How can an Indie game developer possible have any profit, or even payback?

[Sokka]

How can an Indie game developer possible have any profit, or even payback?

I mean, from Brazil, for each sold game, Steam would have 30% of the sale value, then USA government 30%, then Brazil government 27.5%, plus another minior taxes.

I am developing a game for fun and I am thinking in turning it in a real project, or at least I was, since it would have to be an extreme success just to pay (or maybe even not) the time I would spend to complete it.

I think that is the main reason "almost" all indie games are based in random generated maps, or reguelike style, where a "small" logic could be reused with infinite variations, lacking on story, arts, animations, mechanics...

[Mad Scientist]

How are you getting 30% twice? 30% is Valves cut, Taxes are based upon location to be collected by that Country/State/City the purchaser resides in.

[ุ]

Nguyên văn bởi Mad Scientist:

How are you getting 30% twice? 30% is Valves cut, Taxes are based upon location to be collected by that Country/State/City the purchaser resides in.

He's likely confusing sales/income taxes, which...non-US residents...don't pay.

[cSg|mc-Hotsauce]

Nguyên văn bởi Nozomi:

How can an Indie game developer possible have any profit, or even payback?

How can an Indie game developer possible have any profit, or even payback?

I mean, from Brazil, for each sold game, Steam would have 30% of the sale value, then USA government 30%, then Brazil government 27.5%, plus another minior taxes.

Valve takes their cut. Your country takes their tax cut.

https://partner.steamgames.com/doc/finance/taxfaq

[Sokka]

I suppose these 30% comes from:

Q. What happens if there is no income tax treaty between my country of residence and the United States?

A. We will be required by the IRS to withhold 30% of your revenue share payment and remit these taxes to the IRS. You may want to consult with your tax advisors on whether you can recover these taxes as a foreign tax credit on your tax return.

[Aachen]

Well, then, perhaps it’s not so much “indie developers” as “indie developers from specific areas.”

[failsafe]

The question is why you calculate from gross value instead of net value. For any company - I assume indie dev is still a company - only net matters.

Netto value + VAT = gross value
in this case it is more like:
net + valve cut + VAT = gross value (price we see)

VAT is the value added tax, so it is not taken from value of the product, it is added to value of product and then deducted.
Profit tax is a different matter, but you dont pay it if you dont have profit, so if IRS takes 20 or 18% or whatever it means that they take those % from the profit, not from the gross or net value.

And profit is:
net value - costs = profit

So 20% of profit tax is not 20% of net value or gross value. I would say that it is more like 3-5%, or even less.

[Sokka]

Nguyên văn bởi failsafe:

The question is why you calculate from gross value instead of net value. For any company - I assume indie dev is still a company - only net matters.

Netto value + VAT = gross value
in this case it is more like:
net + valve cut + VAT = gross value (price we see)

VAT is the value added tax, so it is not taken from value of the product, it is added to value of product and then deducted.
Profit tax is a different matter, but you dont pay it if you dont have profit, so if IRS takes 20 or 18% or whatever it means that they take those % from the profit, not from the gross or net value.

And profit is:
net value - costs = profit

So 20% of profit tax is not 20% of net value or gross value. I would say that it is more like 3-5%, or even less.

Since I am a solo developer, wouldn't every income be a taken as a profit? I don't have a registered company with a registered salary or a registered team dedicated to this development, so I don't have any registered expenses for this project as well. I think I would have to set a commpany for that, so the IRS would be over the real profit.

About VAT in https://partner.steamgames.com/doc/finance/taxfaq: "Please see the Current Tax Rates section below for the list of countries where this type of tax is collected and the applicable tax rate". I think BR would not pay it because it is not in the list, so it sounds it is not applicable. Also I read BR pays that just for Europe.

According to a youtube channel a developer shared a little bit of the real income, where a gross 45000 USD became a net 8900, that where my indignation came from.

