WHAT DOES THE “X5 RULE” MEAN?
How much should I sell my game for? This is a great question and should be thoroughly thought about before putting your game on the market or developing it. There is no point in selling a game where you will break even or even lose money on production, shipping, or marketing costs.
The X5 Rule for selling games is basically the landed price of your game multiplied by 5 to ensure you will receive a profit. The Landed Cost of your game includes the production costs of your board games and the shipping to your warehouse. For example, a game that costs $5.00 to make should potentially sell for $25.00.
If you have a game company, the goal is to make enough money to produce new games, spend it on marketing campaigns, fund logistics planning, reprint the current game if it does well, etc. There are a lot of factors to consider.
This rule is more of a guideline to being a successful game company, but each developer will have their own financial structure. In general, think of it in terms of breaking down 1/5 of the retail price of your game to these areas:
|Game Retail Price||$25.00|
|Logistics (Warehousing shipping to customers)||$5.00|
|Development Budget (future reprints/ new titles)||$5.00|
|Payroll (employee salaries)||$5.00|
Larger game publishers can fluctuate to 6x or 7x and get the landed cost for 15% of the MSRP of the game. If it is over 15%, they will not accept the game. Some retailers might aim for 12%. This number can even affect the quality of the game because the company is dedicated to staying within that financial budget.
Small publishers should keep these financial rules in mind if they produce a small number of games. Any game produced with less than 2,000 units will face issues with generating enough profit to meet the 5x standard.
Additionally, it is important to remember that your game cannot be too expensive compared to other games in the same market niche. At the end of the day, the market decides if the price you put for your game is worth it.
SHOULD I QUOTE MY GAME EVEN IF I AM WORKING WITH A PUBLISHER
In short, absolutely! Here is why:
After discussing a lot of the unplanned for nuances in creating a game, getting an estimate on how much it will cost is a definite must. For instance, if you do not have an idea of how much you could potentially spend/earn on your game, a publisher could use this to take advantage of the situation and cause you to lose profit. Publishers already have manufacturers they work with and will get the best price for them, but they are probably not looking out for your best interests.
A list of components for your game might not be the same detailed list and prices you would get from a publisher. This is especially important if you are the creator and the contract specifies you royalties are based on the cost of the game. So, the price the publisher is charging could take money out of your pocket if the game sells well.
By doing your own research and getting a quote before talking with a publisher, you will have a better idea of how much the game will cost to make, how much it could sell for, and how much you should be receiving in profit. You might find it is easier just to self-publish and ignore using a publisher completely if the numbers add up in your favor.
Remember: Just because a publisher is in the industry does not necessarily mean they know where to source all the best quality products and affordable prices. They can provide estimates, but Hero Time can provide you with up-to-date pricing for every game component.
Customers can email us at: Manufacture@herotime1.com
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