Monday, May 28, 2012

The Frugal Indie

Today I want to talk a bit about cost-cutting tips for indies.

One of the major advantages indie game developers have over traditional studios is our reduced overhead costs. When working at a studio, each employee costs more than their salary. This cost includes not only salary, bonus, and taxes, but also a portion of the total cost of the company's insurance, office space, security, and a range of support staff including HR, IT, reception, accounting, management, and many others. An oft-quoted figure is that employees cost roughly double their salary in "fully loaded cost", or FLC.

For indies, that overhead is much lower: often zero. My salary pays for my office (home rent), taxes, insurance, and support staff (I am my own accounting, HR, management, and desktop support). As a result, my work as an indie can be as low as half the cost of an equivalent amount of work at a studio.

Why is that important? That low FLC is part of the reason I became an indie. Operating cheaply means I can try game design ideas that I find interesting even if they are risky, since I need to earn less revenue to stay fully funded. That means I can stay afloat with fewer copies sold, lower price, longer development time, or any combination of the three. And the cheaper I operate, the more I can play with development timeline, game design risk, and pricing/distribution models.

Tips for Operating Cheaply

So what are some of these tips?

Before I get into the list, there's one thing I'd recommend doing first. A long time ago, I spoke about indie development and money. One of the most important things an indie can do is to understand their costs. If you don't know where your money is going, you can't plan effectively. In fact, it's arguably impossible to cut costs if you don't already know what you're spending. How else would you know whether a cost-cutting measure works, if you don't have a baseline against which to compare? Having a clear financial picture is an essential first step to cutting costs of operation.

Once those costs are understood, you can begin to examine where you're spending money each month. What costs are necessary, and which can be reduced or eliminated? Everyone will have different priorities and needs, so I can't prescribe a one-size-fits-all recommendation. However, I can share some of the tricks I've used, and perhaps inspire others to think of ways that fit their financial situation.

Okay. Without further adieu, the list of cost-cutting tricks:

  • Reduce debt - If you have debt, aim to reduce it. Not all situations allow for this, but if you can, minimize or eliminate your debt. Interest on debt is a cost, and it's money you could be putting towards other things.

    There are exceptions, of course. One's mortgage is a huge debt, but is one of necessity for many. It'd also be impossible to reduce quickly. That's fine. It's the frivolous debt that should be viewed with prejudice. Things like credit card interest on designer sunglasses, or a vacation and bar tab in Cabo San Lucas. Those are luxury purchases, and the interest on their debt is part of their cost. If you're reading an article about cost-cutting for indies (and you are!), you probably can't afford this interest (nor the sunglasses and vacation themselves).
  • Lower Your Rent/Mortgage - Only rent or buy what you need and can afford. You can save money on housing if you're willing to make some changes. Here are some ideas:
    • The Boonies - You can often find some really great deals if you're willing to leave major urban centers. As indies, we have less of a need to be right in the action of a major city, since we can do most of our work from any place with a broadband connection. Living even a short distance away from a city can save hundreds of dollars per month in rent. It's not for everyone, particularly if you have a family with school or job needs, or lack transportation. However, giving up the downtown apartment is a surefire way to save some serious cash.
    • Downsize Your Life - Smaller places are cheaper than bigger places, all other things being equal. That's not only true of rent, but also maintenance costs, such as heating, cleaning, furnishing, lighting, etc. Find ways to live in as small a space as you're comfortable doing. In our case, moving cross-country twice in as many years forced us to donate and/or sell a huge amount of crap we had accumulated over our lives. We probably removed almost half of our belongings in the process, allowing us to fit into smaller apartments, and to avoid renting costly self-storage facilities. (It also saved on moving transportation costs!)
  • Cook More, Eat Out Less - For a while when I was employed, I ate lunch at restaurants every workday. With each meal costing between $6-15, that means I was spending almost $2500 per year on workday lunches alone. By making my own lunch, I was able to eat for about $3-5 per day. That's a savings of over $30 per week, adding up to over $1700 per year, just from home-cooking my lunches (assuming 235 workdays per year).

    Plus, cooking one's own food can often be healthier. This depends a lot on the person and the cuisine, but it's not hard to imagine how saving a trip to the doctor's office or ER saves you money.
  • Transportation - Do you drive? Do you need to? Owning and operating a vehicle is a huge cost. Between the purchase of the vehicle, fuel, maintenance, parking, and insurance, vehicles represent a major outflow of money. Seriously consider how much vehicle you need, or even if you need one at all.

    Rochelle and I decided to sell one of our cars, and the savings has been tremendous. Since I work from home, we really only need one car anyway (we live 34km from her school). Hers was better on fuel, and cheaper to maintain and insure, so we sold mine. This has saved us several thousand dollars per year.

