One question we get a lot is why our pledge prices are set the way that they are. We received this specific question on our last project quite a bit because of a $2 price increase we instituted. So we thought it might help to shed some light on the subject.
Shown in the following chart is the difference just $2 makes on profit margins of a custom Bicycle-branded deck followed by an explanation of each category.
This is the actual cost to produce the deck which includes our cost per deck from the manufacturer for a Bicycle branded product. This also includes the cost of a custom seal, additional fees that the manufacturer charges for layout, art fees for the actual cards, and shipping to our door.
We’ve only included the costs of a small bubble mailer and the thermal label used to mail the package. Not included are the costs of printing paper and ink for invoices or the use of packing tape and other packing materials such as plastic bags. These may seem insignificant on a per item basis but they increase as volume goes up.
This is for US shipping only and will warrant its own separate post in the future given the complexities and nuances of this particular category. One thing to note here is that many have compared shipping costs for today’s current rate. We’ve been a bit more forward thinking given that our product will not ship until after January 27th, the day when the USPS will increase all of their domestic and international rates. To give you an idea, a 9 oz package that ships today at $2.65 will cost us $3.09 after the rate hike. This weight is enough for us to mail one deck, a coin, and 6 dice.
These are pretty self explanatory, Kickstarter and Amazon each take a percentage of the total pledge that can be as high as 10%.
The title of this category is a bit misleading, this is simply what is left over for us to use. This money goes to things like business expenses (utilities, hardware/software expenses, marketing, convention fees, travel, etc) that are necessary to continue running the company and building the brand.
Given an example of 1000 $9 pledges, that amount would be $270. Not a whole lot, especially when you consider that after expenses, my cut for working 360 hours doing just fulfillment comes from that. To put that in perspective, if that was my entire salary just for the time I spent doing fulfillment, my hourly wage would have been 75 cents an hour.
Now, at $11 a pledge, that’s looking a little better: $2310. This is much more in line with the costs incurred in doing business. Even if I received all of it, still only about $6/hour, but this will help pay the bills. And more importantly, it keeps us in business so that we can continue to keep making great products for you.
As you can see, nobody is getting rich off of this anytime soon and it certainly doesn’t have anything to do with greed. I firmly believe that our decks could sell at a $15 price point because of the quality of the product. However, I would like to keep the cost to our consumers down as much as possible to allow more people to have access to our products.
I’m a firm believer that if we take care of you, you’ll help take care of us.