Spiderweb Games - How Many Games I Sell
 

Jeff Vogel has posted an unprecedented and detailed article at his new blog, titled So Here's How Many Games I Sell. Using Geneforge 4 as an average example, Jeff reveals the development cost, current unit sales and dollars generated:
A second post will cover how Jeff sets the price, PC vs Mac breakdowns and other related observations.
More information.

hmmmm…. I should definitely buy more of Jeff's games..

I find it hard to believe 120k for a game he basically reuses a ton of assets from all the other games. As for paying the artist, I surely hope he isn't paying too much for that. To be honest, its not the graphics that his games are known for.

I would be interested in hearing Basilisk Games take on this.

Jeff explains why the budget was 120k: Because he pays himself for his time.

And that's how it should be when you are self-employed. Pay yourself first.

Three staff at an average of $40k sounds too expensive? Really? I'm glad I'm not a developer in your world.

Spiderweb Software has 3 full-time employees, and there was a full year between Avernum 4 and Geneforge 4. Treating that as development time for Geneforge 4, he'd have a total cost of about 42000 USD on employees at US minimum wage. Assuming he doesn't pay minimum wage (a fair assumption), that easily vaults up. According to a Game Developer Magazine survey, the median wage of game developers is 73k, so paying 3 professional devs for a publisher costs 210k yearly. If Spiderweb is somewhere in the middle, I can easily see it hitting 120k in yearly cost, especially if you also factor in insurance, external costs, etc. etc.

People often forget to factor in employee costs when thinking of how much it takes to make an indie game. But even if it's just you, the fact that you're not working is still a cost.

I think part of the problem there is that many (most?) people don't understand 'opportunity cost'. If I quit a $100 000 a year job to become an indie game-developper, and then I find that after spending a year making a game, the game only raises enough revenue for me to pay my staff, cover my costs, and pay myself $40 000, then, assuming I intended to pay myself as much as my old job did, I should take the view that the game lost $60 000, not that it made $40 000.

As an aside, I think that just knowing what some terms or words, like 'opportunity cost' and 'verisimilitude' is makes one substantially smarter. Knowing the meanings of those prevents one from saying such patently stupid things as 'if you farm the mats yourself, it's free' or 'lol, it's Star Wars and you're talking about what's realistic!'.

I don't think opportunity cost even needs to be taken into account. Spiderweb Software Inc is a business - a legal entity in its own right - and staffing is a legitimate cost; often the largest in many businesses. Does anyone think Chris Avellone's salary isn't accounted in Alpha Protocol's development costs, even though he is one of the company owners?

The opportunity cost, but what about cost of doing something less preferable as your work? It seems like a slave mentality for me, you can't do what you like without feeling like you are loosing money. How do you factor preference in what you are doing for living into salary? I find it more important, and more life changing then extra money.

If you read the article carefully his is attributing salary cost based FTE (Full Time Equivalent) over the development year. GF4 was NOT the only game worked on that year. Come on. No developer works for 40K.

I did read it carefully. I didn't say he earned $40k - I said the average cost across the three staff was $40k. That's not meant to be specific - it's a response to earlier claims that GF4 couldn't possibly cost that much.

The low sales numbers surprised me quite a bit, I had estimated that he would sell at least 10k per game - which I guess his games sold through other portals do, although at a much lower return. That tradeoff would be an interesting thing to discuss, I hope he touches on that in his next post. Still, it's good to know that even with numbers as low as that, he can break even and feed three people with his operation.

Opportunity cost is the biggest amount of money you could make by doing something else.
Preference can be included by attaching a monetary value to the "fun" doing something you like. Then you can compare it to the opportunity cost.

I'd love to have a compilation of Indie games on a CD or a DVD, done by some bigger puplisher.

I think this would be a great idea if this ever happens: The Indies had less costs of distribution, the games were all there, and buyers had a physical shape in their hands, so to say. ;)

Unfortunately this is too vague than this would ever happen. Plus, not all people have credit cards …

Got it. In my opinion the best way to break into indie development is to produce your first game while you have an alternate source of income. Reinvest the first game return to pay yourself as you go for #2.

I started down this route with the Torque engine but burned out. I have kids, I'm older and staying up till 2AM every night with a "second job" that is really a hobby wasnt working really. I also started to affect my primary job. Oh well.

That would certainly be a great idea for many indie players to get involved with, especially if it served as an introduction to other bits of their catalogue. Easy money for a bigger publisher as well, especially one that wasn't competing with the indie market in that particular style of game.

And what would it sell for? In such a deal the indies would get some pittance as everyone else up the food chain would suck up most of the money.

It wouldn't be about that release in itself making money. It'd potentially gain a lot of exposure for that indie producer with people who don't normally bother with such things, which could lead to new people exploring the back catalogue and keeping an eye out for the upcoming releases.

U.S. Federal minimum wage is $6.55 an hour, or about $13,624 a year (52 weeks). So yes if he paid each minimum wage his tital cost would be around $40k. That is a great question, would you work at minimum wage to do what you love? I would bet that these guys get paid more then minimum wage though. I don't think they are buying/licensing a new engine even every couple of years. And they are most certainly not licensing any expensiove graphics programs/assets.

Would I? Well, obviously, I would, since I make far less than minimum wage doing what I do as a part-time gig. But I certainly wouldn't aspire to do no better for the rest of my career. And I wouldn't expect to be able to hire high-caliber full-time employees at minimum wage. Or at least not expect them to stick around year after year.

Also, remember that for full-time employees, there's insurance. Plus additional taxes that are probably paid by your employer. You know how much gets deducted from your paycheck each time to pay the government? Expect that your employer probably pays an equal amount in taxes for you. that ISN'T deducted from your salary.

Ideally, the salaries of the full-time employees are offset by some kind of profit-sharing, bonuses, or royalties. These wouldn't be part of the games' budget, but rather taken out as "overhead" from the profitability of all titles combined (including the ones that take a looooong time to break even…)

I believe he contracts out for artwork (thus he reuses all he can). That stuff gets WAY expensive pretty fast. Artists typically won't work for minimum wage, either - especially not on contract. If you outsource overseas, you can sometimes get a better price, though. Still - for something like this, with custom content, you could expect to spend thousands of dollars (if not tens of thousands) on art, sound, and music.

So yeah - I think the budget for GF4 sounds extremely modest.