Why is the Fair Market Value of Tabletop RPG Products So Low?
James Mishler recently devoted a long blog post (The Doom of RPGs: The Rambling) to basically berating gamers because they are not willing to pay the (higher) prices he thinks RPG materials should sell for. He seems to believe the prices are artificially low because gamers are cheap and refuse to pay what it takes to produce high quality material that is very profitable to publishers.
Of course, there is one huge problem with his argument. In a free market economy, the fair market value of a product is not the cost of production plus a sizable amount for profit for the producers and resellers. The fair market value of a product is what consumers are willing to pay for the item. If consumers are only willing to pay $19.95 for your product, the fair market value of the product is $19.95. The fair market value remains $19.95 whether the product costs you $5.00 to produce or $500.00 to produce. If the product costs you $5.00 to produce you can sell it for $19.95 and probably make a profit -- even in a two or three layer distribution system. If it costs you $500 to produce and you need to price it at $1000 to make a profit after distribution costs, then your product is not going to sell. The fault is not with the consumers who are only willing to pay $19.95 for it, but with the producer for not producing a product that can be profitable at its fair market value. As much as producers may not like it, consumers, not producers, set the fair market value for a product -- that is basic economics and all the whining and blaming the consumer for being "too cheap" is not going to change a thing.
Perhaps a better question than "how can we shame consumers into being willing to pay more" would be "why is the fair market value for RPG products so low"? Personally, I think the answer to this question is obvious.
From the point of view of a publisher, the problem with the RPG hobby is that hobbyists really don't need anything other than a set of rules (and perhaps some dice) to play. And only a couple of players in a group really even need to own a copy the rules.
Once you have sold those, everything else a player might buy is completely optional. Players don't really even need minis and battlemats for games whose rules seem to require them as one can make cardboard counters and draw a grid on a large sheet of cardboard. Adventures and supplements are nice for those who want them, but they aren't needed and will therefore be bought by even fewer players than buy the core rules for a game.
Optional hobby items seldom regularly sell for premium prices, except in very small quantities. Worse, there are a large number of companies supplying a huge number of these optional tabletop RPG items. No matter how good these optional items are, only a relatively few hobbyists are going to buy them. Lots of product that players don't need to buy to play means that the fair market value of these products is going to be low and even at those low prices few products are going to sell in large quantities to the player market.
Most companies producing such items therefore depend on the collector market for enough purchases to break even or make a profit. RPG collectors are really a separate (but overlapping) hobby. The RPG Collector hobby needs the product to collect far more than the RPG Player hobby needs product to play -- which is probably why so many game companies seem to produce products aimed more for collectors than players. However, the collector market is smaller and needs far higher production values than the player market does. This drives up the cost of production meaning even fewer units will be sold to actual players.
Making a profit off of tabletop RPG players is hard and most companies that try to do so will fail miserably. Of course, that's what happens to most new businesses in any field. Companies who want to survive and make a profit from the RPG hobbyist need to quickly learn to produce what the RPG hobbyist wants at the price he or she is willing to pay. If they can't, they need to move into a different market. Publishers whining to consumers that the RPG hobby is "cheap" because it will not pay the prices the publisher want them to for whatever one publishes just makes the publisher look like a clueless newbie in the business world.
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July 24, 2009 at 6:12 PM
Thank you! You've nailed something bugging me since the mid-80's and that's the moaning on just how hard it is to make it.
To which I respond "Play smarter".
The fair market price is reflected in how the written word's marketing has changed. You're dependent on your patrons (aka the customers).
Piracy is a fact of life - an epic marketing fail. You can either try and fail to stop the copies (look at the record industry) or use a ready made marketing tool you have available.
Watch Paizo, watch Rogue Games, watch Fantasy Flight Games. Each works differently but each does a niche well. To quote someone smarter than me. "Connect with Fans + Reason To Buy".
Or just watch this video.
July 24, 2009 at 6:41 PM
I think one direction that companies are taking to get out of this process is the "Game as service" model you see with Dungeon a Day or DDi. This lets them get a more constant revenue stream and keep the costs below a perceived level. You might spend as much or more on a subscription to these sites, but the cost is more spread out, and therefore, less difficult to justify.
