This is a tricky question, since we have a lot of professionals involved with contracts and revealing too much about those contracts would be unprofessional, if not downright illegal. Here's what we can tell you though:
1. Shipping Costs. We're using Oceanic Graphic Printing to produce our physical books. This high quality company has done printing for Schlock Mercenary, The Walking Dead, Witchblade, Peanuts, and many more companies. Their portfolio is on the website. Depending on the print run, this will cost between $11,000 and $16,000 with additional delivery fees since we don't have a warehouse and a forklift. The price of paper can also fluctuate and we have had to guess high to avoid getting in trouble with our budget later when we actually place the order.
2. Wayne Reynolds is one of the most in demand artists in the field and it's understandable that he commands a premium price for his work. Wayne is a brilliant artist and exceedingly friendly, but he deserves to be paid up front before he schedules time to work on our project. Not only do we have to commission the work, but we have to buy the outright ownership of the image so that we can give it to backers as a wallpaper and to one lucky individual as a physical piece of work.
3. Have you seen how many professional authors are involved? Please look again. These are well-respected individuals who also deserve to be paid a professional rate for their work.
4. Kickstarter and Amazon Fees for a $40k project will be close to $5,000.
5. Shipping supplies. We want to protect your book when we send it to you, so we're not just using an envelope. Foldable book boxes will run us close to $2,000, depending on the print run. Again, we've estimate high to keep ourselves out of a bind.
6. We've already had a lot of wonderful work done by artists, layout designers, video compositors and others who have so far worked on speculation. They deserve to be paid for their work.
7. Even if friends and family donate their time to help with the massive effort of packing and shipping books, they deserve to have water bottles and food for doing so.
8. Full color illustrations for interior art are expensive and the kinds of artists we want to attract will demand and deserve a professional rate for their time and effort, not to mention that we must also purchase the rights to this work so that we can release it to readers for inspiration in their own works. Even at $40k, with all the other expenses we hope to be able to hire many more artists. It takes a lot of art to fill a 200+ page book.
9. Taxes. Any money that we do not spend on the project by the end of the year will have to be taxed as income for the business. We'll do everything we can to make the order by then, but we do not want to be caught in a situation where taxes steal the money we needed to make the print order.
We hope that answers some of your questions about how the money will be spent. Feel free to ask any other questions by emailing us at firstname.lastname@example.org.