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Geek Culture / Game Dev Expense vs, Payout

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old_School
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Posted: 7th Sep 2011 00:49
Recently I decided to do a small study on profit vs. expenses for an average indie game that made 10,000 dollar income. This amount is not random; in fact it’s the typical income for “free” engines before they begin to take a royalty percentage. According to average rates from various websites, the information below reflects about what would be your average expenses total for basic expense payout.

The 1,000 cd case rate is an average based on an independent websites rate. The rate/volume seemed to be about normal when compared to other sites. This part would be a typical expense for most indie developers of software. However, the rate may vary depending on packaging needs.

Every game will require some form of advertisement expense. In some cases, this is where using a publisher may help you a lot. Most indie companies perform self-publishing, which is great but may limit your sales. Some publishers will cover the cost of advertisement for you but will slowly take away your profit percentages to cover that cost slowly over time. In the case of the example below, were just saying the total expense was “X” amount of dollars. According to statics, $4,800.00 is about the average expense per year for a cheap advertisement campaign web site based.

Internet expense would relate to your website expenses. Hosting the game, paying the internet bill monthly on a $30.00 a month expense; this is referring to if you self-host. Additional expenses would apply if you used an offsite host. For are study though, I decided to choose what would be the cheapest route possible.

The last expense is your website domain expense. I choose “Go Daddy’s” rate because they are the number one domain host. They also have additional services you could use to tack on more expense but I again kept it simple expense wise. This is to show a simple cost and profit margin for a simple game.

Now at a common indie game price rate of $15.00 dollars, you would need to sell roughly 667 copies to make 10,000 dollars. This excludes tax of course. So after your average expenses, you would have made 4,370.00 after paying out 5,630.00 dollars in expenses. You out of your ten grand you made, over half went to expenses. This does not also include paying anyone you employed. So remember any partner or help you had will need paid too. So subtract that expenses as well and you should have your grand total.

Now let’s also figure in how long it takes or took to make the game. A typical indie team will spend around 6 months or longer to make a game with an average team size of roughly 3 people. So let’s take are basic profit above and split it up three ways. The grand total would be 1457.67 per person using the figures above. So not a lot of money to be made one you pay everyone. If you had a real job working 40 hours a week at $10.00/hour you would of made 400.00/week before taxes of course. That’s 1,600/month and 9,600.00 dollars in 6 months before taxes of course. So making a game you make roughly $5.00/hour un-split your first $10,000.00 dollars using a “free” engine. Once you hit the 10k mark, you start paying out massive % royalties on top of your other expenses.

So what’s the best route when making a game? I personally think money wise make your own engine would be best. But some really enjoy/depend on game engines so the best route in that case would be engines with “one time” fees. This means you pay a fee upfront for the license of royalty free usage of the engine. However, you still want to read the fine print, because some will still charge after “X” amount of money is made and hit you with more fees.

1000 Cd Cases-$460.00
Advertisement/Year-4,800.00
Internet Expense/Year-360.00
Website/Year-10.00

Roughly sell-667 Copies at 15.00/Copy = 10,000
-Expense = 5,630
Total Profit for 10,000 after expenses = 4370.00
Jeku
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Posted: 7th Sep 2011 03:12
The most ideal thing to do would be to make the next killer indie game, in which it will sell gangbusters and catapult you into a fortune. Making indie games for a living, though, is very difficult and not very common. There are the fortunate few who end up on Xbox Live or PSN and get a good IP going (like NinjaBee's Keflings series), but again, it's pretty rare. The best thing for me, personally, is to work on my indie games after my real job that pays the bills.

On a side note, why are you buying CD cases? Surely the advantage of releasing an indie game would be to use something like Steam or Impulse, and not put it on the shelves at Wal-Mart.


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tiresius
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Posted: 7th Sep 2011 03:39
All your numbers sound like magic numbers pulled out of a hat. But I do agree with the main premise: it is hard to make any profit writing an indi game.

