Multi-Level Margin Shock

I shouldn't have to write this article.  By now anyone who has even the tiniest modicum of numeracy should be well aware that multi-level marketing, also known as "pyramid schemes" (Shut up, yes they are, stop repeating the nonsense your upline spoon-fed you) are mathematically unsustainable and cannot possibly work for the vast majority of people who engage in them.  Yes, even if you hustle real hard.  You're going to lose money.  The odds are literally overwhelming that you will.

But because the marketing spin from the MLM companies is so very persistent and ferocious, and speaks directly to the conceits of the most vulnerable populations that these companies prey upon -- typically stay-at-home moms these days -- I figured a great way to throw a cold bucket of water on MLMs would be to show how utterly awful their margins are compared to the already awful margins in the small specialty retail games industry, which are typical of other small specialty retail categories as well.  Basically any non-mass-market retailer you like is going to have merch numbers kind of like mine, and as bad as mine are, they are an order of magnitude better than MLM numbers.

Yup, rather than trying to persuade people that the thing they really really want to be not-a-scam is a scam, I'll just show that the numbers are grotesquely bad, and that should dispose of the matter.  Who cares whether it's a scam or a legitimate business if you can't make any money doing it.  In business, NET INCOME is the most important thing of all.

This is going to be a number-crunchy article and not elegant prose.  I'm just dumping information on you here and counting on the reader to process it.  This isn't a FAQ or a checklist.  It's a warning siren.  Heed it or don't.  It's your money.

I am going to be referring to GROSS margins in this article.  This is simply the selling price minus the price the store paid for the merch.  There is some additional cost encumbrance due to freight, credit card interchange, and waste disposal.  Yes, you try getting rid of sixty or more large cardboard boxes every few days.  You can't throw those out with the dirty plates and napkins.  But for simplicity we're going to treat it as a flat, clean margin that is "revenue minus wholesale."

As an anchoring point: The mass market has 65%-75% gross margins, based on the four-bucket model of their economic structure.  They pay 25% of their revenues in labor, 25% in occupancy, 25% in COGS, and 25% to the bottom line, which includes debt service and advertising and is not by any means a take-home figure for investors, which tends to be about 3%, and for the true mammoth companies like Wal-Mart, often less than 2% of revenues.  Their COGS figure is a split based on slightly higher cost for the goods that sell and returnability to the manufacturer for the goods that don't sell.  Must be nice.  In terms of the four-bucket format, apparel does better, while food does worse.

In small specialty retail, the best margins overall we get are for used merch, but that's also low-turn merch that sometimes fails to sell.  Used merch averages 70% GM, though the real spread is bimodal between hot used stuff (key singles, top video games, etc) that we're paying 50%-70% of market price for, so as low as a 30% GM, and then all the bulk which we pay 10%-20% of market price if that, so 80%-90% GM but some may never sell.  This is a very safe way to do business provided you have enough cash flow to pay the bills.  The store will typically own all its inventory outright, paid for in cash, and be at liberty to give it time to clear, and when it does clear, the store operates in the black very quickly and free of encumbrance.

The best margins for new wholesale product tend to be around 55%-60% GM for stuff we source by pallet quantity, or publisher-direct with MOQs, or special offers from distributors, that sort of thing.  This builds in a good hedge against deadwood titles and other stuff we need to clearance when it doesn't move.

The ordinary, day-in-and-day-out margins we get on new wholesale product, is 40% to 50% GM, usually in between.  And crucially, at that ~55% COGS, small specialty retail brings home a final net averaging 3% to 7% of gross sales.  We'll come back to that in a moment.

The worst margins we get right now are around 35% on Magic sealed product and stuff like Upper Deck and some kickstarters (for those stores that opt to go that way).  Magic doesn't have an MSRP anymore so technically it's 35% or so against a "common price" that's not really "market price" but their kids go to the same elementary school, if you get the idea.

Wait, check that.  THE WORST margins we get are for brand-new video games and systems, which are typically 10% or worse.  But most small stores just don't carry that stuff.  Used is... much better, as you see above.  So the worst margins we get on the regular are like 35%.

What about MLM product?

