP and reward price decisions.

    Thanks again.

  9. Hi Jamey,

    I know you get this all the time, but thank you so so so much for providing all of the amazing Kickstarter campaign lessons and content. All of your posts (especially this one) have greatly benefited my progress on my future KS project.

    Due to all of the useful content you and your community provide I feel a great deal more confident my KS project will be a success with significantly less mistakes.

    This post answered important questions I had concerning how to price my core rewards. I now feel confident I won’t make a mistake in this area.

    Would it be unwise to slightly raise the MSRP price above the formula used in your post if the perceived value of the game was significantly higher due to extremely high quality artwork and a significant amount of unique illustrations? Maybe to 6.5x manufacturing cost.

    For example, if a project was going to have uncharacteristically high quality artwork with 100+ unique illustrations in comparison to other similar crowdfunded games with decent artwork and 35-70 unique illustrations.

    In addition, is there ever a situation you would not sell your product (games) to distributors and instead only sell through your own online channels (and / or conventions)? Or would there ever be a reason to recommend others to not use distributors?

    Thanks again for all of the stellar content you have provided.

    1. Thanks Josh! I’m glad to hear this blog has been helpful for you.

      I think you’re wise to look at perceived value, and art can play a small role in that. You’re balancing sustainability and what is reasonable for a consumer to spend. Like, with Scythe, there are well over 130 unique illustrations in the game, and the cost of the game would justify a $90-$95 MSRP based on a 5x multiplier on production costs, but I thought we could better serve our customers by charging $80. We did something similar with Charterstone, which has over 300 illustrations and would justify a $90 MSRP. I gave it a $70 MSRP because it’s a legacy game, which carries a different perception than non-legacy games.

      There are companies that just sell their games through Kickstarter and directly (see: https://stonemaiergames.com/kickstarter-lesson-234-batman-the-7th-continent-and-skipping-retail/). That’s not something we do, though, partially for reasons mentioned here: https://stonemaiergames.com/lessons-learned-from-quitting-kickstarter-as-a-creator-part-1/

  10. […] Kickstarter Lesson #201: A Step-by-Step Guide to Pricing Your Core Reward […]

  11. Hey Jamey,

    I’m late to the party on this post, but loving all your advice. I’m prepping a game to Kickstart next spring and have a question about core price. Should there be some consideration for income taxes? Assuming the game funds, if I’m going to end up paying taxes on KS dollars as if they were income, doesn’t that take a pretty large bite out of the funds if I’m trying to treat this like a business from the start and set aside money for taxes? I’m a crowdfunding noob and just starting to absorb all the information for doing it successfully, so I apologize if there’s an obvious factor that I’m missing here.

    Thanks for the guidance.

  12. […] Kickstarter Lesson #201: A Step-by-Step Guide to Pricing Your Core Reward […]

  13. […] From the excellent comment by David Snyder on the post Kickstarter Lesson #201: A Step-by-Step Guide to Pricing Your Core Reward: […]

  14. When determining costs, the print run size seems the biggest variable, and this is what I’m having the most issues with.
    For example If I print 1000 units it costs me around £4 per unit including art etc.. If I do 5000 the costs drop a lot, to around £2/unit . I’m not sure as to the volume I should expect. Do you have any tips?

    1. Sure, as mentioned in this post, I recommend that you base your reward price on the minimum production quantity. As the coat drops (if you exceed your goal), you can spend the margin on stretch goals.

  15. Jamey,

    One of your comments might have gone under the radar…”sunk costs.” I personally think far too may “would be designers” attempt to run a Kickstarter project at close to “$0” expended on the project OR the corollary, they have spent so much on the project already that they attempt to use the Kickstarter project to recoup those sunk costs without an informed plan.

    In the first example, this is an unfortunate case of believing that the Backers will cover all aspects of the game development and production, they forget to have their own skin in the game,. In the second example, the designer may already feel “skinned alive” and has to push the costs onto their Backers. I have dealt with both kinds of designers as a developer and it’s a difficult place to be…but if I had my druthers, it’s easier to move folks away from former situation than turn-around someone facing the latter one.

    As for me, I had a similar discussion before I ran my KS campaign, but the3 difference was that I had produced thematic-cum-artistic pieces which didn’t subscribe easily to the “5x manufacturing costs” formula. If that were the case, I would have to have charged more than $50 for some of the smallest pieces…I settled on a “2x manufacturing costs” formula, and pushed all of the shipping costs to the Backers. For bard games however, your analysis is spot-on and now that TAU CETI is going through the production phase, I can attest to the numbers!

    Cheers,
    Joe

    1. Joe: Thank you so much for sharing your experience! I agree that accounting for sunk costs is incredibly important during the budgeting and pricing process.

  16. Thanks Jamey, this post is helpful. I appreciate that you go step by step and provide actual numbers that are really easy to follow. It may be worth cross-linking with your KS Lesson #7 about the funding goal. Setting the reward price plays directly into the funding goal. From what I’ve read it sounds like there’s a “triangle” of interdependent factors: reward price, funding goal, and manufacturing costs.

