(Topic ID: 190825)

How much capital does it take to start a successful pinball co.? POLL


By PACMAN

2 years ago



Topic Stats

  • 46 posts
  • 39 Pinsiders participating
  • Latest reply 2 years ago by chuckwurt
  • Topic is favorited by 4 Pinsiders

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    Topic poll

    “What dollar amount in US funds would it take to build a non pre-order pinball company?”

    • ONE MILLION DOLLARS!! (Dr Evil) 8 votes
      8%
    • $1,500,000 cash 2 votes
      2%
    • $1,500,000 cash and $500k credit line 8 votes
      8%
    • $2,000,000 cash plus $500K+ loans from your family and friends 85 votes
      83%

    (103 votes by 0 Pinsiders)

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    OneBillionBabyYeah! (resized).jpg

    #1 2 years ago

    I've started a few companies myself and i'm batting 500. I've started from nothing or next to nothing twice and i've also had a bit of money to work with on the other ventures. So i'm curious what you guys think it would take to create a pinball company that pre-built say 1,000 games and then sold them only after they were complete.

    I don't know if i'd ever try to take on such a thing but you never know, i have some rich friends

    #2 2 years ago

    I'm starting on my 2nd million.......I gave up on the first one years ago.

    19
    #3 2 years ago

    I only chose 2m because it's the biggest number you put up. It's way more.

    #4 2 years ago

    Hahahaha - the poll doesn't have an option that is anywhere even CLOSE!

    ....and I'm speaking from setting up in China where it is about 20% of what it would have cost me in Australia!

    Try AU$4M~$5M and that's IN CHINA!!! You can at least double or 4X that or even more for the USA/Europe/Australia

    It does depend on exactly what level of factory you want to build as well.....

    #5 2 years ago

    From the Point of last machine leaving the line.....3 mil to 5 mil

    #6 2 years ago

    And increments of $500k aren't increments. They are rounding errors.

    #7 2 years ago

    I'm guessing closer to 10mil to be an easy success. Although Spooky has certainly proven it's possible on much less.

    #8 2 years ago

    Assuming no one is going to pay up front for pre order games, I would think 3 to 5 mil.

    #9 2 years ago

    My guess is: "Much more than people anticipate"

    #10 2 years ago

    $0.

    You just take preorders and spend it till the ride ends and you have a pinside hate thread about you. Then you sell your three half-working prototypes for a bonus and disappear. You can even still go to all the pinball shows if you wear a fake mustache.

    #11 2 years ago

    The key is to start with an unlicensed theme and around 100 games (Spooky). Oh, and make it badass!

    #12 2 years ago

    Tim Arnold's favorite (and oft-told) joke:

    Q: "How do you make a million dollars in the pinball business?"

    A: "Start with two million."

    #13 2 years ago

    Old maxim:

    To spot the expert, pick the guy who says it will take the longest and cost the most.

    #14 2 years ago

    About 26-28k
    Edit: I saw Heighwqys balance sheet.

    #15 2 years ago

    Yeah, you need to update your poll to multiply it by 10.

    This isn't some stupid software startup you can run in your basement, it's manufacturing complex mechanical devices involving thousands of parts. Physical objects cost real money and you need to carry those costs for years with zero profit.

    #16 2 years ago

    I would say $10 million for a decent company. Between Stern & Jersey Jack. A little bigger than Spooky $3 million +.

    #17 2 years ago

    You really think Spooky had $2-4M€ to start with??
    Thinking big is indeed expensive.

    Keep a low profile, minimize overheads, work hard, forget about holidays and high salaries, do not organize Dutch Pinball - like parties and you might discover it may well be less than that.

    #18 2 years ago

    A total of 6 Dutch pinball's, 5 heighway's, 1.5 Zidwares, 1 SkitB and -0.75 VonnieD's

    #19 2 years ago

    As much as pinsiders are willing to front them.

    #20 2 years ago

    I was musing about this sort of topic yesterday after reading a thread on people angry about the Aliens Pinball situation. Seems to me every small company that tries to make a go of this run into the same problem. they Majorly underestimated the cost of production. And they take on too much responsibility too fast. Then I asked myself how that problem could be approached? Here's a theory, tell me what you think:

    1, make a prototype table. This can be made in someones garage. so location costs are essentially zero. Stream the process, interact with community, get feedback on the game as its in production. This process will take at least a year or more, and you wont be making any money. But materials and tools expect under 10K to build a prototype allowing mis steps and mistakes to be made.

