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Estimating net Revenue from steam game sales (minus Returns, Regional pricings, Discounted Sales, VAT, SteamCut, Unreal fee...) - Detailed breakdown

A topic by thomiass created May 14, 2023 Views: 632 Replies: 3
Viewing posts 1 to 3

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:


https://prnt.sc/hiT-QWPiV7xB

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

(+1)

With all due respect, but I think this question should be asked on the steam support forums and not on itch.io, since they are both game stores, I feel that the question is a bit inappropriate.

If the moderators and/or the administrator don't mind your question and because I don't want to be rude and not answer, I'll risk telling you about my experience on steam.


That 46% seems too optimistic to me, and a value closer to 30% would be more realistic. The main error I see in your image is that you have 0% projection for discounted sales.

Most game sales are at launch (typically 10% to 15% off) or at special events like Christmas (typically 25% to 50% off). Unless you plan to never make a discount.


1) No. One thing is the percentage that you receive for each copy actually sold and another very different thing, it is to calculate an estimate based on the value of the full price in the USA vs the total estimate of sales in the world.


2)As REFERENCE values, they don't look bad.

However, whether or not they are real for your game will depend on many factors, for example, if your game has a demo, you will have a better return rate than if you don't have a demo.

If your game has Russian language, you will have more sales in Russia than if your game doesn't have that language and the regional price percentage will be higher (It also depends if you agree to use regional price). etc

In the absence of more data and details and as a starting point, these values do not look bad, but you must be clear that an average value is one thing and dispersion is another.

3) Yes.  

I) I have a 6%.

In the sales reports that I have access to, steam gives me a single field with chargeback+refunds and does not inform me of the customer's reasons for requesting a refund.

I don't have data to answer further, but I do know that there are many players who "buy" a game to try it out, they use it as a form of demo.



II and III)  

These questions are more related to statistics, what you understood is correct. But you are trying to calculate an estimate of future profit. You really don't know how many copies you're going to sell in the US or how many copies you're going to sell in Russia.

Inferring these values depends on many factors and can be very complicated, a simple way is to use numbers of similar games.

However, you must be clear that these numbers are not a law, but an estimate and a very simple one.

Thanks

1) on reddit someone told me his number was even 57,5% (and not mine expected 46,4 or yours 30, in other places i got 30 as well).

2) Regarding discounts - yeah, this is projection for the 1st year more or less and im not (at this point) planning discounts. BUT your point about the discounts in the beggining of the sales is valid, i didnt realize it. I dont usually buy games when they launch so i forgot about this. It wasnt like this before, WHEN did this trend start? (giving 10-15% discount on the games launch?) and do ALL games do it? (majority at least)?

3) You wrote:

"1) No. One thing is the percentage that you receive for each copy actually sold and another very different thing, it is to calculate an estimate based on the value of the full price in the USA vs the total estimate of sales in the world."


Well thats why theres the "Regional adjustment" sale number (at 15%) i assumed this number is for the reason you wrote about?


thanks

(2 edits)

Hello.

1) What they tell you on reddit is correct, the problem is that you are using the same words to refer to 2 different things, with different percentage values.
My answer to your question was "no" precisely because you are misusing the term and that leads to confusion.

the "percentage that you receive for each copy" is the value that steam actually pays you for each sale made, but it is used AFTER a sale (typically around 55%).
You are looking for an estimate of the profits that the game will give, that is, a future value(typically around 33%). That is why they are different percentage values.

Saying this in words can be confusing, so let's look at an example.


Imagine that you estimate that you are going to sell 30 copies. you release your game and effectively sell 30 copies.

You sell 24 in the USA for 20 dollars. = 480
You sell 6 in Russia for 5 dollars = 30
Total sales = 510.

Of those 510, you must discount the VAT and the steam part. You have about 55% left (I say "around" because there are tax withholdings and VAT is variable).
510*55%=280 (The amount you receive from sales)

****************************************

Your calculation, start with estimated sales as total price in the USA * total world sales, that is

30 copies * 20 dollars = 600 dollars in sales. (this is your initial value)

You add the "Regional adjustment" to compensate for sales outside the USA.

600-600*15% = 510

Of those 510 you must discount the VAT and Steam, that is

510*55%=280

****************************************

In reality, you sold 510 and received 280
280 is 55% of 510. What they told you on Reddit.

In your calculation, your sales projection is 600, you adjust the international price and you arrive at a profit of 280, but
280 is 46% of 600.

Do you notice the difference?

55% (or 57.5% if you are from the USA and only consider sales in the USA) is the percentage of the actual sales value, that is, a value that you only know AFTER selling.

46% is the percentage of a hypothetical estimate of future sales worldwide, based on the fact that you do NOT know the exact distribution of sales.

If you apply discount sales and refund  to that 46% and give more importance to international sales, the value will be closer to 30%. Especially since when you're making projections, it's best to be conservative.



2) This depends on you, it is not an obligation to place a discount at launch, but the vast majority of games are usually launched with a 10% to 15% discount at launch.

Whether or not it suits you is something you should discuss with someone who knows about marketing.