    On an unrelated note, have you written about how much you need to have prepared/finished before launching a Kickstarter campaign, especially for first-time creators? I always hear stories about projects that fulfill 1-2 years late. Something like that can hurt the creator’s reputation so I’m curious about your thoughts on things like how far along your talks with manufacturers should be (should you already be discussing potential stretch goal additions?), % of artwork completed, etc, before launching.

    1. Joseph: Thanks! I’ve added a link to the funding goal post. :)

      Sure, I’ve talked about that in different ways in a number of entries. There are several entries that talk about how it’s usually ideal to have most of the product design finalized before Kickstarter, leaving just a little bit of wiggle room for backer feedback/engagement. Other entries where I talk about it are below

      https://stonemaiergames.com/kickstarter-lesson-3-art-and-design/
      https://stonemaiergames.com/kickstarter-lesson-68-you-dont-have-to-launch-today/
      https://stonemaiergames.com/kickstarter-lesson-171-the-project-timeline/
      https://stonemaiergames.com/kickstarter-lesson-97-delivering-on-time/

  17. I always find a gulf between the “5 x minimum order manufacturing cost” price and the “perceived value based on what’s on the shelf at my FLGS with similar components” price.

    Most of the games that are out there didn’t have a minimum print run and their price reflects that.

    I don’t find them to be compatible approaches. I always find that there’s a decision to be made between three approaches:

    1) Campaign based on “5 x minimum order” knowing that this generates a pledge that’s unreasonably high for that collection of components
    2) Campaign based on “5 x larger order” knowing that this generates a campaign goal that’s seen as unreasonably high alongside existing campaigns.
    3) Campaign based on “3 x minimum order” knowing that this makes the campaign barely profitable and the game inviable at retail unless the campaign significantly overfunds.

    Sitting closest to the (3) corner of the triangle, with a preference for approaching (2) over (1) where that’s not possible seems best to me – but it can be taken too far. I think there’s a race to the bottom that has campaigns with funding targets and pledge levels that would be literally impossible to fulfill if they just squeaked funding, created in the hopes that it’s a formula for over-funding. Which seems dangerous to the creator, backers and the platform – yet I can see how it comes to pass.

    This topic’s always stuck me as a complicated one that lacks a decent universal solution.

  18. Disclaimer: FLGS perspective incoming.

    The flip side to this is protecting the value of your product. If you “suggest” a retailer can get $60 for a game and then sell it at $49, you’re sending signals that you don’t think your game has staying power to command the MSRP.

    I take an extra-careful look at games that hit distribution after coming off Kickstarter, and most of the time I pass because it was discounted incredibly for the Kickstarter, retail is a significantly pared down experience, and most of the hype has already died down.

    I carry your games, Jamey, because they are exceptional (I am going to hand-sell SO many copies of Scythe) and it seems like you genuinely make moves intended solely to help FLGS’ like mine, but I do have to offer my counter-perspective when I see a heavily-discounted Kickstarter.

    1. Micah: Thanks for sharing your perspective! I can definitely understand the idea of protecting the brand and the perception of value (that’s something I’ve been discussing lately with online game stores).

  19. Nice, that will be a helpful guide for a tricky subject! I’m working on my 7th campaign and I’m STILL going back and forth on pricing, so I’m sure newer creators will really appreciate it. A Kickstarter campaign brings with it the added challenge of not knowing how many people will support you from the beginning. If 3000 people back, you might be able to charge $30 for a game, but if only 200 people back, you may have to charge $45 for the same thing. You can price it assuming you’ll get 1000+ to support you but if you do that and you only get 200, you might risk going out of business. Ahhhhhhhh!

    Will you add all your sunk costs into it for things like illustrations, molds, graphic design, advertising, and video production, or do you take that out to lower the price and hope to make it up from profits? That’s a tough question and not one necessarily for Jamey, but just one creators will have to answer when they set their price.

    One mistake I’ve made a couple times: I recommend not mentioning the price in your main Kickstarter video (and review videos) if you can avoid it because once it appears in a video, it’s much harder to change. You might think it’s the final price, but then you figure out a cheaper way to ship to the EU or you forget about a customs fee and the price needs to move up or down. It’s similar to how Jamey recommends allowing yourself the option to move your launch date. Although when you move your price, especially up, folks may feel a bit miffed, and we don’t want that.

    1. Brian: I can relate to that–I agonize over the impact of pricing too.

      I do not add sunk costs into the cost per unit. I budget for them, but they do not factor into the MSRP for me (I’m sure other companies do, though–we’ve all seen $40 games that probably only cost $4 to make, but maybe there’s a lot of art in the game).

      That’s a great point about mentioning the price in the video.

  20. Hi, Jamey, how are you?

    I guess (after reading your post) that in your MRSP you include only manufacturing cost and shipping? Is that right? You don’t add to it Kickstarter and Stripe fees, art and design, freight shipping, and other ancillary costs?