    2, Prototype made, playtest the hell out of it. Nail down the design. Get people excited. Auction off "3 ultra limited edition units" to be made. With some special features never to be included again. Start the auction at %200 production cost. (for the sake of math, lets say the machines are estimated to have a $3,000 production cost) So if 3 people in the world are willing to pay $6,000+ for the machines, you have 9K+ 'gross profit' but hopefully more if folks start a bidding war for the machines.

    3, Once those machines are sent and customers are happy, take your net profits, put them back into production, Take an order for 6 (2nd run) machines. Again, auction style with a minimum bid of 6K.

    repeat step 3 until people stop ordering them. with a gross profit of $18,000+ per run of the machines. This way you only ever have 3-6 people 'mad' at you for delays, and if you start to get overwhelmed in production you are not millions of dollars on the hook. At some point during this process you could probably start renting a small workshop or makers space for production, and start work on prototype #2 if you are confident #1 production is running in a smooth loop.

    You wouldn't be making money on this for a few years, and even when you did it would be small amounts at first. but it seems a much safer way to go in my mind, not only financially, but Brand Reputation seems to mean life and death for a pin developer. Minimizing risk would be my #2 goal.

    #22 2 years ago

    I'll start by saying I have no idea what the actual out of pocket cost is for a machine. This cost obviously depends on the difficulty of build you are working on. Let's just say the cost (labor wages, benifets, payroll taxes, insurance, materials, building utilities, and other overhead expenses) are around 4.5K (a guess based on current NIB prices). As stated this number can fluctuate by thousands.

    $4.5k x 1000 units = $4.5 million.

    This does not consider the initial startup cost of building a manufacturing facility (could find a subcontractor for this but obviously doesn't always work out), and the associated equipment to go along with it. You could build a smaller building for around 1 million and the equipment would be another 500k (no idea of equipment cost).

    Total startup cost:
    $4.5 million build cost
    $1 million new facility cost
    $.5 million equipment cost

    $6 million

    This would put your total cost up to 6 million before you see one cent of return. Obviously this is mostly determined by a very rough estimate of building costs. Interesting question though as I wouldn't have thought it was that high until I did this exercise.

    #23 2 years ago

    If I had $6 million dollars I would be done. Lol. No work for me.

    #24 2 years ago

    20-50 million dollars.

    #25 2 years ago
    Quoted from GetTheJackpot:

    20-50 million dollars.

    What's funny about that number is I heard a rumour that Gary was looking to sell Stern back in '99 or so for about $20M. So that was a going concern already producing games.

    No takers.

    #26 2 years ago

    Without me digging through my archives, I recall Bally's (The real Bally, Bally Manufacturing Corporation) IPO was $25,000,000.00 in the late '60's. Bally was already 37 years old but was private. They were making slot, flipper pinball, bingo pinball and arcade machines. The idea was to pay off the bank loans as the banks wanted out and some of the investors were forced to sell their interests due to legal issues.

    Adjusting for inflation puts that at $167 mil. Figure 20% of that ($33.5M) was for the flipper pinball portion. This includes profiteering and stuff so $25M is a good reference point in today's dollars. Amazing how one of the smarter guys not long ago thought he could do it for way less Capital plus pre-orders. Fortunately he was able to get investors as public shares in pinball manufacturing won't make it these days.

    #27 2 years ago
    Quoted from scarybeard:

    approached? Here's a theory, tell me what you think:
    1, make a prototype table. This can be made in someones garage. so location costs are essentially zero. Stream the process, interact with community, get feedback on the game as its in production. But materials and tools expect under 10K to build a prototype allowing mis steps and mistakes to be made.
    y

    This is so wrong it made me laugh! You have only looked at hardware costs - how about $20~30K for audio, $20~40K for animations, $10~20K for artwork, $25~150K for programming and a whole heap of other expenses that are mostly out of your control.

    That's well over $100K before you cut a piece of wood or order in a standard flipper assembly. How about interface PCBs (if you use standard PC hardware) and the many other specialised PCBs required - who will design them? Electronic engineers worth employing cost $80~150K a year. They are expensive EVEN in China!

    #28 2 years ago

    This thread is brilliant!

    Exactly the perspective a number of pinsiders should really consider right now...