Let's have a look.  For selection here I've just opened the catalog and looked for something in the middle of the spread.  This is not statistically robust comparison, but it's good enough for an altitude overview like this article.  And I picked Young Living purely for easy recognition.  They are not the only snake essential oil peddlers out there by any means.

Young Living Cinnamon Bark Essential Oil: $32.57 MSRP, $24.75 wholesale. (GM 24%)
The same stuff from a real wholesaler: $17.31 wholesale. (GM 47%)
A like substitute from the same real wholesaler: $4.96 wholesale. (GM 85%)

In reality nobody should be paying $32 for that tiny bottle of oil -- it makes inkjet cartridges look like a bargain by comparison, and doesn't actually do anything except smell nice -- so if we take the more realistic $10-or-so end-user willing-to-pay price, the like substitute from the real wholesaler has a fairly normal-looking cost of goods of around half (keystone) and doesn't even require you to burn bridges pitching marketing trash to your friends and family!

Seriously though on a gross margin of 24% you can't make any money unless you are in the grocery business running their economy of scale.  Remember above where I explained that a GM of 45% or so will get you all of 3% to 7% final net income?  If you give up 21% GM, that's way more than even 7%!  You have forfeited all your net and more!  Okay, so you might say, I do this business out of my home, I don't have to rent a brick-and-mortar location.  But occupancy at small specialty retail isn't 25% like it is for mass.  Occupancy at breakpoint rent rates is 8% for footage and another percent or two for utilities.  That 24% GM still runs into loss even if you subtract out the entire occupancy after the final net, 7% best-case plus not having to pay our 10% occupancy, means you're negative 7%.  You still aren't making any money.  And oh wait, did you pay taxes yet?

Are you, the aspiring MLM entrepreneur, seeing clearly in these numbers yet how there is no way for you to make any money doing it as an MLM affiliate?

But hey what about other MLM stuff that isn't essential oils.  Fair question.  Let's look.

The best-known apparel MLM is LuLaRoe.  They offer keystone (~50% GM) against an inflated MSRP, insulated by a MAP policy, for items that really would sell for less than wholesale at a volume level that will meet rudimentary turn rates.  I mean, hell, I can offer you a 50% GM on anything I've got if you want to try to sell it for double the price I sell it for.  Good luck with that?  All day every day I am reaching to find ways to be price-competitive or to offer a value that makes up for the difference in price against the dumpers, or else it's a product where only brick-and-mortar can even source it, so we're all at or near MSRP.  Don't you think if there was a great way to make double our money selling the same products to mainstream consumers every day, that somewhere in the literal marketplace of options, someone would be doing it?  And yet no one is, except MLMs.

Apparel at mass market is a 90% GM reality.  Those sweatshop kids in Bangladesh earn very little making shirts and sneakers for export.  I'm not a big fan of that degree of exploitation, but ultimately I'm not a third-world despot and I am not in charge of that.  In any event LLR is such an awful deal that other intermediators have popped up to take advantage of the huge apparel manufacturing gross margins and offer aspiring home business entrepreneurs a modestly better program, though it still won't stand up to the economy of scale the titans achieve.  But you could, could, after spending untold hours and hustling those Facebook groups and that flea market stall, actually make some money and not lose money, by using one of the LLR alternatives like that link, that are not MLMs.  You could do still better if you sourced the goods further along the chain, closer to manufacture.  And crucially, even then you would not be in a competitive position against the mass market, which is extending its collective lead faster than any small business can catch up.  Your sales will come at the sufferance of friends who don't want to see you do poorly.  Most people will just get their apparel from mass-market channels like they've been doing.  And it will personally upset you when you see them do it, which they will do without thinking or even noticing, for things that are already in your inventory today.

I will look at one more MLM in a different category, Pure Romance, purveyors of rubber ding-dongs and other toys and accessories by means of adults-only "passion parties."  In order that this blog doesn't get flagged for explicit content, I am not going to link products directly, and anyone wanting to verify this information will have to do research on your own.  So the thing about Pure Romance is similar to LuLaRoe: the mass market already dominates this space, and so on top of the cultural norm that you're selling products that have to be kept out of plain sight, to some extent, because won't someone please think of the children!, blah blah prurient interest and so on, you also have to face the reality that the $189 phallus-shaped "massager" in the passion party catalog will cost an end consumer all of thirty bucks via AliExpress or some other China-direct shipper.  Which means even the 50% GM that Pure Romance offers you, still has you paying wholesale of like $94 on that thing, and anyone who cares to have one can get it without your involvement for way, way less.  Which means unless you have some pretty spendy friends who don't know how to use smartphones, you're going to be hard up (pun intended) to move that merch.  It's a bad deal for them and an even worse deal for you.  I will credit Pure Romance that at least you can use their vibrators for... things you'd use a vibrator for.  Not so much with essential oils, which have no medicinal efficacy and yet every boss-babe hun this side of Pinterest claims will cure your cancer through nice feelings.

