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TIGSource ForumsDeveloperBusinessEstimating Revenue from steam (less Returns, Regional pricing, Discounts VAT...)
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Author Topic: Estimating Revenue from steam (less Returns, Regional pricing, Discounts VAT...)  (Read 3881 times)
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« on: May 14, 2023, 03:48:18 PM »

Im doing some estimating/planning of net revenue of my game (game just in my head currently) - how much will my company receive after all other things/actors take their cut. The breakdown shows that from every copy of game sold, I (my company) willl receive  ~ 46% from its selling price... Is this realistic? What is the number usually...?

The picture/table:


My questions are:

1) Is the 46,41% my company receives from every copy sold realistic...? Whats this number usually like?

2) Are all the other numbers realistic...?
Returns & Chargebacks:         7,00%
Adjust for Regional Pricing:      15,00%
VAT (/Sales Tax in USA) - AVERAGE:   15,00%

3) Are the red arrows correct? Did i understand (and pictured) correctly the subtotals the % are taken from...? (for example Valves takes its 30% AFTER VAT is deducted ; Unreal Engine Takes its 5% (if gross revenue exceeds 1 mil USD) from BEFORE VAT is deducted...?) (BUT AFTER chargebacks and regional pricing) etc. correct?

Additional questions/"analysis":

I) Are the returns and chargebacks realistic at 7% only?  (if my game is ok, good, no excess of bugs etc.)? Also WHY are chargebacks deducted and why are they often counted in separate category (i did NOT do it here)? Are majority of chargebacks atrributed to purchases made by stolen credit cards...? Or do some customers ABUSE the "return" policy and even if they played OVER steams 2 hours, they just get a "REFUND" by contacting their bank/credit card and asking for a chargeback ("illegal refund" essentialy)? (simply whats the reasoning behind chargebacks and sometimes counting them separately from refunds?)

II) Adjustments for regional pricing... Not sure i understand it correctly...
-If my game for example sells 100% of its copies ONLY in the USA, there would be NO need for "Adjustments of regional pricing" (0%)  (since in USA it sells for its original full price)...? BUT (!):
-If i sell 100% of my copies in Russia (for example) for 5 USD (typical price adjustment for Russia AFAIK), the "Regional pricing adjustment" number would have to be at 50%...?
-AND If I will sell 50% of my copies in USA (full price 10 USD lets say), and 50% of my copies in Russia (for 5 USD), that would mean that the "Regional pricing adjustment" number would have to be at 25%, correct?

III) Regarding VAT...    There is NO VAT in the USA... in the USA there is "Sales Tax", and is added ON TOP (in addition) of the original price of the game. And i dont really need to count anywhere in the table with it...?
-So if my game sells 100% of its coppies in the US, the "VAT" number in my table/chart shown would be 0% since i dont need to count with it in the table at all...?
-But if my game sells 100% of its copies in some other country (lets say Germany, whatever), that has VAT (and not sales tax), and the VAT in that country is 20% for example. This means 2 things - the VAT is now included in the price of the game (its not added on top of the game as in the case of "sales tax" in USA), and now in my calculations (table/chart) i would have to count with the VAT number at 20%... correct?
-AND If my game sells 50% copies in the USA and 50% copies in Germany, now i have to count with VAT at the average rate of 10% (0% USA, 20% Germany = 10 % VAT on average on every sold copy)... Correct?

I think developers (me included) do not fully understand the nuances in these numbers as shown, so i think if somebody can clarify/answer these, it would be MUCH HELP not just for me, but for a lot of other Devs as well...

Thank you

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« Reply #1 on: May 14, 2023, 03:57:34 PM »

if your budget doesn't have money for marketing, you will never sell 30,000 copies on steam.

Edit: also it would be crazy to spend money on marketing to just give your customers to valve and have them never see your stuff again without spending on marketing again.

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