July 25, 2009 at 12:19 AM
July 25, 2009 at 3:22 AM
From my experience it is because most gamers that I have dealt with when it comes to RPG prices are spoiled self entitled winers. RPG books are crazy cheap considering the amount of "hour use per dollar" you get out of them and the price for quality ones hasn't really gone up in the last 15 years compared to say, well everything else. I would honestly have no issue with RPG if they cost double their current price - it would still be a deal considering the amount of use you can get out of them.
July 26, 2009 at 8:22 PM
I think it's concepts like "hour use per dollar" and "revenue stream" that are causing all the problems. I'm not picking on the people who used those terms in this thread; they're just quoting standard modern business thinking. That's the problem. "Consumers" don't buy products because they maximize the hour-use-per-dollar or because they want to provide a stable revenue stream to a business. People buy products because it's stuff they want and think will be useful, and becausethey think it's a fair price. Business people should familiarize themselves with business models and procedures, but having a business model isn't a reason to start a business, nor do predicted sales equal money a business is entitled to. The RPG "industry" isn't doing as well as expected because it's not an industry, it's a hobby, which means a good chunk of the product out there is home-brewed, traded, or sold at garage sale prices. It's like rock collecting or model railroading; there are professional publishers and manufacturers of support materials for rocks and model railroads, but there are a lot of people selling stuff at flea markets and collectible shows, and not all of them are what you'd call "professional".
July 26, 2009 at 8:43 PM
I’ve said it many times, but people tell me I don’t know what I’m talking about. Not that I’m going to let that stop me. ^_^ I think there are two things a smart RPG publisher should do.
1. Identify the types of modules that there are. One size does not fit all. A module that is information overload to me is ideal for someone else, while the ideal module for me leaves someone else feeling like they got ripped off. Then find a system for identifying the various types so that I can know which of your modules to look at and which to skip over because they’re for someone else.
2. I think there’s a lot of opportunities to create products that make running games easier. Of course, modules are generally designed to do that, but I think even they could be done it ways that make them easier to use at the table. From what I’ve glimpsed, Wizards actually has done some of that with “new school” modules, but surely there are some innovations to be found that address “old school” style as well. I think there’s a lot of room for more products designed to help the “winging it” GM too.
July 28, 2009 at 8:33 AM
Wickedmurph wrote "I think one direction that companies are taking to get out of this process is the "Game as service" model you see with Dungeon a Day or DDi."
This probably will suffer from the same problem supplements and adventures do -- it's really optional and many players will not need it. There isn't much of a way to make it mandatory without seriously limiting sales of the core game rules.
September 21, 2009 at 4:22 PM
Indie game publishers should consider themselves part of the artist class instead of the merchant class. ;-)
May 24, 2013 at 4:29 PM
This is one of the few times I have read a solid descriptions of economic fact. For all of human history, there have been those (usually rulers or other power-hungry folk) who believe they can manipulate an economy - and act surprised when such artificial means ultimately fail. The first and only time in which a society had enough to feed everyone was, ironically, when a nation followed - very imperfectly - a free market system. I say "ironically" because the very freedom of the system means that wealth will be distributed unfairly. That is, some will get rich, some will be poor, but even the poor will have a higher standard of living because the wealthy will be unable to hold onto their wealth if they cannot supply their goods at the prices their target customer can and will pay.
Capitalism, like nature, is inherently unfair. Yet every other method of buying, selling, and trading (this includes employment) requires force and loss of freedom. Once someone is forced to work at an artificial price (wage) and/or someone is forced to sell at an artificial price, the bust and boom cycle begins, brings panic, and is as disruptive to our income (food, shelter) as trying to make a peach tree give forth watermelons would be to the tree.
Kickstarter, for all the evils inherent in its system, proves that people will pay for something they want and value. Postpone the payment, and people will pay even more. (The "rainbow" effect of an optimistic future.) The price - in this case, the pledge - is chosen by the buyers. If enough people want a $100 game with polished hickory miniatures, a publisher can get that message immediately - with little chance of a loss...assuming they understand math, budgeting, and economics.
If even more people want a $5 game which suits their needs, a publisher can find out (with Kickstarter or something like it) comparatively quick. Either type of game can profit as high as imaginable -- IF simple economics are followed. And that means sell what people want at the price they want.
It's finding out what people really want (which means much more than just asking them) that is the first rule. Can you make it or create it at a price they'll pay - AND ensure the right customers (those who want it and have the money for it) know it is available?
"Economics" is merely our word for facts which already exist. We can work with those facts or work against them. Our success will be like those who choose to work with the facts of How to Swim as opposed to those who just splash around.
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