In the 1990s, I made the mistake of looking for easy money through an MLM called Equinox International.  They sold overpriced vitamins and water filters, mostly.  But even the company itself was structured as a means to prey upon uninformed would-be businesspeople like me.  The Equinox ownership created a spin-off company called Advanced Marketing Seminars, which charged a premium to affiliates to attend weekend-long sales pep rallies for Equinox products at various hotels and convention centers around the country.  Equinox itself was set up to make massive money for its principals, largely at the expense of affiliates, but even if they had to spend tons of money depreciating out spoiling inventory or fighting lawsuits or whatever, they had this secondary company charging top-dollar to present "marketing seminars" and it was bulletproof, in and of itself.  Nobody could realistically claim AMS was not delivering the marketing seminars that affiliates paid to attend.  Yet AMS would not exist except for the underlying MLM that was its only client.  Equinox founder Bill Gouldd would be banned by court order years later from ever working in the MLM industry again.  I lost a few thousand dollars and burned some bridges I wish I could have back.

Hopefully this article will dissuade at least one person from throwing their money away on an attempt at MLM business.  If you want to run a business, start a real business.  Do research.  Source your goods (or tailor your professional service).  Raise your capital.  File your articles of organization.  Get your tax and banking foundation set up.  Then find commercial space if you're going to need it, or if not then set up your virtual commercial footprint on the web and in social media.  Provide great deliverables.  Delight your clients.  And don't apologize for making money.  Use that money to improve your life.  And good luck.

Peripheral Vision

Console game publishers are reluctant to develop software supporting any peripherals that do not come with the base console, and in turn console manufacturers are reluctant to develop any peripherals that are not going to be supported by game publishers.  It's something of a vicious cycle.

Once in a good fortune, an accessory becomes sufficiently essential that support for it becomes widespread, and probably the most important of all of these, the memory card, was then obsoleted by cloud connectivity and storage.  Memory cards are only needed now for retro use on the earliest systems that supported them: Neo Geo, Dreamcast, Playstation, Playstation 2, and Gamecube.  Though they are supported on PS3 and Xbox 360, both of those systems supported hard drives from day one, and both support cloud storage now.

Another great peripheral, Nintendo's Rumble Pak, became common as a build-in with controllers in generations moving forward.  It's not true force feedback, but there is definitely an immersion improvement that went beyond mere oohs and aahs for rumble to catch on as significantly as it did.  Thousands of games ever since have supported rumble effects, publishers knowing that virtually every player would have a controller that worked with it.

Unfortunately, the more likely outcome for any peripheral or accessory is that it fails in the market, or succeeds for a short time and then dies off with no further support.  Ask anyone who bought Tony Hawk Ride for last generation's systems, which came bundled with an interesting skateboard controller you actually stood on, and which was used for Ride and the Tony Hawk Shred series and nothing else ever.

Some peripherals sold somewhat well initially but became so irrelevant afterward that stores won't even take them in trade now.  These weren't in-generation to many of my readers unless you had kids, but who here remembers Skylanders?  They are so much plastic clutter now.  Watch as they become sought after by 2025.  (Or not.  Probably not.)

Even Nintendo at its 8-bit peak couldn't keep the Zapper light gun relevant.

Fortunately, often a game is playable even without a key accessory or custom controller.  Or else the key accessory or custom controller is sufficiently simplistic that a third-party aftermarket solution appears, even for narrow ranges of games, or even single games.  Hyperkin makes an optical mouse for the Super Nintendo, to replace the out-of-print SNES Mouse that was required for Mario Paint and barely worked on anything else that was actually released in North America.  So, future-facing peripheral support is not unheard of.  It is sometimes done.