I don't even hold a hope to earn enough money that would make all this work worth while.

However, I do hope that I will make enough gamers enjoy the game to make all this work worth while.

And make sure I enjoy (at least mostly) the hobby I spend so much time in.


A 3D marble platformer using Newton physics.
old_School
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Posted: 7th Sep 2011 04:34 Edited at: 7th Sep 2011 04:36
The question about cases:

I thought some may want to package their product, so I felt it was important to include that possiable cost in the case study. Tiresius is right though, there is no true magic number. But It does show how hard it can be to profit making indie games. In the case of TGC products, they fall into the one time fee engine cost. So you guys benifit overall if your game sells in my openion. As were the free engine people start out with no overhead and endup with a lot of added costs as the game pickup on sales. Since most people here use DB Pro, its proably best to just make your own engine using DB Pro and rake in all the profits. In the end, the case study is just about dollars and cents lol
Grog Grueslayer
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Posted: 7th Sep 2011 06:37 Edited at: 7th Sep 2011 06:38
It's way better to do what you're already doing and allowing people to download your games rather than make an actual CD. It's way cheaper to add a .pdf of the manual to a .zip. But if you feel you really need a CD case with a CD you can print your own CD labels, and make your own cover artwork.

A couple of months back I helped a friend make a recording of 10 of his songs onto a CD. I burned 100 CDs with LightScribe, made and printed the artwork on card stock and cut it to fit the CDs with a paper cutter. The finished product he sold for $10 each.

The cost:
100 CD Cases - $40
A ream of card stock paper - $10
100 LightScribe CDs - $50
My Labor - Free

Sale Price = $1000
His Profit = $900

This of course isn't counting the cost of the semi-pro recording studio (only $150 for 10 songs) and my ink that costs $70 to replace all colors and black).

Benjamin
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Posted: 7th Sep 2011 07:09
If you want to be a successful indie developer, you'd be much better off looking at electronic distribution. It's cheaper in the long run and apart from the start-up costs you don't have to shell out in advance for discs.



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Fallout
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Posted: 7th Sep 2011 09:21
I've never spent money on advertising. If I had, I might've done better, but Space Squadron was featured on the Android Market for free. I've never bought CDs either. My expenses are about £100 web hosting (which I don't even need) and £600 for Android devices (tab and new phone to test on).

old_School
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Posted: 7th Sep 2011 16:00
IDK I think this could be a good topic to debate. To market or to not market your product. In marketing I know the more you spend, the more volume you expect to move. At some point you reach a profit margin in theory.
Kevin Picone
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Posted: 7th Sep 2011 16:43
it's not linear... so 1$ doesn't guarantee $2 dollars return.

Fallout
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Posted: 7th Sep 2011 17:06
Quote: "it's not linear... so 1$ doesn't guarantee $2 dollars return."


Yeah. With Android, if you plug money into AdMob, for example, it goes into the void and you see nothing in return. You can throw £100 at AdMob and see no noticable improvement on download statistics. I think you have to throw A LOT more at it, to get an increase of traffic/downloads sufficient to move you up the charts and then cash in on the higher chart position.

RalphY
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Posted: 7th Sep 2011 19:20
Garry, of Garry's Mod fame, had a couple of interesting posts on his old blog about their experience releasing a game on the iPhone app store. It's a shame he didn't copy them across to his new blog, as he provided a breakdown on exactly how much money they had spent on advertising and how successful it had been (click through rate, number of sales, etc). Anyway, the conclusion of it seemed to be that spending out on advertising hadn't really helped.

Personally I wouldn't go throwing money at systems like AdMob and expect a huge number of sales in return.