    #29 2 years ago
    Quoted from jwilson:

    Yeah, you need to update your poll to multiply it by 10.
    This isn't some stupid software startup you can run in your basement, it's manufacturing complex mechanical devices involving thousands of parts. Physical objects cost real money and you need to carry those costs for years with zero profit.

    You left out the cost of the stupid software in these games. Small talent pool and incredibly difficult and costly to do right

    #30 2 years ago
    Quoted from Homepin:

    This is so wrong it made me laugh! You have only looked at hardware costs - how about $20~30K for audio, $20~40K for animations, $10~20K for artwork, $25~150K for programming and a whole heap of other expenses that are mostly out of your control.
    That's well over $100K before you cut a piece of wood or order in a standard flipper assembly. How about interface PCBs (if you use standard PC hardware) and the many other specialised PCBs required - who will design them? Electronic engineers worth employing cost $80~150K a year. They are expensive EVEN in China!

    Wow, you don't read the homebrew threads much. Ain't no way any of those folks have dropped 100k to build one machine in their garage.

    #31 2 years ago

    Powerball is really up there now... so that much.

    #32 2 years ago

    Costs can vary so much depending on what route you take.

    If pinball is your only focus, no pinball company should start until they've developed the first whitewood in their spare time (whether it's one person, or a team). So long as everyone is doing it as a passion project, there's effectively no labor cost, and no overhead (knowing there's a deal to make a percentage for every pinball built). Like they say, you have your whole life to design the first pinball, but only a year to design the 2nd one.

    Not to say it's easy once you have your first design done, but it certainly takes away some of the pressure. Obviously there's tons of work to do once you have a solid design (get prototyped components redesigned to be made in mass), create drawings for all components (with tolerances) setup a manufacturing floor, quality plans, testing plans.

    #33 2 years ago

    I GUARANTEE The Pinball Co got Jetsons made for under 1mil... #justsayin

    #34 2 years ago

    Terrible poll, you think it only costs 1-2k per game lol

    5m minimum for 1000 games

    #35 2 years ago
    Quoted from Sliderpoint:

    Wow, you don't read the homebrew threads much. Ain't no way any of those folks have dropped 100k to build one machine in their garage.

    You are right, I don't read them. They are not building a commercial product.

    #36 2 years ago

    You don't need all the money up front to build 1000 machines or however many you are making. You also don't have to buy the building with 100% cash up front.

    #37 2 years ago

    Profitable pinball company does not have to be manufacture games. There is plenty of profitable service, or add on related things you can get into. Pinball people are generally well off and like spend money on their hobby.

    #38 2 years ago

    OneBillionBabyYeah! (resized).jpg

    #39 2 years ago
    Quoted from Sliderpoint:

    Wow, you don't read the homebrew threads much. Ain't no way any of those folks have dropped 100k to build one machine in their garage.

    They can spend at least several thousand dollars on parts and have a few hundred hours of work into them. And that's only for a one-off machine where parts may have been scavenged elsewhere, rather than buying all brand new stuff. Plus all the friend favors that can be had for free or low prices that you would normally have to pay obscene sums for in a commercial environment.

    Some of the homebrew games that have surfaced are very impressive, especially the ones that are fully complete with artwork on them. But the way in which they were built does not usually make them production ready, and that would probably take thousands more and hundreds of hours more.

    #40 2 years ago

    I don't know what the number would be, but if your 1st game is crappy, it will be a whole lot more. You'd have to carry the costs of developing a second game and hope it sells well.

    #42 2 years ago

    What was Capcom pissing away? 30 million a year ?

    LTG : )

    #43 2 years ago

    I can't find a way to edit the poll. With this new information i'd like to adjust it.

    #44 2 years ago

    This is a misunderstanding of the industry.

    Money is not the primary determination of the startup of a pinball company and certainly not a determination of success.
    The experience of the organized support team and development planning for manufacturing and part production resources from the onset is paramount.
    Capital investment is the second concern.
    Otherwise, the enterprise is an money pit whether $1 Million or $100 Million.
    This is part of the reason people start on the wrong foot going backwards.

    Success and longevity of a pinball company is a completely different discussion.

    #45 2 years ago

    Stop the guessing people I've nailed it. the exact cost, one 15 year old Porsche and two months rent in the slums......sorry, I thought I was in the hydrofoil thread.

    #46 2 years ago
    Quoted from PACMAN:

    I've started a few companies myself and i'm batting 500.

    I'm possible to bat .500 with three at bats. Haha.

    Added over 2 years ago: Impossible

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