But sometimes not.

If you want to get your Rock Band 4 on, or more accurately your Rock Band Rivals on, as that is the digitally-delivered "final" version of the game for current-generation platforms, you will need a bunch of plastic controllers shaped like instruments.

To explain why this is even an issue, a recap helps.  Harmonix, the programming studio behind the Rock Band series and the first two main Guitar Hero games (the good ones), co-published Rock Bands 3 and 4 with Mad Catz, the controller manufacturer.  Unfortunately, unlike the successful Rock Bands 1 and 2 and the spin-off Rock Band: The Beatles, neither Rock Band 3 nor 4 were smash hits. Mad Catz took heavy losses, ultimately buying time by selling off the entire stock and the Harmonix partnership to Performance Digital Products (PDP), known for Smash Bros fight pads for the Wii U and now the Switch.  Mad Catz sold their Saitek flight stick brand to stave off death, but still died.  Then came back to life, but is now... kinda... who knows.  Alive, perhaps.  But there are most assuredly no new plastic guitar- and drum-shaped controllers being manufactured anymore.

The lack of any new hardware usually wouldn't be that much of a problem, except for one thing: Player interest is back on the rise, mainly because Rock Band is extremely watchable on streaming.  Harmonix and Mad Catz can hardly be blamed for being a few years too early to the e-sports banquet, but that banquet is here now.  The Rivals release was successful and there is new music available for download weekly; in fact, Rivals and new DLC are Harmonix's entire Rock Band revenue now, with no hardware revenue from retail channels.  PDP periodically slow-rolls some NOS (new old stock) guitars in brown boxes on Amazon at $50 per, but there are long droughts between restocks and no indication of when another will occur, pushing prices up high in the meanwhile.

Fortunately, the game works with any USB microphone.  And the Playstation 4's existing PS3 bluetooth controller compatibility extends to the Rock Band 3 instruments just fine, for wireless instruments. The core instrument bundle is obtainable, but expensive, typically a few hundred dollars for either PS3 or PS4 versions.

For the Xbox One, players need either XB1 versions of the instruments, which are much less common than the game software due to digital sales, or they need the Legacy Controller Adapter for their Xbox 360 wireless instruments.  The regular bundle, as with the PS4, will set a player back hundreds of dollars, but at least they are circulating for the moment.

To use a MIDI drum kit as preferred by competitive players, PDP made a certified adapter in apparently tiny quantities, that today's secondary market values at right around $300 in used condition.  Yeah.  (This is different from the MIDI Pro Rock Band 3 adapter for PS3 and Wii, which can be picked up for under $40, and different from the Xbox 360 Legacy Controller Adapter noted in the previous paragraph, which costs only slightly more.)  For the time being there is no hardware workaround to this.  It's a dealbreaker.

(Thanks to /r/Rockband for help clarifying which hardware works with which drums.  I am a guitar and bass player and singer, and drums are the only thing I don't typically play on RB, so I had to learn a little more about the nuances of that.  I have the Xbox One wireless official kit to pull out in case a drummer visits and we decide to play, but that likely wouldn't suffice for competitive scoring attempts.)

Will PDP or some other company produce new plastic instruments?  It all comes down to whether they think they can make money doing it.  There has been a narrow but sustainable aftermarket for dance pad controllers across multiple platforms for Dance Dance Revolution, Stepmania, and Pump It Up, so the market has already accepted some notion of rhythm game controllers continuing to be made.  Rock Band will have to show sustained and notable regrowth digitally and on stream before PDP would bother, which is a tough ask when players who might want to play... can't get the instruments at a reasonable cost!  So, as this article began, we have a vicious cycle going on.

Rock Band is only one game where the natural attrition of the peripheral supply in circulation impedes access, and it happens to be one I play on the regular, so it's the one I picked for this article.  But it's not unique and at least we got a pretty reasonable initial supply of hardware thanks to the series' mass-market reach, and that of its competing series, Guitar Hero.  Rhythm games are especially vulnerable to peripheral unavailability because most of them are unplayable or pointless to play without the correct controller.  DJ Hero, with its turntable, is definitely limited, but has a far smaller player audience following modern streamers, so the supply of gear in the wild seems sufficient to meet demand, and market prices agree.  Nintendo, meanwhile, fortunately manufactured a passing excessive quantity of Bongo controllers for Donkey Konga 1 and 2 and DK Jungle Beat, because those games are at their peak enjoyment during four-player simultaneous play.  I'll leave Samba de Amigo's maracas unlinked just because.

