When you are the only person taking a salary from game development, the simple question of whether or not a game has made a profit becomes a bit fuzzy. Normally everyone takes their salary, and after other costs are paid, if money is left over, there is profit. The thing is, as the company owner, you normally take a tiny salary and thus working out if ‘game x’ made a profit is not as simple as it seems. Do you consider a game profitable if it makes more than the bare minimum salary you pay yourself? or if it makes ANY money at all? or if it earns more than the average salary you would get in a comparable job elsewhere? and WTF is a comparable job anyway?
Democracy 3:Electioneering is new DLC for my political strategy game Democracy 3. It was released just over a month ago. So far, total revenue from all sources for this DLC is $18,600. The total development and marketing cost of the DLC stands at $21,500 so I have (so far) lost $2,900. Thats a ROI of -13%.
Ouch.
But that’s kinda nonsense. Firstly, that’s for 1 month. if I look at the one month sales for Democracy 3:Clones & Drones, then compare it to the one month of D3:Electioneering and project to a year out, I should earn a net of $87,042 from the DLC. YAY!
But again, that’s nonsense because it doesn’t take into account my work. I put roughly 3 months full time work into the DLC (over a longer period), so how much should I be charging myself for the purposes of working out if this DLC was a good move? This brings us back to the whole ‘what do I pay myself question.
Looking at game developer salary surveys, it looks like a typical ‘lead coder’ earns around £47,000. I also run the studio, so lets assume I am a ‘development director’ and earn £59k. A salaried employee would have a pension too, plus sick pay and so-on, so lets add another £6k to that and say a reasonable salary for me is £65,000 a year. I’m 45, been coding on and off since age 11. I’m worth it :D. So 3 months at that rate costs me £16,250. Given exchange rates right now at about 1.3 £/$, lets plug it in…
| Dev & PR cost |
$21,500 |
| Cliffs cost |
$21,125 |
| Projected total income |
$87,042 |
| Profit |
$44,417 |
Whoah thats more like it. Of course that assumes that the sales of D3:E are the same curve as D3:C&D over time, which they may not be. On the other hand, this is a US election year, and a fairly crazy one, people might be really into a game about election strategy. Or they might be fed up with politics entirely. who knows.
Now before you all quit your jobs to ‘go indie’, its really not this simple. I also released Democracy 3:Africa recently and that game LOST money (so far). It’s close to breaking even, but right now, that cost me money, even assuming I personally earned zero from doing any work on it. Gratuitous Space Battles 2 DID make me a five figure profit (yay!) assuming I worked for free (boo!). Luckily other games, notable Democracy 3 and Big Pharma, are big hits and continue to bring in money, so it all kind of evens out.
The two takeaways from this are:
- its VERY RISKY to be dependent on just one game. It really is a hit driven business.
- If you have a contract with someone that mentions ‘profit’ relating to bonuses etc, make SURE you know how they are defining their costs. It really is open to interpretation.