How to estimate profit for a computer game
Author
I was wondering how you estimate/calculate the profit for a computer game after everybody involved in the chain takes out a chunk.
Below an example that I would any feedback you might have on.
store sale price = $ 50
store profit = $ 5 -
---------------------------
wholesale price = $ 45
wholesale profit = $ 5 -
---------------------------
gross profit = $ 40
duplication costs = $ 5 -
---------------------------
gross profit = $ 35
This $35 then needs to be divided between the distributor and the publisher. The percentage each gets probably has to do with both their involvement/investment.
LOL!
I''m not sure but for a game at $50 in stores the developer will not get more than $3 or at most $5, many give you the 10% of the trade price, retailers get definitely more than $5 for a $50 game and duplication is about $1 or $2 at most but not $5, and the distributor is always the wholesaler I think, in any case if you''re a developer you''ll get probably a couple of dollars per copy, after recuperation of all the investments that you cannot control and can simply make the total royalties to be $0. Like someone said, if you get any tiny ammount in advance (rare) save it cos that''s all you''re gonna get.
I''m not sure but for a game at $50 in stores the developer will not get more than $3 or at most $5, many give you the 10% of the trade price, retailers get definitely more than $5 for a $50 game and duplication is about $1 or $2 at most but not $5, and the distributor is always the wholesaler I think, in any case if you''re a developer you''ll get probably a couple of dollars per copy, after recuperation of all the investments that you cannot control and can simply make the total royalties to be $0. Like someone said, if you get any tiny ammount in advance (rare) save it cos that''s all you''re gonna get.
Plan on not making any profit. If you do, great, but dont even bother trying to estimate it.
Account for what you can get paid upfront for, or on finished product delivery, and everything else is just gravy.
Not a real profitable industry.
Account for what you can get paid upfront for, or on finished product delivery, and everything else is just gravy.
Not a real profitable industry.
Ikrann,
Afraid your not quite right on the process. It goes like this...
On a $60 game
Retailer sells to you at $60
Distributor sells to the Retailer at $40-50
Publisher sells to the distributor at $20-30
Publisher may then make further deductions for cost of good etc.
Publisher then pays a royalty to developer of somewher between 0% and 20% (in very rare cases it may be more for a good developer).
That means the developer is getting a couple of bucks per unit. This assumes the publisher funded the game. This may go up or down depending on exactly how the deal is structured and of course the developer wont get any royalty until the development cost is recouped.
Dan Marchant
Obscure Productions
Afraid your not quite right on the process. It goes like this...
On a $60 game
Retailer sells to you at $60
Distributor sells to the Retailer at $40-50
Publisher sells to the distributor at $20-30
Publisher may then make further deductions for cost of good etc.
Publisher then pays a royalty to developer of somewher between 0% and 20% (in very rare cases it may be more for a good developer).
That means the developer is getting a couple of bucks per unit. This assumes the publisher funded the game. This may go up or down depending on exactly how the deal is structured and of course the developer wont get any royalty until the development cost is recouped.
Dan Marchant
Obscure Productions
I think I once heard the ratio (of retail price) was often something like:
40% retailer
30% wholesaler
20% publisher
10% developer
But those are just figures I think I might have remembered from somewhere. Either way, as Anonymous Poster pointed out, don''t predict making any profit at all. Some say that as few as 1 in 10 games that are released even manage to break even. The only reason so many software houses manage to continue is that the few games that do turn a profit turn a big enough one for the publisher to fund several other games.
40% retailer
30% wholesaler
20% publisher
10% developer
But those are just figures I think I might have remembered from somewhere. Either way, as Anonymous Poster pointed out, don''t predict making any profit at all. Some say that as few as 1 in 10 games that are released even manage to break even. The only reason so many software houses manage to continue is that the few games that do turn a profit turn a big enough one for the publisher to fund several other games.
The problem (for a developer) is the development advance is an "advance on royalty". All of the advance (AOR) must be recouped from profit on sales by the publisher before the game breaks even. The developer doesn''t get any royalties until the break even point is reached.
The accountants and lawyers at almost all publishers have very "creative" interpretations of a)what the break even point is and b)how much profit is made per copy.
Many developers have a tale or two about this creativeness. One sinister practice you might come up against is pooling of profits where the profits of all titles in a certain range are pooled so your titles break even point gets shifted to make up for poor sales of another title.
The accountants and lawyers at almost all publishers have very "creative" interpretations of a)what the break even point is and b)how much profit is made per copy.
Many developers have a tale or two about this creativeness. One sinister practice you might come up against is pooling of profits where the profits of all titles in a certain range are pooled so your titles break even point gets shifted to make up for poor sales of another title.
There was a two page flow chart in PCGamer a while back that detailed where all the money went. Unfortunetly I dont remember anything from it 
---------------
Ratfest.org
---------------
Ratfest.org
Think of a number between 0 and + infinite, put a minus sign (-) before, u have the estimate 
try www.makegames.com from Diana gruber where she has an online ''estimator'' not very accurate but heck
try www.makegames.com from Diana gruber where she has an online ''estimator'' not very accurate but heck
This topic is closed to new replies.
Advertisement
Popular Topics
Advertisement