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Original post by BigEatSmall
Hi cbenoi1
You still have not share with me, for every $1 of capital employed, what is your return?
I don't want to answer for cbenoi1 here, but this question has way too many factors to be used as a global across the board statement about profitability.
I'm going to use my consulting business to demonstrate (these are real numbers from a real business).
When I started my business, it was myself and two consultants. My only overhead was my home office, my computers and software licenses. All travel expenses were paid by my clients. In my first two years of business, I averaged somewhere around $500,000-$600,000 in sales. After I paid my contractors and all my expenses I was making roughly $200,000/year for myself.
Business was booming and I made a decision to grow the company. I rented a 1,600 sqft office, hired a sales staff and brought on a full time programmer as well as a few more consultants. In the next two years, my sales came close to $1 million (I was about $50,000 shy of the mark).
But when it came down to my profits for the year (both years), I only made $100,000.
The problem I had was that my overhead was too high. The cost of running an office and paying 2 full time employees were chewing into my profits despite having record sales.
Earlier this year I closed down the office and let my staff go. I've been working back home since November and guess what, my profits are back up to where they were in my first two years of business. All this in the middle of a recession as well.
So, what is my point exactly and how does it apply to this post?
My point is that every game project is going to vary on costs based on the abilities of the team involved. If you have to hire out your art and sound (or even programming), your game project will have a much higher cost than someone skilled enough to do the work themselves. The project costs for a project developed by someone who already has the hardware/software and skills they need may be next to nothing. A team of 2 paid employees may cost you $10,000+/month by the time you are done with salaries, equipment and office expenses.
An indie project with a high development cost is going to have a hard time breaking even. One with little development costs can turn a profit even on a small number of sales.
John
