Market Report Part 1

So over the last few weeks a lot of things have allowed me to look at the market and Avalon’s place in it. This in turn got me to thinking about Avalon’s future and what we might expect, or possibly look forward to.

Before I begin I should state that this is all based on guesswork and conjecture. Little if any hard data is available, so I’m working with my gut feelings and some limited observations.

So let me start with the numbers I do have.

Avalon has been doing rather well this year, ranking in the top 20 on One Book all year long. So that is good. This puts Avalon in the top 3% of publishers on One Book. (And in about the top 6% of RPG publishers.) Looking at the top 15 publishers, almost all of them include printed products in addition to their downloadable offerings. This allows them to pull customers from a wider base. Avalon on the other hand does only e-publishing, so our base is limited to customers who purchase PDFs.

Which brings me to the second part of this analysis: print vs. e-publishing. Most of you know the next bit, but I want to give it a broad run down so we have a common starting point.

To produce a product you have to hire a writer, maybe buy some art, get it edited, etc. These are your initial production costs for a basic product.

In e-publishing that’s it. The only other expenses are site fees, which run from 18% to as high as 35% of a product’s gross sales.

In print publication there other expenses. You have to get the product printed, shipped, stored, etc. If you sell it online you have to pay site fees. Thus the initial cost for a printed product is quite a bit greater than for the PDF version. It can run two to three times the cost of a PDF, and it has to be paid for with each and every copy printed. So the final costs for printed products are quite large when compared to a PDF product.

Then we get to sell the product. A product generally has its largest sales numbers in the first month of its release. Those numbers then start to fall off over the course of a few months until it comes down to one or two a month at the end of the product’s life. For PDF products these limited sales at the end of a product’s life continue on, basically forever or until you pull the product. In print sales, this is not the case, and there is usually product left over, which did not sell. When deciding how many copies to print a publisher has to guess at the final sales numbers. If they guess too low, they do not get as many sales as they could have. If they guess too high, they are left with a lot of product that did not sell, product which has already incurred expenses for printing, shipping, storage, etc.

What you end up getting is a small publisher spending a lot of time trying to move the last 25 to 100 books of a product’s run. Yes, they may have recuperated their expenses at this point, but any real profits are still sitting there waiting for that last load of books to sell. Many small publishers end up attending small cons trying to sell their stuff or dumping the books at a large discount in order to clear inventory and save on storage costs.

Now I have looked at some publishers who have gone this route, and to be honest, the results are dismal. What they made versus what they had to spend, both in money and time, to move their products, well it’s not worth the results. Yes, larger publishers can do this, mostly because they have the distribution channels and cash reserves. Pazio and WotC can print huge runs and sell them all, sometimes going into second and third printings. Small guys like Avalon don’t have the capital or the distribution to pull that off successfully.

So while it may cost $500 or more to get a book into a small print run (say, 100 copies), the profit on this is no more than what can be made selling the same number of PDFs of the same product. The difference is the PDF version might cost only $25 to $50, so the rest of that up front money could have been used to produce more offerings. With these numbers I get one print run of 100 copies for a single product, or I could do 10 PDF-only products.

Let me illustrate this with an example:

Print Version Plan, One Print Product for $500

PDF Version Plan, 10 PDF Products for $500

Print Copies Sold, 100 Possible

PDF Copies Sold, 250 or more possible sales

Print Return Customer, 100 chances

PDF Return Customer, 250 or more chances

As we can see I have not only more products, but also more sales, and a much better chance of turning those sales into return customers.

Which leads me back to the market as a whole. Many big publishers are seeing the same thing – that e-publishing is the way to go. Their only drawback is there are not as many customers in the PDF market as there are in the print market. So they cannot make as much profit in the e-publishing field as they can in the more traditional print. And while the customer base for the PDF market is growing, it may still take years, if not decades to complete the shift.

With all this in mind, Avalon is trying to set itself up to be a significant player in the PDF market. While we may eventually move into print, (I’m not holding my breathe) we are first making sure we expand our catalog of products, increase our market share, with some success, and to grow our customer base. This will allow us the opportunity to grow along with the e-market, and as that market grows, so will Avalon.


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