    If you're lucky enough to live near public transportation (we don't), consider using that instead. It's cheaper, plus, some places allow you to deduct public transit costs from your taxes. More savings!
  • Haircuts - How much do you spend on haircuts each year? I've lived in a wide range of places, and I think the cheapest haircut I've paid for was $10, plus tip. That was a tiny shop in the subway tunnels under 8th Ave in Manhattan. Most salons will charge at least $15-20 plus tip for a men's cut.

    Want a cheaper cut? Do it yourself. I spent $30 on an electric razor with an assortment of guard lengths, and I just buzz-cut my hair every month. Haircuts are free now. Saves us $150-200 per year. Other alternatives? Don't cut your hair. Or go to a haircutting school and let the students practice on you.
  • Shaving - Shaving cartridges can be pricey. At one time, a 10 cartridge refill was costing me $20. When I took a step back and thought about it, that was pretty ridiculous. Rochelle's dad gave me his old butterfly safety razor, and I now use double-edge razors: $3-5 for a pack of 10 razors. They last longer too.
  • Change Your Shopping Behavior - Spend less time browsing in stores. Don't tempt yourself by looking at things you don't need. Just go in, get what you need, and leave. You can't be tempted to impulse buy something you don't know about. Which reminds me:
  • Don't Impulse Buy - Don't buy anything you didn't already research and plan on buying. If you see something you need, great. Make note of it, go home, and start researching it. Compare it with competitors. Read reviews. Price it out at a few local stores and online. Sleep on it. Do you still need it after all that, or do you just want it? If it's a necessity, go to the store with the best value, armed with your research, and make an informed purchase. If it's not, put it on your wishlist for when you have money to waste on something.
  • Grocery Pricing - Groceries are a monumental cost, often second only to rent/mortgage. It's easy to underestimate how much money one spends on food each month. Ever checked the weekly circulars grocery stores put out? If you're willing to visit two or more stores, or adjust your buying schedule to work with sales, you can save a ton of money on your grocery bill. We're talking 20-30% savings. Potentially hundreds of dollars per month, depending on how many mouths to feed. It's worth it.
  • Beer - If you're like me, you enjoy a frosty beverage from time to time. Also if you're like me, you can enjoy it on the back porch, living room, or yard just as much as in a bar. Maybe more. So do so. On average, a bottle of beer in a bar is roughly 200-400% of the equivalent you take home from the store. Better yet, invite some indie friends over to drink and talk shop. Now your beer is both cheaper and enriching your business.
  • Kill Your Phone - Technology has made reaching out to others phenomenally easy. Email, Twitter, Facebook, Skype, and a host of other services make keeping in touch an easy and free prospect. Unfortunately, phone carriers are trying to hide that fact as much as possible, and charge you accordingly.

    Ditch them. As much as humanly possible, dissociate yourself from the racket that is voice carriers. We don't have a landline. For outgoing calls, we use Google Voice through our computers. Calls to anywhere in North America are free, at least in 2012. Compare that to $25+ per month for a local phone plan w/voice mail, plus per-minute fees to call long distance.

    Unfortunately, we cannot receive calls via Google Voice. So we invested in 2 prepaid cellphones. This way, we have a phone number people can reach, and we can coordinate with each other when Rochelle is in town and I'm at home. We bought text-friendly handsets for $60 apiece, and $100 worth of prepaid minutes on each (in our region, $100 prepaid refills have the longest expiration period: 12 months). Provided we don't overuse our minutes, that works out to $13.33 per month per phone the first year, and $8.33 per month per phone every year after. Still cheaper than a single local phone plan through Telus.
  • No Cable TV - How much do you spend on cable TV each month? $30? $50? More? Assuming you have a TV package that costs, let's say, $40/month, that works out to almost $500 per year. Is it worth it? What percentage of the programming would you say you actually view?

    Try an experiment. Hook up your computer (you're an indie dev, you have a computer) to your TV. Or if you prefer, just use your computer normally. Try ignoring cable TV for a month, and instead rely on internet programming. I mean legit internet programming (pirated TV and torrents are a whole other discussion). You might be surprised at what you can find online, free, and legally.
    • Most major networks have current full episodes online, free for you to watch. ABC, CTV, NBC, you name it.
    • has a seemingly endless series of inspiring and interesting talks on a wide range of topics.
    • Watch the Daily Show each weekday, as long as you're ok with a 24-hour delay. Even in Canada.
    • YouTube now has full movies online. Free.
    • Catch a course at MIT.
    • And none of this even scratches the surface of paid subscription and on-demand services like Netflix and YouTube.
    • So why are you paying the cable company for video content? Especially if a huge portion of it is commercials and crap programming? With the money you save in your first cable-free year, you could buy a dedicated computer for your TV setup, and have spent the year watching what you want, not what cable TV execs want you to watch.
  • Recycle - Got a bottle depot near your town? We do, and we live in the mountains. It's 30 minutes away, but we drop bottles off there once a month on one of our weekly grocery runs. A month-worth of household recycled bottle deposits comes to about $5. All you have to do is keep them someplace, and when it comes time to drop them off, sort the bottles and cans. There's a reason you see folks raiding garbage bags on the sidewalks for bottles and cans.
  • BBQ - As soon as it's above freezing in Canada, it's BBQ season. While that may sound crazy to our southern neighbors, it can also be a great way to save money. 15 minutes heating a small BBQ or hibachi is way cheaper than an equivalent 15 minutes heating a full oven. Especially an electric oven.
Is that all? Definitely not. One could save even more, from trimming vacation costs, to choosing the right banking plans. And none of this really explores the topic of business expenses (website hosting, incorporation fees, accounting fees, etc.)