If your video game tastes run further afield than music, you might get to run a merry chase for the likes of fishing controllers, biometric sensors, polarized 3-D glasses circa 1987, pocket sonar emitters, trance vibrators, Robotic Operating Buddies, the entire cockpit control panel of a battlemech, and a VECTOR LIGHT PEN.  Not even making any of those up.  And a surprising number of them sound like a euphemism for some sort of adult toy.

Or you can do what the overwhelming majority of gamers do, I suppose, and just play stuff that uses the system and controllers as supported out of the box every time.  Lord knows both the game publishers and the hardware manufacturers have more or less settled there, except when one of them gets the itch or starts feeling limber and then the cycle starts again.

Gamernomics and Income Taxes

The Trump tax cuts resulted in most consumers having less funding withheld for taxes in 2018, which meant smaller tax refunds in the spring of 2019, when there was any refund at all.  It's a paradoxical outcome from a reduction in tax burden that got distributed over 26 or 52 disbursements, rather than a portion of a greater tax burden being refunded and landing in peoples' mailboxes (or direct deposits) all at once.  We paid less, but didn't feel the difference.

My situation was in line with the mainstream; small business taxation affords us some shelter mechanisms to help offset the obnoxious self-employment income tax, and I still ended up owing taxes for 2018 and sending in a check last week.  The IRS is spinning tales of there being no refund reduction in aggregate, but the anecdata from the front lines says "lol whatever."

Anyway, without tax refunds coming in to many gamers, we saw a distinct reduction in big-ticket purchases this spring thus far, from what had been a fairly dependable draw and one of the few positive effects offsetting retail's conventionally slowest quarter.  Can't buy that Playstation 4 if you had to send the Treasury a check instead of receiving one.

This is in line with gamer-demographic economics generally.  While tabletop fandom runs the gamut from young children to students to young adults to parents and even to senior citizens like yours truly these days, I find a reasonably common average to be something like: Gamer in their late twenties, earns $30k/year, single, struggles with credit card and student loan debt, rents an apartment, has a car payment, and is otherwise reasonably thrifty just by the default of having no real choice in the matter.  Because tabletop (aside from Warhammer) has become more gender-diverse, let's call this exemplar average gamer "Kelly."

Kelly brings in $2500/month gross, after taxes about $800 per paycheck.  After debt service and food, Kelly has maybe $100 per week to spend.  While small purchases like tournament entry, 3-for-$10 boosters, and premium sleeves don't wreck this budget, an occasional booster box is a significant chunk, more than the weekly discretionary makes possible.  Something like a new console, a Warhammer army, or a Masters booster box goes right onto the credit card and prolongs the eternal interest service. It shouldn't be a shock if many Kellies spend much less than $100 per week, especially in terms of more mainstream product mixes.

Twice per year or thereabouts, there's an additional pay period in a month due to the progression of two-week increments.  Kelly feels like they hit the jackpot during those times because it's basically a fully "extra" paycheck on top of the monthly cycle.  If Kelly is having reasonably low stress in the rest of their life and is feeling particularly responsible, they might use the extra ~$800 as a chance to jump two weeks ahead of the bills cycle, or even kill off some credit card debt.  More likely, it becomes another of those rare opportunities for Kelly to splurge on games or cards.

It's not difficult to see why Kelly might not change behaviors all year long if their biweekly direct deposit was $880 instead of $800, even though this meant a whopping $2000+ smaller tax refund.  The ingrained habit in Kelly's money management is to spend most of what they have, week in and week out.  Until some sort of career advancement occurs, it's tough to imagine Kelly breaking free of this wage cage, despite the door being openable.  This means the forced "saving" and refund of higher taxes actually provides Kelly with something of an inefficient, involuntary annual mini-windfall.

