It’s a Lifestyle
Today’s blog post is going to be a few thoughts that are tied around the idea of luxury. To that end we will start off with a definition of a few terms.
Luxury – Something that is expensive and not necessary
Luxury Market – A market for expensive goods that are not necessary but are bought for pleasure
The board game market is a luxury market. It is a market where hobbyist definitely spend income on a product that is not necessary for living. There is an argument to be had that some form of entertainment is necessary for humans to be happy, but this can be accomplished in many other ways and has for thousands of years and does not have to involve board games.
When I think of a luxury market and goods, I tend to think of very expensive items: high end fashion, cars I will never be able to afford, jewelry, and the list goes on. When I think about some of this, I also tend to think of the companies that make these products and think about how much money they might be making. They have to be reeling in the dough hand over fist. Well, at least that’s what comes to mind. What reality is I don’t know, but that’s what I think of.
However, when it comes to board game companies, especially Indie or smaller board game companies I don’t have these same thoughts. I especially don’t have these thoughts after having financed the starting of a board game company, running a successful Kickstarter, and being in the process of shipping a manufactured product. I am sure there are some companies and individuals that might be the exception and do better than others but by and large, I don’t think board game company owners are buying their own islands.
I started to think about why that is and what the cause of that is. I have done a little bit of thinking and Googling and I have a few thoughts to share. Before that I have to share a few more definitions.
Luxury Goods – When income increases, demand for luxury goods increases proportionally more than income does. Example: My normal budget, I spend 5 dollars at Taco Bell for every 100 dollars I make. When I make an additional 100 dollars, I spend an additional 10 dollars at Taco Bell.
Normal Goods – When income increases, demand increases but at a proportional or lower rate. Example: My normal budget, I spend 5 dollars at Taco Bell for every 100 dollars I make. When I make an additional 100 dollars, I spend an additional 5 dollars at Taco Bell.
Inferior Goods – When income increases, demand decreases. Example: My normal budget, I spend 5 dollars at Taco Bell for every 100 dollars I make. When I make an additional 100 dollars, I spend 5 dollars less. I am no longer buying Taco Bell.
First, while the board game market is a luxury market, it doesn’t mean that all goods sold in that market are luxury goods. I would say by and large most products in the market would be a normal good.
This can be seen by the rather set price points for games. Most games that consist mostly of cards and have minimal other components usually hover around 18 to 25 dollars. Games that have boards, dice, and other components are around 50 to 60 dollars.
This type of pricing also tends to hold true for the type or genre of game it is. Whether this is due to number of components that genre tends to have or due to what people expect to pay for a type of game is a conversation for a different day.
What does this have to do with anything? Well, it has to do with how you make money and why most smaller companies don’t make a lot. When you have a normal good and you are selling it, even in a luxury market, there are only two ways to make money.
The first way is to produce more product. The more of something you produce, generally it gets cheaper per good to produce (until a certain point, look up economies of scale if you are really interested). You are now making more money per sale of your product assuming you haven’t changed the price point.
This is hard to do as a small company. There are several potential reasons for this: lack of capital to fund a large production run, under or overestimating the demand for your game, not being able to get the word out about your game. While some may point to crowdfunding as a solution to this problem, it is not a solution in and of itself but definitely eases the burden or lowers the capital required to “startup” or “kickstart”.
The second way is to make your good an inferior good or product. A great example of this is the cheap plastic Chess sets you can buy at the big box stores. They are super cheap to produce, have a low selling point, but caters to a consumer that if they had more money or really liked Chess, they wouldn’t bother buying your product.
What about luxury goods or boardgames within the market? What does that look like? For this example, I would like to use one more definition and that would be Veblen Good.
Veblen Good – A luxury good that as the price increases so does the demand. A good that is desirable as a status symbol.
Now for some game companies this is the game you want to produce. You want to produce a Veblen game (might even make a good game title: Veblen). We can all think of a few board games that are status symbols. Games that are expensive, extravagant, probably a little overpriced but the demand for someone to buy it is always there and the price never goes down but only goes up over time.
So, where does all this lead me to? What does any of this mean? I have a couple of thoughts and it mostly has to do with what you are designing for. However, I think I will leave that for another day.
-Duke of BAzlandia-