Warballoon breaks down Kickstarter expenditure

When Warballoon netted over $36,000 for its iOS and Android title Star command, the team was delighted, especially as the Kickstarter target was just $20,000.

What was less pleasing was how much of that total was eventually used as funding for the actual game.

In a post to investors interested parties on the company's development blog yesterday, Warballoon detailed exactly where all of those funds went, giving a fascinating insight into the perils of financial management for a small studio.

The final total for the fund was an impressive $36,967. Around $2000 of that failed to materialise, the result of failed or reversed transactions which hit the counter but not the account. Then there are fees for the Kickstarter service itself and Amazon's slice of Paypal transactions: another $3000.

"Right off the top you had $10,000 for prize fulfilment"

Warballoon development blog.

With $32,000 left, the team started to allocate funds.

The biggest single cost of the project? Reward fulfilment for backers. Warballoon had chosen two relatively expensive and difficult to ship products to send to fans who'd funded the game, and had set a price bracket which made them an incredibly popular option. $10,000 worth of popular.

"Now, right off the top you had $10,000 for prize fulfilment," reads the blog post.

"That includes printing the posters, the shirts and shipping everything (thanks Australia). If we had to do it again, we would have probably had the price point a bit higher for the t-shirts and posters, as those turned to be a very large expense. We also would have included the cost of a 3rd party fulfilment house - we just aren't equipped or skilled in that area, and it was (still is) something that we struggle with."

" We just didn't fully appreciate the cost of printing 200 posters, shirts, and more than anything shipping. Shipping is a) expensive b) a pain in the ass when you have tubes and c) time consuming. None of those things are productive. We don't resent having sent that stuff off - we think the posters and shirts are awesome and we are super proud of them and it seems like everyone loved them, so thats great. But they were a lot of work."

Down to $22,000, and the practical expenses start to show up. $6,000, for example, went on paying the composers of the game's music. $2,000 went on the poster designs. $1,000 went on iPads for testing. $3,000 went on a presence at PAX East - perhaps a little indulgent, but understandable.

Where Warballoon would cut down, however, was lawyers, having spent $4,000 on legal professionals and processes needed to properly establish the company. In hindsight, the team sees this as a mistake.

"Keep the attorneys out of it," is the blog's stark advice. "We got a little nervous after we recieved all the Kickstarter money and wanted to make sure our business was set up correctly. We registered our LLC's, got operating agreements etc, but in hindsight a nice piece of napkin paper probably would have done just as well.

"Keep the attorneys out of it. We got a little nervous after we recieved all the Kickstarter money and wanted to make sure our business was set up correctly.

"You plan for the worst (we all start hating each other and people start leaving) but if anything the team has gotten closer, so it seems like a lot of wasted money. If we could take it back we would. Maybe we will get another attorney and sue them...wait..."

But after that $16,000 round of costs, the team still had $6,000 to play with. However, the end of the tax year rolled around, meaning that the money now counted as income, leading to a 30 per cent tax bill.

The remaining $4,000, says Warballoon, disappeared on incidental expenses and daily costs. Currently, the team itself has acquired $50,000 worth of debt on top. Yet they remain positive.

"All that said though, its been great and the game would not be where it is if it wasn't for kickstarter. We're extremely confident were going to hit our summer release date and that never would have happened without you guys. We have made a game we're really, really proud of and you guys should be too.

"We have always felt an obligation to make your investment worth it, and hopefully we don't disappoint."