It becomes easier to recognize why Kelly lives from deck to deck and trades in any Magic cards they aren't using in a deck right freaking now rather than sticking to by far the best EV practice of buying the cards one wants to play with, and keeping them.  It becomes easier to recognize why Kelly becomes a console fanboy; they can't afford all three.  Two at most until late in the generation when all the price cuts have come in.  And Kelly has to trade in all the previous-generation games and gear just to muster up enough cash to get into the current stuff.  To the extent that Kelly has kept any retro stuff around, it's either a nice trade-in or something they'll hold onto for the long run.

Lest you think I'm being judgmental, be assured I am not, because I was Kelly for many years in my twenties, and millennials who are Kelly today are burdened by an even more formidable array of expenses than I was.  My point in explaining Kelly's outlook is to illustrate that as a business, I need to craft my processes and economics around the needs, wants, and resources of a clientele of thousands of Kellies.  (And some number of younger or older clients, and some with less resources and some with more.)  Which means when Kelly doesn't get their annual Splurge Fund, it's my job to know that money isn't coming, and to avoid ordering deep on big-ticket merch out of distribution.  It won't affect buys much, since I'll take just about anything that comes in.

Distributed costs like taxes tend to ratchet; the colonists were ready to revolt over a matter of "taxation the tenth percent of what a man earns" and today even those who get most of their federal or state taxes refunded are paying far more than that in a combination of sales tax, payroll tax, property tax, social security (which we all know ain't gon' be there when it's our turn) and so on.  Even when Republicans are passing tax cuts, it never peels back substantially below earlier increases.  Accordingly, in those rare cases when taxes go down,  Kelly (and the rest of us) are at liberty to max out our withholdings on our W-4 and [State]-4 forms if we want to use the tax cycle as an annual savings fund.

Assumptions

In order to make any kind of business decision, certain assumptions have to be made, and with a confidence level.  A 50% confidence level is a coin toss, and the assumption becomes essentially valueless at that point.  A 99% confidence level is reasonable certainty, with the accepted caveat that you can never be absolutely certain that some apocalyptic scenario won't suddenly end your business entirely.  Earthquake, pandemic, return of Jesus, 100-year flood, Thanos snaps fingers, etc.

The confidence level of your typical assumption will vary as market conditions change, both macro and micro.  Publisher announcements, changes in local laws, even who gets elected President can affect assumptions to various degrees.  We are essentially guessing what details will emerge on events and items that are still fairly far away on the horizon.

Here are an assortment of assumptions I make decisions with right now.  There are a lot of references to the year 2022.  That is when DSG's Chandler lease ends.  While I will be delighted to continue the business beyond that year, for most decisions I might make, I only have to consider the ROI that DSG can achieve on or before that date.

99%: People will still be playing tabletop games until at least 2022.
80%: People will still be playing tabletop games until at least 2032.
60%: People will still be playing tabletop games until at least 2042.

In the long run, even though "analog" games are a wonderful thing, changes in technology will probably make it much easier to play them in some sort of virtualized form.  Essentially, where will we be on a scale from Today to The Invention Of Holodecks.

99%: People will still play video games on existing physical media until at least 2022.
99%: People will still play video games on existing physical media until at least 2042.
75%: The market for physical video game media will still be growing in 2022.
55%: The market for physical video game media will still be growing in 2042.

The digital sunset that everyone thinks is already upon us will eventually come.  However, much like no single streaming service lets us watch whatever specific thing we want all the time, not every digital delivery video game option will reach many of the richest and most engrossing titles throughout video game history.  In some cases key hardware won't be circulating.  In other cases the license for the game content won't be feasibly renewable.  In some cases remote servers will no longer be online as the player base moves on to newer titles and platforms.  In some cases all three will be the case, and by that I am referring to Rock Band: The Beatles.

Having said that, population growth generally guarantees at least a modicum of some market growth in most categories, which is why we're at 55% by 2042 for any market vitality at all.

Let's get somewhat more specific:

99%: People will still play paper Magic: the Gathering until at least 2022.
70%: Hasbro will still own Magic: the Gathering in 2022.
55%: There will be no market correction to Magic: the Gathering singles before 2022.

We've discussed this here at length.

Here is an example of the grotesquely narrow end:

99%: I will sell at least one copy of D&D Saltmarsh within 30 days of release.
70%: I will sell at least 20 copies.
55%: 50 copies.

