Path: utzoo!yunexus!xrtll!mark From: mark@xrtll.UUCP (Mark Vange) Newsgroups: comp.sys.amiga Subject: Re: No more Cinemaware stuff for Amiga !!!???? Summary: [DSome 'real' numbers on the cost of game production Message-ID: <337@xrtll.UUCP> Date: 5 Aug 89 05:03:59 GMT Article-I.D.: xrtll.337 References: <6712@warpdrive.UUCP> <1505@ndmath.UUCP> <43756@bbn.COM> <3byO02zd46Mp01@amdahl.uts.amdahl.com> Organization: Wcom, Toronto, Ont Lines: 129 In article <3byO02zd46Mp01@amdahl.uts.amdahl.com>, dwl10@uts.amdahl.com (Dave Lowrey) writes: > > It would be interesting to hear from some REAL developers/distributors > of Amiga software on the breakdown of costs. > > Anyone out there, especially "game" developers, willing to provide > any info? If you want, keep your identity secret, 'cuse I sure that > the IRS is listening! :-) These are numbers I pick out of my experience in the marketing of three games in the Amiga market and involvement in a few more. Some of these figures were originally in Canadian dollars, and I convert them into US for ease (+ or - 5%) First thing first, to put out a game, you must produce packaging. Full-color boxes, disk labels, manual, warrenty card and the like on a 10,000 unit run is appx $12,000. You might say 'print fewer boxes' but the price difference becomes minimal because most of the cost is for plates, typesetting, inking and the like. Second thing you need is the media, which you can swing at around $0.80-$1.20 per disk. Based on your 10,000 units, that's $10,000 (for convenience) Number 3 thing is the artwork for the game (in terms of the Ad and the like) For decent quality work (4-color seperation of full color poster) you're looking at at least $1000.00. Number 4 thing is the boxes into which you game boxes go for shipping. These are the ones you send to the distributors. A typical one would hold 50 units. 10000/50=200 boxes. Appx $200.00. Assuming you are really persuasive, and you can talk programmers and graphicians (and musicians) into working entirly on a royalty basis, and assuming you can keep it down to 15% of gross (you're doing really well!) along with any appropriate liscensing, you have that owing. In addition, distributors would typically receive 60% off the retail price of the product. Let's pretend that our Mega Blaster from Mars game retails for $50.00. That means we sell MBFM to distributors for $20.00. Of this, 15% goes into royalties. So you're left with 85% of $20.00= $17.00 To cover your investements from before, $10,000+$1000+$200, you must sell at least 650-700 units. One add in Amigaworld costs some $6000.00 (that's 352 units!) Place 3 of them (for three months running) and that's another 1000 units to sell! A couple more adds (in AmigoTimes, Info, Ahoy!, Compute and the like) are in at $1300-2000 each. That's (76-117 units for each add) place it three times, and you're looking at (use 100 for ease!) 100*2*3 because you should really place each add at least three times to get any effect! 600 more units! Attend one trade show (Like AmiExpo) to seem like good corporate citizens and you're talking about $10,000-15,000 for the whole trip. (588-882 units, so we'll use 700) So far you have sold 700+1000+600+700=3000 units, and you've not made any money! In the mean time, you've invested some $20,000 dollars (figure that if you kept it in the bank for a year, you'd have some $22,000). What have we left out? Well, there's all the courier bills for sending your demos around the world to the Amiga press! Also, the costs of selling over-seas are considerably higher, because of money exhange and tariff problems! So for overseas units you're talking about less than $17.00 Now, say you're running out of a relatively small place (2000 square feet) at around $2.15 per foot, you're montly rent is $4300 (253 units). Youre phone bills in this industry add up very quickly (speaking with all those users and magazines around the world) I typically had months where phone bills were between $1000-$3000 (use $2000 for average). That's 117 units per month. You have a secretary that you pay $7.00 per hour (cheap bastard that you are!). 40 hours per week, roughly $1120 per month (65 units). A shipper at $10.00 per hour 40 hours per week = $1600 (94 units). To pay your rent, food, and car payments, you take a salary of $2000 per month (117 units). So, let's pretend we can put our our game for an initial material investement of $20,000. In addition, it took us four months to put the game together, but we'll pretend we didn't pay rent for those months. Now then, at the end of the first month after the release of the game, you will need to have sold 3000 units which we calculated before + 253 to cover rent + 117 to cover phone + 65 to cover secretary + 94 to cover shipper + 117 to cover your salary --------- 3646 units just to cover your costs! In reality, of course, there are a lot of costs which are not covered here, things like paying your add agency a 15% markup, paying taxes on your earnings, paying your accountant, paying your lawyer, buying a fax machine, paying for your hardware and a million and one odds and ends that add up. A typical Amiga game will do well to sell 8000 units! All the extranious costs of doing business add up to a great many more dollars. In addition, we have ignored the cost of selling. Either you hire a salesman (another 100 units per month) or, more likely, you're paying someone commision on sales (then your gross drops by another 5%). Furthermore, $17.00 per unit is being REALLY optimistic. Duplication costs, returns for bad media AND VIRUS INFECTED DISKS, as well as all those free copies you've handed out to the press! If you've printed posters, count on them to be about $4-5 each (for a run of say 1500) that's another 450 units! Well, I could go on, but I think you can see where I'm getting to. The lifespan of a typical game is 4-5 months, so multiply all your fixed costs by at least 4 (so you need to sell 3000+(646*4)=5584 just to cover your ass excluding all these associated but hard to place costs!) Software development is an expensive proposition. Not to mention the fact that as a company grows, it's fixed costs do as well. The model above is a much simplified 4-person operation. A real company will have many more individuals than that! It's not simple, and pirates don't make it any easier! Excuse the long article, but you asked! -- Mark Vange Phone Death Threats to: Vanguard Distributing (416) 730-1352 mark@xrtll 8 Everingham Ct. North York "Every absurdity has a champion Ont, Canada M2M 2J5 to defend it." - Oliver Goldsmith