Think of it this way: every single service you pay for has been carefully engineered to gouge as much money out of you as possible without turning your stomach in disgust. Teams of marketing and engineering experts have been trained on this problem for decades (centuries in some businesses). So every single thing you spend money on is worth at least a cursory examination on your part for an opportunity for cost-cutting somewhere. Some are low-hanging fruit (like those I list above), others are a tougher nut to crack.

Whatever the case, chances are, you have room to save money. And money saved means you can operate cheaper, which translates into more freedom for you to make what you want and do what you love.

Got some tips of your own? Feel free to add them in the comments! I'm always up for learning a new trick, and maybe it'll save readers some money, including me!

Monday, May 14, 2012

The Importance of Data

I was recently looking over the Steam game submission form. As mentioned last week, one of my goals is to get NEO Scavenger onto delivery services such as Steam, so I was curious what that entails.

While looking over the questions they ask, I came across two which previously gave me pause:

  1. Current Sales Data on Released Platforms
  2. Links to Reviews
The first time I saw these was well before NEO Scavenger was released (probably even before it was started). I remember seeing those fields and feeling discouraged. How would I get the reviews to convince Valve my game would be worth it? And wouldn't answers to these questions present a sort of Catch 22? Granted, they're not required fields, but Steam had a reputation as a hard service to get indie games onto, so not having such data seemed like a major weakness.

Looking at them now, however, I'm actually feeling fairly confident. Apart from the recent increase in indie games on Steam, soft-launching my first game has given me data I can point to. For one thing, my payment provider (FastSpring) compiles sales data since the launch of the game, and Google Analytics can tell me how many unique visitors I've had.

Using these stats, I can tell a prospective distributor that NEO Scavenger has a 2.4% conversion rate. That is, 2-3 visitors out of every 100 buy the game. I'm not sure how that stacks up against other games, but I've heard that ~2% is actually a respectable number in the e-commerce world.

Furthermore, my obsessive tracking of magazine reviews and forum threads about NEO Scavenger seems to have paid off as well. Since NEO Scavenger's soft launch, I've kept links to every article mentioning NEO Scavenger, as well as every forum thread I can find. I gathered these links from referrer info in Google Analytics, Google Alerts on both "NEO Scavenger" and "Blue Bottle Games," and my own obsessive Google searches for instances of "NEO Scavenger" each day.

By now, I have a long list of articles where people talk about the game, and I can easily link to and quote them should a distributor ask.

Overall, this appears to be yet another benefit of "soft launching" one's game. In addition to the benefits of early adopters testing and helping to refine the game, and an early boost in funding, I can also quote relevant data for potential distributors.

Could it have backfired? I bet so. Had I released NEO Scavenger earlier, it may have been so broken that early reviews were negative, potentially marring NEO Scavenger's reputation on the market for a long time. So it's definitely not a one-size-fits-all endorsement.

On the other hand, being an indie carries a certain amount of leniency. I probably was treated less harshly than if I were a giant publisher pre-releasing a buggy and unfinished game.

Is it critical to have this data before submitting a game? Not necessarily. As mentioned above, it's not required to get onto Steam, and launching early has it's own perils.

However, I think tracking stats and product coverage is a valuable tool, whether "soft launching" or not. For example, I also found that 8.7% of visitors become members of the Blue Bottle Games site. This is an interesting number, since that means a whole 6% of visitors become members, but don't buy the game. Judging by the forum posts, I don't think all of this is for the ability to post comments either. So why else would visitors become members?

Probably this is a byproduct of the clunky purchase flow on the site, which requires the user be a member to see ordering info for the game. If I were to change it such that pricing info was available to non-members, how would that affect numbers? Would the member conversion rate go down? Would the purchase conversion rate go up? My gut instinct is that a combination of the two above would happen. Although, it's possible that people may actually feel more inclined to buy the game after completing a membership.

It would be an interesting experiment to try. If nothing else, it should increase transparency, and I'm all for that. And back to the main point, this is an experiment I could hardly explore without this data on hand.

Whatever method one uses for distribution, I suggest gathering as much data as possible. The tools are out there, and often free (several are linked to above), so the only thing barring their use is effort on the indie's part. Don't be lazy!