Often, at Paragon Packaging our customers will ask questions such as what the most sensible minimum order a board game start-up should consider. The answer will vary based upon many factors such as price per unit, available capital, industry insights, the value proposition, timing, type of game, and price category. At Paragon Packaging we discuss these types of questions with our customers and, in general, the following are some of the ideas we present:
- Pricing rises or falls exponentially with reductions or accelerations in volume, especially with so many components involved in the consolidation of a board game. Thus, at quantity levels below 2,500 games, it’s virtually impossible for anyone at or below the wholesale level, manufacturer included, to be profitable at a reasonable price point.
- It’s contrary to good business practice to manufacture board games or any other product at a loss without the assumption of future profitability. If you’re starting a business, you must have enough conviction in the product to be able to take a leap of faith at a sensible volume in order to maximize the potential to do no worse than break-even. In twenty-five years of manufacturing games, we’ve yet to see even one that was successful starting at a quantity level of less than 2,500 games.
- If there is not enough current interest in the product to warrant a reasonable starting order quantity, it’s too early in the cycle and thus, scheduling should be delayed until enough capital has been raised so that 1) The product can be marketed in accordance with a sound business model and 2) The investors understand and are reasonably comfortable that they could face a 100% loss. With that in mind, under standard retail pricing models, we recommend a production order of no greater than an additional 100% the amount of games that you absolutely know you can sell.
- Paragon Packaging has for years operated with an MOQ of 5,000 games. We recently reduced this to 2,500 in recognition of the current economic uncertainty and the belief that many novice entreprenuers may have difficulty raising necessary capital or be less willing to roll the dice with their own nest egg. Our primary interest is not in our own ability to obtain a manufacturing order for an unsatisfactorily low quantity, but in doing the best we can to partner with a company to achieve the greatest long-term success. Frankly, there are companies that would love to take an order for 1,500, 1000, or even 500 games because it helps them achieve their own temporary goals of running their machines or adding to their own perception of their value proposition, such as a project’s companion graphic design work (again, there is no positive cash flow generated for anyone at such small volume, thus it stands to reason there must be other goals to support the negative value). Long-term, this is a recipe for disaster, both for the customer and for the manufacturer as has been proven time after time. Paragon Packaging, on the other hand, has an organizing principle of looking at the potential for success of every company or project, and doing the best we can unselfishly to have a hand in that future. In other words, we are a growth company looking to work with other organizations that are looking to grow, and not be stifled. (The caveat to the above paragraph is the strategy game market, products which are typically manufactured in smaller volumes for a market that is accustomed to accepting a higher price point than the average consumer would for a traditional board game).
We hope this makes sense and can be of some value to you. All of us at Paragon Packaging wish you great success in all of your endeavors. It would be our pleasure to work with you as your plans unfold. Please understand that the opinions above are no guarantee of success nor failure, but are positions we would take if faced with some of the same decisions you may be encountering.
Paragon Packaging Inc.
www.paragonpackaging.com