    So your recommended Kickstarter core reward prices per MSRP allows the creator to have $20-$30 profit on a per-unit level. Do you use this profit to cover other costs (the fees, art, etc.)?

    I’m curious how are you calculating the overall cost and what do you include in it, I mean the cost which you will use to multiply x5 or x6 to get the MRSP?
    Thanks!

    1. I only include manufacturing cost in my MSRP calculation (the cost the factory gives me).

      I do use the profit to cover sunk costs.

      1. Jamey, I got another question if you don’t mind :)

        From what quantities of games, you will use the cost the factory gives you to get the MRSP? To produce 1000 games will be much more expensive than 5000.

        1. Mateusz: I think your question is answered in Step 1 (“Step 1: Determine your manufacturing cost per unit for the minimum print run.”), but maybe I’m misunderstanding it.

  21. Here’s a quick and relevant question for Jamey (et al). What do you think of the practice of putting the price on the game on the video thumbnail so it’s easily seen on the discovery page? Sometimes the creator puts the price in a green kickstarter starburst, sometimes in a corner banner or other place. I’ve notice this popping up a lot, especially in the product categories.

    1. Dale: That’s a keen observation. I’ve noticed that too, and I really like it, because it instantly answers a question that many people are likely to ask the moment they arrive at the project page.

      1. So, if the answer to “how much” is given from the thumbnail, the amount of clicks change, making the ROI higher (those that were only interested for the price and left wouldn’t buy anyway)

  22. I was hoping you would touch on the funding goal as well. As I look around at fellow Kickstarter creators the #1 thing I see them doing wrong is setting their funding goal too high.

    Getting to funded is an important psychological milestone and indicates that your project is successful. If you set your goal too high it’s easy for the project to lose steam and limp across the finish line. (If you’re lucky.)

    Setting the goal low allows for rapid funding, stretch goal excitement, and a general snow ball effect to the project. It also makes stretch goals easy since it’s all the stuff you took out to make the funding goal low!

      1. Thanks Jamey! I thought you might have touched on it before. Any way to double underline the link? ;)

        Part of it might be that creators don’t understand the need to do the unthinkable: compromising the pre-stretch goal quality of your game in exchange for a lower funding goal. Stretch goals can always add quality back. But you can’t lower a funding goal once you’ve set it.

    1. Yeah but let’s say I set a funding goal of 20k then only get say 300 backers, wouldn’t it be okay to just print the minimum number of games and ship then run a second kick starter latter on, even just a few months after the first print has shipped?
      Does anyone really have to know how many games you printed?

      1. That only works if you’re using something like IndieGoGo where you can get partial funding. On Kickstarter it’s all or nothing. If you don’t make it over the line you are SOL, regardless of how many copies you’re willing to print. So if you’re okay with printing fewer copies, set your funding goal low. You can even shift some of your quality into stretch goals to drive a bit of funding craze. :)

  23. @Scot – many backers will bring this up. ….I know of a true publisher who found out months before the game was manufactured that a certain OLGS was preselling certain add on items (that he intended for direct sales only) at a large discount such as this WITHOUT clearing it with the publisher…..things like this and discounting deeply are definitely issues you must watch out for ( IMHO). Definitely make sure your backers feel that their “investment” and support early on leaves them feel it was a good choice vs. waiting for retail.

  24. It’s eye-opening that creators may sell to distributors at a 60% discount off MSRP (it doesn’t sound like that much profit is made per unit). And when some OLGS will sell at a 30% discount (or more) off MSRP — lower than the KS price — are “deluxe” versions and/or promos important “added value” for backers to support a project?

    1. Indeed, 60-65% off MSRP when selling to distributors is industry standard for board games.

      As for online game stores, I agree that special editions and promos are some of the ways to entice backers to support the project instead of just waiting for the retail release.

  25. Let me preface this comment that this is just one theory for first timers (and definitely not for everyone).

    I always believe it’s a good idea to try to price your base pledge down to almost a break even at minimum print quantity. Of course make sure you’ve built in some serious safety factors for unexpected costs, increases in shipping, etc.

    The idea is that getting a successful kickstart (and your first offering in print) has its own built in value. I would estimate that most first time creators would rather be successful at KS the first time without making a lot of money than have to relaunch, reconfigure etc.

    Of course, you’ll hopefully get many more pledgers than your minimum (with such a low price). Start giving some smaller stretch goals while keeping some of the gains (now you are actually starting to collect some money yourself that most people build into the pledges from the beginning). Start adding some SG’s that cost you a bit more per pledge and still keep adding a bit of money for yourself. Last but not least if it looks big enough for retail utilize 100% of the savings of a larger print run as true profit.

    Like I said, not for everyone but if someone is more interested in getting their game printed and building a reputation for themselves early on than trying to make significant money on their first offering this might work for you.

    Lastly I must add that if making a significant amount of money on your first offering is paramount you may be better off finding an interested publisher.

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