The indie game developer's start-up cost

This article is a free exploration on the cost of starting an indie game business. The calculations are rough and not meant to be exhaustive. The typical individual starting an indie game business is relatively young, willing and motivated (or else he would'nt try to be an entrepreneur). I assume throughout the calculations that the individuals are living on minimal money and estimate the living cost of every one of them to be $15,000 per year (from experience, that's about what I need to sustain myself). The cost estimates are for one year of business, which is a reasonable amount of time for building a small game.

Case one – The garage dweller model
Let's look at the smallest cost possible. The hypothetic situation here is a lone developer trying to develop downloadable games or games for the web and generate revenue via various income streams. Even at such a level, there is several possible scenarios. Let's look at two of them:
  • Cheap, used computer with peripherals (screen, mouse, keyboard, printer) – $1000
  • One year internet access – $500 to $1000, depending on available services
  • Free graphic softwares (say, Gimp) – $0
  • Free coding environment (C++, java, Flex, ...) - $0
We have a whooping total of $2000. It's interesting to note that the costs described above are probably already been paid by anyone who is interested in making games and would actually NOT involve any new investment from it's part. The only thing left to pay for is time.
The work could be distributed via free channels like online game portals where posting games is free and revenues are generated through advertisements, sponsorships or royalties.

Total investment for one year: $17,000

Case two – The lone ranger model
The second model is still a lone developer but working with better tools.
  • A nice computer with peripherals – $1500 to $2000 (let's be conservative)
  • Adobe web premium suite (flash, dreamweaver, photoshop, illustrator, ...) – $2700
  • One year internet access – $500 to $1000
  • One year web hosting – $100
  • Domain name – $40
So far I'm not considering the cost of renting an office space since I'm assuming the developer works alone and from his home, « garage style ». In this second case, the initial investement rises to a little under $6000. Still not a big deal.
Total investment for one year: $20,840

Case three – The small start-up model
The final model I'm looking at in this article is a small start-up company formed by a party of three individuals: one designer, one programmer and an artist.
  • Office space – $1200 x 12 months = $14,400
  • One nice computer with peripherals – $1500 to $2000
  • Two state of the line computers (powerful, dual screens, lots of ram) $3000 x 2 = $6000
  • Adobe web premium suite – $2700 x 2 = $5400
  • One year internet access – $500 to $1000
  • One year web hosting – $100
  • Domain name – $40
$28,940. We are nearing the $30,000 point in investment. The team members probably already own computers, so if they want to stick with what they have, it is possible to lower the initial investment by a few thousand dollars. It is also possible that they will all work from home so the office space (the highest investment), while a neat thing to have, might be superfluous. With a team of three, the possibilities are soaring and the amount of work that can be done in a year is much bigger. Depending on the scope of the game, they could easily pull out from 1 to 3 games during the year.
Total investment for one year: $73,940

Comparison chart:
Case one – The garage dweller model: $17,000
Case two – The lone ranger model: $20,840
Case three – The small start-up model: $73,940

In the end, if you intend on starting-up a small indie game business and want to buy yourself a year of development, we could roughly estimate that a fair amount of cash to start up with would be around $20,000 per individual. While the number we explored here are interesting, there are several other scenarios that we haven't looked at. Some developers keep a full time job and try to work on their business on the evening and week-ends, others have part-time jobs or accept some freelance work for other companies in order to survive. Still others outsource the art, music or coding to other companies so they require more money but less time.

Personally I am blessed with a part time job that fulfills my basic needs (incomes fluctuating somewhere around $20,000 a year) and leave me with a four month stretch of free time during the summer. I have been able to develop a first game last summer after a three months of full time development and the result of my work was a total income somewhere around... hmmm... $5... We might as well say I got nothing from it but I would say that it's not bad for a first game that taught me much about being an indie developer.

And with that last bit of information, I would like to end the article with this advice: design your first game to be a very small one so you can build it in only a few months and do not focus on money. Expect go gain $0 from it because it is quite probable that this is what you'll get. However, expect to learn very much, and be prepared to build a second game using that knowledge!


Anonymous said...

plus costs for accountant and lawyer

Donny Viszneki said...

I'd say that cost of living varies widely depending on your area. Also, if you have the knowledge to write such an article, I'd be much more interested in what kinds of figures correspond to the revenue models you listed!

Anonymous said...

Im only 15 but this wont deter me. I've already got good engines to work with. Also you can get free modeling programs like anim8or and download free models which greatly alleviates the cost.

daren said...

Interesting and practical!

Kevin said...

Depending on the scope of your project and the size of your team, lawyers and accountant might be useful but they might not be necessary. I see indie developers doing without them often.

Costs of living sure are varying! As for myself, I'm living in Montréal on the east coast of Canada. I don't have huge monetary needs so for the same city someone else could "need" more money but it also depends on how you live.

If you are 15 yo, you can probably afford the luxury of time, which is a thing that costs when you get older and have to work to pay the rent. Use that to your advantage. ;)

Maintenance Man said...

You only made 5 bucks on your first game? I think we should hear more about why the profits were so dismal.

Anonymous said...

Montreal's not east coast...

Kevin said...

er.. well, you're right about that. Montreal is pretty much on the east side of Canada, but not quite on the coast. Sorry for the over-statement.

Julien said...

Interesting models. Very simple in term execution but the plan for revenue seems a little week. This is where having a friend in marketing helps!

Anonymous said...

Ok, as indie game dev, you don't need all that office space, desk, awesome comp crap. so through those costs out.

1. Office space?! Psh....Go to the library with your team=FREE

2. Everyone already has a computer to code/work on=FREE (cost i'm assumed was already incurred long time ago) - along with adobe software

3. Artwork/Animations = one of the most expensive parts I think

4. Another Dev = costly

So i'm making my first iPhone game now...and expect to spend about $10k. And the most expensive will be art/sprites/animations. Second, my 2nd dev (university intern).

haha you're spending quite a bit going your route!

Kevin said...

You are totally right, some of the costs can be easily cut, though I'm only assuming there is possible office space for the third model.

In the third model, I'm also assuming there is an artist in the team, so the artwork an animations are covered.

How much time will it take to develop your iPhone game? If you spend 6 months on it, then you are exactly at the same point as my models, since I am assuming that the businesses are ran for a year.

In anyway, this is absolutely not scientific and will most assuredly vary for every developer, but it gives an idea.

Anonymous said...

It's rare to see a complete breakdown of all of the little costs an indy developer may be saddled with. I don't think I've ever seen such a detailed list before. Good job!

Still, I wonder though, if it isn't possible for someone to create a great game for considerably less. Assuming some expenses such as internet connection, etc most people will already have that anyway. Take the coolest game developers in the world for example, those guys seem to be working hard to create a great indy game with limited resources.

I'm sure there are great games out there already that have been made with a lot of time and extremely little money.

Thanks for the interesting reading!

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