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fallen one
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Posted: 7th Sep 2011 19:26 Edited at: 7th Sep 2011 19:35
Everything I have read on people using admod brings no change to sales at all. Also the OP breakdown on 10k, I have read a post very similar to this it looks like you may of taken from it. I do not recommend spending that on your first game, make the first one for nothing bar your time, then next one, spend a little to help with the game, no more than a few hundred pounds, then from there go up with each game, from 200, to 500, then 1 thousand , and along like that, all money must come from the game sales, grow slowly. But do not jump in and spend 10k of your savings on a game, I can guarantee you will lose the money, learn to crawl before you can walk.

Also from my own learning experience and talking to developers that have actually made money and have supported themeselves for a number of years from indie games, do the opposite of what you are TOLD by mainstream media, which is, casual games, low price point, don't do this (And I dont care how many bird games have sold on the iPhone, probably by Apple 'subsidiary' developer companies), go niche games for hardcore gamers, (you know, those people that actually buy games and have done for years, not middle aged women like what you are TOLD to make games for) and higher priced games. Finding customers is hard, half the price means double the prospective customers, you have to sell a hell of a lot of games when the product is under 5 pounds, you also negate advertising as the end point sales price is too low to cover marketing costs.


jrowe
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Posted: 7th Sep 2011 21:46 Edited at: 7th Sep 2011 21:53
Since Spiderweb Software first published a full breakdown of their costs releasing a game ( part 1 , part 2), lots of others have done the same. Makes interesting reading for anyone thinking about moving into this field. I'd also recommend reading Jeff Vogel of Spiderware's blog as it tells you a lot about building a niche for your games and serving a fanbase etc.

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old_School
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Posted: 7th Sep 2011 22:02
Good article, enjoyed reading it and shows real profit loss info.
fallen one
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Posted: 7th Sep 2011 23:05 Edited at: 7th Sep 2011 23:16
Quote: "Since Spiderweb Software first published a full breakdown of their costs releasing a game"
says it cost 140k, thats irrelevant to most people here, as they just don't have that sort of money to sink into a game. When you look at it, looking at the figures, is it a good investment, what sort of business could you start for that, and what kind of return could you get on investment, perhaps the games industry is just not that lucrative.

Another good read on indie development is Cliff Harris, search through his blog for some very good posts on indie development
http://positech.co.uk/cliffsblog/


old_School
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Posted: 7th Sep 2011 23:37
Went to it and read it but did not find it very interesting sorry. It was a collection of him discussing his projects. I did not care for his project concepts ethier.
Grog Grueslayer
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Posted: 8th Sep 2011 09:18
I love playing all of Jeff Vogels games. Geneforge is one of those great games that if you play the first one you have to get all of them (which of course helps sales a lot).

Plystire
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Posted: 8th Sep 2011 10:28
I used facebook to advertise before. Probably not ideal for game advertising, but for the week of advertising done on it, I did see a traffic increase coming from the ads.

Not everyone that sees an ad will click on it, and not everyone that clicks on an ad will buy/use your product. But all the same, you're paying for people to see AND to click on your ad.

Advertising is a huge risk, and like with most business related risks, you only really see a difference the more you put into it.


~Plystire

A rose is only a rose until it is held and cherished -- then it becomes a treasure.
Jeku
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Posted: 11th Sep 2011 09:37
The creator of Braid claims it cost him just $200,000 USD to make. Of course, that factored in the money he used to hire an artist, and the money he had to pay himself for 3 years while he worked on it. He said it quite clearly that someone can make a successful game for free in their Mom's basement if they have that option!

Braid basically made buttloads of money and garnered him lots of fame. Pretty cool.

http://www.eurogamer.net/articles/gdc-braid-cost-200k-to-make-says-blow


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Fallout
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Posted: 11th Sep 2011 12:38
If Braid didn't look as good as it does, I don't think it would've been successful. Even with indie games, people are still suckers for cute graphics and the immersion they provide. So I reckon his money was well spent and the game would've failed without a budget.

old_School
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Posted: 11th Sep 2011 18:16
I think ever game needs clear goals and a realistic budget set before creation.

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