[failsafe]

I think it would help if u talk with the accountant. Typically IRS doesnt consider full net value as a profit - even person working in the company as the employee states a part of his income as a cost, so most probably you can do it same way. But really, I dont know how it works in your country. And I wouldnt ask people on forum, it is better to talk with someone who is less... virtual ;-)

[Sokka]

Nguyên văn bởi failsafe:

I think it would help if u talk with the accountant. Typically IRS doesnt consider full net value as a profit - even person working in the company as the employee states a part of his income as a cost, so most probably you can do it same way. But really, I dont know how it works in your country. And I wouldnt ask people on forum, it is better to talk with someone who is less... virtual ;-)

Thank you

[Mad Scientist]

Nguyên văn bởi Nozomi:

About VAT in https://partner.steamgames.com/doc/finance/taxfaq:

Feel free to make inquiries using any of the 2 E-Mails they provide if you want to know the realistic estimate of what you'll be paying. One may direct you to the other, but it will help clear the air.

[Start_Running]

Nguyên văn bởi Eiswolfin:

I remember reading somewhere that on average an indie developer who self publishes ends up seeing about 25% of the revenue per sale after Valve's cut, and after government taxes, and other fees.

Sounds about right,. Of course depending on the country and the taxes.
Life's tough. Though i don;t know why you had to say 'Indie Developer' All devs who self publish basically see the same thing.

OP. Are you starting to understand why so , sooo many dev studios fails and go under.. Granted you can make big bucks if you manage to make the next *it* game.

The way indie devs make money is typiocally by keeping their production costs as low as piossible and reusuing as myuch code and assets between procjects as they can. But then thats not really any different from any other tax paying business now is it?

[failsafe]

Nguyên văn bởi Eiswolfin:

I remember reading somewhere that on average an indie developer who self publishes ends up seeing about 25% of the revenue per sale after Valve's cut, and after government taxes, and other fees.

I guess anything around 20% should be correct. Typically this would be the profit you want to see without going too far with prices. Sometimes very low price may give higher profit than high price because it attracts many more customers.

[failsafe]

Nguyên văn bởi Eiswolfin:

Nguyên văn bởi Start_Running:

Sounds about right,. Of course depending on the country and the taxes.
Life's tough. Though i don;t know why you had to say 'Indie Developer' All devs who self publish basically see the same thing.

OP. Are you starting to understand why so , sooo many dev studios fails and go under.. Granted you can make big bucks if you manage to make the next *it* game.

The way indie devs make money is typiocally by keeping their production costs as low as piossible and reusuing as myuch code and assets between procjects as they can. But then thats not really any different from any other tax paying business now is it?

The same thing I read had bigger publishers averaging about 40% due to better revenue shares, contract deals, and corporate jiggery of dealing with taxes.

I dont think that 40% could be considered as a standard. Typically bigger publishers have bigger costs as well. Small indie company with one or two people inside will always be much cheaper than company having 15-20 people. Sometimes very small companies dont even have offices, so they dont pay extra for working space ect. But we are discussing two figures - one is a profit from title, second is profit per year. Small company can have higher profit per title, but most probably lower per year (since it cant multitask).

[failsafe]

Nguyên văn bởi Eiswolfin:

Nguyên văn bởi failsafe:

I dont think that 40% could be considered as a standard. Typically bigger publishers have bigger costs as well. Small indie company with one or two people inside will always be much cheaper than company having 15-20 people. Sometimes very small companies dont even have offices, so they dont pay extra for working space ect. But we are discussing two figures - one is a profit from title, second is profit per year. Small company can have higher profit per title, but most probably lower per year (since it cant multitask).

That 25%/40% is revenue, not profit. The profit will be even less of a %.

This also doesnt look realistic. Profit below 5% is lower than standard inflation (not mentioning current inflation peak), I dont think this could make sense. Also, if you are small indie dev you dont have high costs (at least not comperable to bigger companies) so less than 1% from small general costs is something not really worth doing job. Smallish percent could work with very high turnover - I guess AAA companies sometimes aim on low % profit but compared to large turnover it still does make sense.

[Komarimaru]

Not sure for other countries, but for steam they take 30% when under a certain sales amount, then taxes is around 25%.

So for example, I sold a game for $30.
Steam gets $9, leaving $21.
Taxes takes 25% of that, for $5.25, leaving my profits as $15.75.