For comparative purposes, DSG sold more than 50 copies of Guildmaster's Guide to Ravnica during the two-week WPN exclusivity window, which is no longer in effect as of this spring's release of Saltmarsh.  I will still sell a lot of this as D&D is hot and Saltmarsh is going to be demanded.  But it won't be like it was.  It can't be; Amazon dumps books in order to accrue market share, and even though many players do support the store, it's going to be tough to attract the masses when they can buy it on Prime for a nickel over wholesale.  Based on this assumption, I am going to order roughly 40 copies.

The 30-day window is important to stores that buy on net terms.  Ever since I fully embraced the pawnshop side of my business, we do a lot more paying cash up front (or on short terms) so that we no longer have debt-encumbered inventory most of the time; we buy what we can afford in advance, we own it immediately, and I worry about cracking the turn-rate whip later.  However, processes and decision-making based on a 30-day assumption are already ingrained.

Backing off to the more general range, looking at video game buys:

90%: If I buy a Nintendo home console without testing it, it will work.
70%: If I buy a Nintendo handheld console without testing it, it will work.
60%: If I buy a disc-based console without testing it, it will work.
99%: If I buy a cartridge or card game without testing it, it will work.
99%: If I buy a disc game with little or no substantial visible damage, it will work.*
80%: If I buy a scratched disc and resurface it, it will work.
90%: Any given Xbox 360 fat, Playstation 3 fat, or Playstation 2 fat we are offered will be non-working on arrival in some form.  Either red ring, yellow light, or disc read error.

Our testing and buying processes are informed by what we've seen in volume, and most stuff does work just fine.  Most often when a console is in the back room, it's because it's incomplete and we need to dig up components, or else it's known bad and we bought it for parts.  It doesn't make a lot of sense to diagnose a $40 console we'd buy working for $10 (say, a PS3 fat) when a typical bench expense is already $40+.  (Right now I am doing this work, but we have to craft our processes on the assumption that we might have to pay a technician to do it at some point down the line.)

The asterisk* reflects the reality that it's possible a game doesn't actually work for software reasons (server long since offline, game requires subscription, etc) but when we say it will "work" we mean the system will read the disc properly and boot the game as far as it's currently expected to be able to.  And while my disc resurfacer is practically a miracle machine, sometimes scratched discs with data-layer damage make it through our staff-inspection filter, or the disc ends up being worse than it looked.

We have some very specific tests in some cases.  Playstation 2 fats from the later manufacturing runs, before the changeover to the Slim versions, usually have good DVD drives, so I have a memory card prepared with a save-game of Gran Turismo 3 where an employee can very quickly load an endurance track in simulation mode.  (This usually takes hours of "license" tutorial gameplay to unlock.)  The endurance tracks are all on the second layer of the game DVD, and any PS2 fat with a failing laser will throw a disc read error dependably on that test.  If you can start the endurance race and the game music isn't skipping, that there's a working PS2.  Buy it, book it, prep it for resale.  Yes, that's an elaborate test to devise and implement, but it increases my confidence level to 99% on the assumption that if I buy a PS2 fat that will run that track, I can sell it and not have it get returned later for not working properly.

Some other general things:

80%: I will have an employee resign between now and the end of the year.
60%: I will have to terminate an employee this year.
80%: We will have HVAC issues this summer that will cost at least $1000 to fix.
85%: DSG will increase Warhammer sales in Q2 2019 even with a company store opening in town in mid-April.
90%: I will discontinue a miniatures line or product this year.  Possibly one that is still yet to be released as of this writing.
95%: DSG will increase Magic sales in Q2 2019 even with multiple new competitors popping up.
80%: I will discontinue a TCG of some kind this year.
60%: There will be another substantial renovation of the store interior this year after our Premium application is completed.
55%: DSG will be bought out by another business entity this year.
75%: DSG will remain configured as one hub store location for the rest of this year.
95%: DSG's hub won't have any location change before end-of-lease in 2022.
99%: I will remain physically alive for the remainder of the lease.
100%: If I win the $100mil Powerball, I'm flipping a bunch of people the bird, high-fiving a bunch of others, gifting some folks a very green Christmas, and walking away into the sunset.

I think I'll head over to the Circle-K to buy that lottery ticket.