A Cost-Benefit Analysis of Attending the SDHist Con 2022 Summit
Welcome to Negotium Ludorum - “the business of games.”
My name is Kevin Bertram and I am the owner of Fort Circle, LLC. Fort Circle is a publisher of historical games. Our first game, The Shores of Tripoli, came out in 2020 to moderate success and our second game, Votes for Women, is about to be released. I think that the company has found its footing and we hope to be publishing great historical games for the next ten or fifteen years.
When I designed The Shores of Tripoli, I was fairly certain I wanted to self-publish instead of approaching an existing publisher because no publisher would give the love and attention to my baby that I would. But I did go through the process of contacting publishers to see if that was a viable path. At the same time, I read up as much as I could on game publishing. I read several years of Steve Jackson Games’ Report to Stakeholders, and then read the blogs of Jamey Stegmaier and James Mathe. These were all helpful, but I found they were all a bit skimpy on the financial details.
So Negotium Ludorum is an effort to provide as much transparency about the economics of publishing games and of designing games. In future posts, I will dive into the revenue and costs of publishing a single game, what do designer contracts look like, what are the costs of running a small game convention, what are the options for warehousing, for domestic and international fulfillment, for manufacturing in various countries by various companies. And feel free to suggest topics as we go. But I am going to kick this first post off with something easy - was it worth it for me to attend the SDHist Con 2022 Summit in San Diego, CA - henceforth referred to as “the Summit.”
A cost-benefit analysis is an appraisal of the desirability of a given policy or action. In this case, I am doing a post-mortem on a past action - did the benefits justify the costs of attending the Summit. The costs for attending were pretty straight forward to calculate.
Direct Costs
I had five main expenses in attending the Summit. My airfare was $1329. My hotel for four nights (including three breakfasts and two dinners) was $1740. The ticket to attend was $75. My total Uber bill was $370. I’ll cap my food bill at $86 so the total direct cost was $3600. I could have attended the Summit for half this amount - but I decided to fly business class and keep my hotel room for Sunday night. The pilgrimage to In-N-Out Burger was non-negotiable though.
Opportunity Costs
There were two other conventions occurring on the same weekend. BGG.CON was being held in Dallas, TX and Compass Games Expo was being held in Meridan, CT. I assess the opportunity cost as $0. BGG.CON doesn’t make sense for us until we have a larger catalog and Compass Games has a very different publishing philosophy than Fort Circle, so I would not have attended either one if I did not attend the Summit.
Intangible Costs
The only intangible cost worth mentioning is being away from my home and family. But I am lucky that both my wife and I work from home and our daughter attends school literally across the street from our home, so if I am gone for a long weekend five or six times a year, it is no big deal. For now, I assess the intangible cost as $0. I could see this calculation changing if I had to go to fifteen conventions a year or my wife’s work setup changed significantly. But for the Summit, no cost.
Total Cost: $3600
Before I delve into the benefits of attending the Summit, I want to briefly talk about two numbers that I think about a great deal. These are AGPPU and LTV. What are those? Glad you asked.
AGPPU is Average Gross Profit Per Unit. I determine this by subtracting the cost of revenue from the actual revenue. I will go on at length about this in a future post (or two or three), but in a nutshell the costs of revenue are: Art & Design, Brand Royalties, Designer Royalties, Freight & Customs, Game Production, Historical Research, Partnership Marketing, Shipping Costs, Transaction Fees. For now, we are going to say AGPPU is $20 - so on a print run of 5000 copies of The Shores of Tripoli, we should expect a gross profit of $100,000. To be clear, gross profit and net profit are very, very, very different things. To get to net profit, you have to subtract out all of the other costs of running the business.
LTV is (Customer) Life Time Value. This is a very difficult number to determine because I have almost no data. But a significant portion of people who bought The Shores of Tripoli have also bought Votes for Women. Some of those people will never buy a Fort Circle product again. But some will also buy First Monday in October, The Halls of Montezuma, Guano! Guano!! Guano!!!, United States v. Aaron Burr and you get the idea. I am completely making this number up, but for today’s purposes I am going to assume that the (average) LTV is 3x the AGPPU - so $60.
Direct Benefits
I identified fifteen sales of The Shores of Tripoli or Votes for Women on either our website or on Amazon that occurred because of my attendance at the Summit. If we multiply that number by the AGPPU, we get $300. But I think these are almost all “new” customers, so I think it makes more sense to multiply by the (average customer) LTV. So the direct benefits of attending the summit were $900.
Product Development Benefits
The product development for The Halls of Montezuma benefitted greatly by my attendance at the Summit. I play tested the game three times and each time was quite valuable. But in the play test with Michael Lahl in particular, a lightbulb just went off about how to fix some of the small issues that were troubling me and Gilberto about the design. I would say this play testing will cut the time to market for Montezuma by a month.
Even more helpful to the development of Montezuma was my meeting with Jason Carr. After hearing his “Innovations in Solo Game Design” presentation, Jason walked me through the bot he designed for TS: Red Sea, and again a lightbulb went off. I am responsible for the “Santa Anna bot” in Montezuma and have really been struggling. I think this will cut the time to market for Montezuma by two months.
But how to value these three months? The firm’s goal is to publish three games a year with 4000-copy print runs. That means 12,000 games a year, or 1,000 games a month. If we wanted to get absurd, we could say the benefit is 3,000 games at $20 AGPPU - so $60,000. That just feels excessive, but I feel comfortable putting the value at $15,000.
Intangible Benefits
There were plenty of intangible benefits of attending the Summit, but I hesitate to assign a dollar value to them. I got to visit In-N-Out Burger with my good friend, Jason Matthews. I got to hobnob with some of the best known designers in our corner of the industry. I met a number of young designers that I would love to work with in the future. I chatted with other small publishers and shared best practices. I also got a bit of an ego boost - both for the design of Tripoli and for the innovative approach we are taking with the historical supplements for Votes for Women. Since the Summit, I have felt more creative than I have in quite some time. I don’t know how to put a value on all these intangible benefits, but I can say this - it was worth a minimum of $3600 plus $500 for that burger run.
The Final Analysis
The numbers don’t lie - for the cost of $3,600 and a few nights away from my family, the firm benefitted at least $20,000. But the real world test is am I going to return next year? The answer is a resounding YES.
Fascinating article Kevin! Keep 'em coming!
Great article Kevin and it was great having you at the Summit! SD Hist Con. Given the net benefit, we clearly aren't charging enough for the convention! :-)