If every game company had its own sleigh and eight tiny reindeer that could travel the world in one night, getting Kickstarter games to backers would be easy. Unfortunately, if you're running a Kickstarter for a physical product like a board game, you have to find some other way to get your game to your backers.
Shipping is probably one of the most complicated parts of a Kickstarter. Art is costly, but it's typically a one-time thing unless you've negotiated royalties of some sort. Production is an investment as well, but our entire economy is built on the idea that you can make something for a cost and then sell it for cost + X. Shipping is a bit stickier: You have to pay for shipping every time you ship out a unit, and that cost is cutting into that "+ X" you're using to make money on your game.
Then there's international shipping, which can multiply your shipping costs even further, and decimate your Kickstarter profits if you're not careful. So how do you get your games out to backers while staying in the black?
Free shipping vs. Paid shipping
Ask any businessperson and they'll tell you that free shipping is at best a myth and at worst a flat-out lie. The fact is, no one can ship things for free. What's worse, unless your doing business at the level of an Amazon, or maintain your own shipping fleet like Staples, you can't even really enjoy any economy of scale or bulk discount on shipping to individual recipients. The fact is that each buyer is an individual destination for your game, and you're going to have to pay to move your product to that destination.
This is all a very roundabout way of saying that free shipping isn't really a thing; it's built into the reward levels of a campaign. Offering free shipping looks good on your reward tiers because it bundles all the cost into one number, and it slaps the word free on it, too, which is always nice. But if that's the case, then you need to make sure that you can pay for production and distribution of your game with the amount that backers are paying. (e.g., if your game costs $10 to produce and $15 to ship, you don't want to offer the game with free shipping for anything less than $25 (more if you want to, you know, make money).
But here's the rub: shipping doesn't cost the same thing everywhere (aside from flat-rate shipping, but bear with me). Shipping one town over costs less than shipping across the country costs less than shipping around the world. So you have a few options:
- Incorporate the maximum possible shipping cost into every game. If the most you'll pay for shipping is $50 to Australia, then every "free shipping" reward tier incorporates $50 in shipping cost. This isn't really done because that means that Bill your next door neighbor is paying $60 for your $10 game + $50 shipping and he's not happy about that, but technically speaking, this would be the safest option to guarantee that you are making money.
- Average out shipping costs and incorporate that amount. You know that shipping next door costs $15 and shipping to Australia costs $50. This averages out to $32.50 per game, so you incorporate that into every game. This is a little better, but closer backers are still paying a lot more than they might need to. You're also incurring a new risk: What if all your backers are from Australia (because hey, cheap shipping, right?). Now you're short about $17 per game you ship. If you're profit margin was intended to be $10 per game, you're now losing $7 instead. Figuring out an average cost to offer free shipping to all at one flat rate requires a lot of research, market projection and finger-crossing in order to make sure you still turn a profit.
- Tiered shipping costs. You can add a little more safety into the mix by using a tiered system instead. Know someone's in the U.S. and eligible for flat-rate? They get one price. Someone's in the E.U.? They get a second level of pricing. People in more remote locales get a third tier of pricing. This gives you a little more protection from people ordering your games at a net loss to you, but it also exposes more of that shipping cost again. To be honest, at this point shipping isn't really free, at least for anyone who's ordering at a higher cost tier.
(NOTE: Kickstarter has actually helped facilitate this strategy with flexible shipping rewards.)
- Restricting locations. Another way to reduce risk is just to limit where people can order. If only United States-based backers can order, then you have a much better idea of what your shipping costs will be. However, every time you limit who can order your game, you also reduce your market.
Other ways to mitigate shipping costs
Regrettably, the shipping industry doesn't offer a bulk discount like you'll get for producing your games. With few exceptions and very little variability, you'll spend the same proportional amount shipping 1 game as you will shipping 1,000. There are a couple ways you can get a little more economy of scale, but they, too, cost money.
- Warehousing. The first option is warehousing your product. If you can set up locations around the country/world that have your game, you can ship batches of them to each warehouse. Then when a game is ordered/backed, the actual individual shipment is coming from a lot closer, cutting costs. This requires a lot of investment ahead of time, though, along with continuing costs to maintain and handle inventory.
- Distributors. If the option above sounds like too much work, there is some good news: there are companies that have all this sort of thing set up already. Specialized distributors, along with companies like Amazon offer warehousing and distribution services to sellers. The nice part is that they have all your costs laid out in a neat little chart, taking a lot of the research and guesswork out of things. However, they'll also charge a fee for the service they're providing, either driving up costs or cutting into your margins.
- Flat-rate shipping. Remember the averaged-out shipping strategy we discussed earlier? Well, shipping services like USPS and FedEx have done just that with their flat-rate shipping options. It still bears the same issues: you're technically overpaying to ship nearby, but at least you know the maximum something will cost to ship. In fact, if you're willing to put in the work, you can ship local packages without flat-rate, saving you money, and send the more distant shipments with flat-rate, meaning that the shipping service is bearing that "lost" cost instead of you. That said, when you're shipping 1000s of units of product, it's probably worth the time saved to just ship everything flat-rate.
- Not shipping at all! The last option only works in special cases (i.e. if there's a convention you're attending close to your release date), but you can save a lot on shipping by offering to have customers pick up their game in person. Some Kickstarter campaigns will over a reduced-cost tier for backers willing to take this course of action, but bear in mind that you will need to get the games to the convention somehow!
This is just dipping our toe into the world of shipping. For more information, I'd highly recommend checking out Jamey Stegmaier's posts on the subject on his blog. Also, just take a look at other campaigns and see how they're handling shipping. Is it free for all? Tiered? Are there some countries from which they won't accept orders? There are as many strategies as there are shipping destinations, you have to find the one that works for your game!