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Core Personnel
This category includes personnel vital to the success of the game. I include anyone here who invests significant time and energy into your project (including long-term contractors). I exclude short-term contractors, lawyers, accountants and friends.
What should I pay full-time employees?
Disclaimer: this part of the article outlines my personal philosophy, not an industry rule. Pay is a touchy subject, and it's tricky to figure out when you're running a startup studio.
TL;DR:
Pay your employees enough to support their cost of living--minimum.
Consider profit sharing if you can't afford to pay them what they're worth.
Here’s the cold, hard truth: in gaming, many talented developers and artists get paid what they’re willing to make, not what they’re worth. And if you’re working with post-grads and career changers, that number is low.
Ideally, we’d pay people what they’re worth, which is likely quite a bit more than anyone on your team will make. Unfortunately, making your first indie game isn’t a particularly lucrative adventure (the games industry is generally notorious for being stingy), and you and your team will have to accept a lower salary than you’d find elsewhere.
First and foremost, you must pay your team enough to support their cost of living.
If you don’t pay people enough for them to support themselves, they will at best become disgruntled over the course of the project. People don’t want to crunch when they’re being paid well below market rates. They don’t want to accept scope expansion for low pay. When things look down, they’ll lose faith in that sweet profit sharing plan you dangled in front of them on day 1. At worst, they’ll leave, delaying your game, eroding morale, and creating style conflicts. You cannot risk this.
If you’re running a particularly intimate studio, it’s best to discuss cost of living with your teammates. Just like a studio, people have their expected costs–driven mostly by location and dependents–and their unexpected costs–health, family wellness, etc. If there’s just a couple of you, I encourage you to calculate personal budgets to determine what you can afford to make when working full-time for your studio.
(That last part is important: publishers expect to fund full-time developers. While you can hire contractors for some disciplines, the people at the helm should be full-time.)
There are plenty of cost-of-living (CoL) calculators floating around the internet if you’re struggling to find a starting point.
Keep in mind juniors in their disciplines may not make enough to support the cost of living in an expensive region. If CoL far exceeds what someone’s willing to make, you have a difficult situation–especially if CoL mandates a high salary that will tank your budget (see: Bay Area, NYC). My best advice is honest conversation.
You might end up working with a ringer or two, in which case you want to pay them at competitive market rates (or else they’ll get disgruntled: see above). If they’re experienced, ask them what they’d expect to make practicing their discipline at an indie studio. Then do your own research and negotiate if need be. Thankfully, more and more US states are posting pay transparency laws, allowing you to check studio websites in those localities to figure out competitive salary bands. Relevant links include:
Finally–and this is a matter of personal opinion–I encourage profit sharing. The people on your team are in for a rollercoaster no matter what, and they’re all contributing to creating something new. It means a lot to people if they share in the spoils. If your game pops off, you should be happy to share; if it crashes and burns, this costs you nothing.
Since my response is mostly qualitative, here is a spreadsheet of anonymously submitted salaries from across the video game industry. Given that you’re running a new studio, it’s unlikely that you’ll be paying your team at these rates. More resources to come!
What should I pay long-term contractors?
I’m not an expert in contracting anything except audio, so you’ll have to do your own homework on that subject. The GameDev Budgeting Handbook offers phenomenal insight into contracting writers, voice actors, and more.
Budgeting for Audio
This article from Kole Hicks will tell you everything you need to know. It was originally posted in 2016. Rates haven’t changed as much as you’d expect since then, but you might want to take the high end of the listed ranges when budgeting for audio.
A note before you dive in: Kole refers to two audio setups. First is work-for-hire (W.F.H.), in which the studio owns the audio. Second is licensed, in which the artist owns the audio. The latter is better for the artist, and the rates reflect it.
I’m a composer, and I’d insist on a licensing agreement if I’m being compensated below market rates. Personally, I’d be happy to compose music that’s temporarily exclusive, and I recommend approaching your composer with that arrangement if you can’t afford to pay them what they’re worth.
Take a look through Kole’s doc. It’s quite comprehensive and should set you on the path to success. As a rule of thumb, audio typically accounts for 5-15% of a project’s budget.
Short-Term Contractors
You might end up working with short-term contractors for tasks that can’t be completed by any of your core team members. Voice acting is a common one, as is writing. Since you won’t need to identify short-term contractors before your project gets funded, you’ll need to do some research to properly budget for them.
You can do contract pricing research via websites like Fiverr and Upwork. Head to these sites and type in the type of work you’re looking for (“animation,” “narrative writing,” “voice acting”). You’ll learn two important things: 1) how that work is typically compensated, 2) standard entry level market rates. That should be sufficient for budgeting purposes. Make sure you’re taking a high average of rates; you want to ensure you can pay for extra time in the event of unanticipated (but guaranteed) delays.
Platforms
Don’t forget to account for the platforms your team will need to create your game. You’ll be fronting platform costs for full-time employees but not for contractors (for example, you won’t be paying for the digital audio workstation (DAW) license your contracted composer uses). You can do this research pretty easily on your own, so I won’t create an exhaustive rate list here. Instead, here’s a list of categories to consider:
Game Engine: Unreal, Unity, Godot, etc.
3D Modeling: Blender, 3DSMax, Maya
Audio Middleware: Wwise, FMOD
Project Management: Jira (industry standard by a country mile)
Other Examples: Photon (multiplayer development), Github/Bitbucket (source control)
Administrative
Since you’re now running a business(!), you need to handle contracts and payroll. Lawyers and accountants can help.
Just a note that every publisher I’ve talked to breezes right past these lines. Your goal is to get your costs looking normal and to make sure that funding will cover them. These estimates do both.
Legal
There’s a lot of Reddit threads and the like out there that cover this subject. Here’s one example.
In my research, I found two models that spit out comparable results. They’re what I use; see below:
Model 1
Employment/Contractor Agreements: $3,000
TOS/Privacy Policy Creation: $3,000
Trademarking: $2,000
LLC formation: $2,500
Padding: $2,500
Total: $13,000
Model 2
Legal Startup Fees: $10,000
Annual Legal Fees: $2,000
Total (2 yrs): $14,000
For additional peace of mind, contact a lawyer. They’ll give you a quote if you let them know what you’re looking for. Professional contracts for your contractors (and employees) are essential.
Accounting
You need an accountant to handle taxes and payroll. While you could theoretically do this yourself, don’t. You need to focus on building your game, not becoming an expert in tax law and GAAP.
Budget $3,000 for accounting startup costs and $2,000 per year thereafter, or contact a local accountant for more accurate rates.
This article helped you figure out how much your game will cost to make. But publishers won't give you all that money upfront. They'll spread it out over the course of development and pay you when key development checkpoints are reached. Learn more about building your pay schedule here: Budget Milestones.
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