This is a hypotethical question. Let's imagine that a game was made, using one of the designs posted in Help Wanted. Most of them promise no compensation up front, but allow for profit sharing in case of a success. So yeah, the game interests a few people that would like to have it on Steam or any other similar platform for money. So the title generates income - most likelly unexpectedly.

As simple as the concept of sharing profit sounds, is it only me that sees several difficulties? That being taxes, even sharing of profit, having to establish a company and hire people? There is a lot of hussle about making money without any local goverment not having a share of it's own. Has anyone encountered such a scenario and could give out some advice?

I admit to having hopes to my current project(s) gaining some interest and creating financial opportunity. As such, I would like to have some overview of how it might look. Even if all doesn't go accordingly, such knowledge would prove invaluable not only to me, but others that participate in the Help Wanted projects that utilize this kind of compensation method.

Thanks in advance and sorry if the subject was already discussed on this forum

This is a hypotethical question. Let's imagine that a game was made, using one of the designs posted in Help Wanted. Most of them promise no compensation up front, but allow for profit sharing in case of a success. So yeah, the game interests a few people that would like to have it on Steam or any other similar platform for money. So the title generates income - most likelly unexpectedly.

As simple as the concept of sharing profit sounds, is it only me that sees several difficulties? That being taxes, even sharing of profit, having to establish a company and hire people? There is a lot of hussle about making money without any local goverment not having a share of it's own. Has anyone encountered such a scenario and could give out some advice?

I admit to having hopes to my current project(s) gaining some interest and creating financial opportunity. As such, I would like to have some overview of how it might look. Even if all doesn't go accordingly, such knowledge would prove invaluable not only to me, but others that participate in the Help Wanted projects that utilize this kind of compensation method.

Thanks in advance and sorry if the subject was already discussed on this forum

If you don't have any running costs and your government allows you to distribute the money before they tax you on your share you don't have to register a company (This shouldn't be a problem in most countries).

If you do have running costs or your government insists on taxing you for the full revenue before its distributed to the other teammembers then you should register a company.

Well you don't have to establish a company or hire people simply because you're making money, so you can still stay simple andcontinue to work the same way once money starts coming in. However how you figure out tax is likely going to vary a lot depending where you are based and how you set it up... essentially you pay tax on the company profits but that means the money left after you pay everyone's bills/salary including your own as well as other expenses. So it's not unreasonable on an amateur project with profit sharing, that there is no profit. Long term if you want to build a 'real' company this is no use because a company needs to build reserves but in the scenario you suddenly start generating income from a project, not so much... the main thing would be making sure you can legally demonstrate the money you gave the other guys is deductible from what your personal tax is based on. e.g. $100k comes in for the year, and $75k is split to the other people... you need to make sure you are taxed on your $25k not the entire $100k.

My concern would simply be that you'll find your profit-sharing idea wasn't well-defined enough when you thought it wouldn't be needed... people claiming they are entitled to more than you decide, dealing with people who started/left the project part-way, etc. How do you do this... based on some value er hour worked or does each person own a share of the profits when they start work? If we agreed I'd get 10% share when I joined your project and then I leave after 2 months, where is it written down that I am not still entitled to 10%?

My concern would simply be that you'll find your profit-sharing idea wasn't well-defined enough when you thought it wouldn't be needed... people claiming they are entitled to more than you decide, dealing with people who started/left the project part-way, etc. How do you do this... based on some value er hour worked or does each person own a share of the profits when they start work? If we agreed I'd get 10% share when I joined your project and then I leave after 2 months, where is it written down that I am not still entitled to 10%?

The way I might approach this is to say that each piece of work contributed would be worth a certain share percentage. Say for example a 3-D model consisting of 1000 polygons might be worth 0.0001% of the profit. Another one consisting of 2000 polygons might be worth %0.0002 of the profit. Or a 3 minute sound track is worth 0.0001% , etc...

What do you think of that idea?

[quote name='JDX_John' timestamp='1300884590' post='4789486']My concern would simply be that you'll find your profit-sharing idea wasn't well-defined enough when you thought it wouldn't be needed... people claiming they are entitled to more than you decide, dealing with people who started/left the project part-way, etc. How do you do this... based on some value er hour worked or does each person own a share of the profits when they start work? If we agreed I'd get 10% share when I joined your project and then I leave after 2 months, where is it written down that I am not still entitled to 10%?

The way I might approach this is to say that each piece of work contributed would be worth a certain share percentage. Say for example a 3-D model consisting of 1000 polygons might be worth 0.0001% of the profit. Another one consisting of 2000 polygons might be worth %0.0002 of the profit. Or a 3 minute sound track is worth 0.0001% , etc...

What do you think of that idea?
[/quote]

What if you have to add more content after you've handed out 100% shares allready ?
What if you don't reach 100% ?
How do you determine the relative worth of a task ?
High pologon models doesn't necessarily take more time to make than low polygon models.

Lets say its a multiplayer game that needs server hosting and management or you want to buy advertising, can you hire someone on a salary to deal with that ? (thus reducing the profit), can that person you hire be a close friend or family member ? , can you hire yourself or buy those services from a company you own ?

Basically if you are going to share profit rather than revenue you need very strict rules on what expenses the project is allowed to have otherwise its way too easy to legally fuck everyone else over, if you share revenue you need to either set aside a percentage for expenses or cover those using your own share.

Thanks for the feedback!

@forsandifs - that is an interesting idea, but per contribution basis isn't exactly fair IMO. One track might be great and get approved straight away, while the other might require several polishes and refinements before it reaches it's final form. And both of them would be worth 0.001%?

Anyway, I asked a few friends that have knowledge of law and it now seems a bit simpler - we could entitle one person to sell the work on our behalf, then deduce tax from that income and hand out the money like normal friends do with one another. The true problem is, as you guys pointed out, how much to give and what to make of people who leave half way.

Now that I think about it, I guess I was right to place the sentence "should the project generate income, new rules should be established and the old ones (for non profit) made void". Still, there are way too many variables (especially with remote work), so IMO such a system is really hard to grasp and make everyone happy. So yeah, some projects that will make money will trully become a battlefield for profit... I'll have to rethink all the stuff and maybe trust my first ideas yet again, to make the game free to play and then decide on additional payed content. Then the work would be treated differently and with more detail than the already started and messy-contributed-unsolidified-team first game. Even so, money creates a lot of problems, hopes and time-consuming thoughts

I think that you have to state from the start anyone leaving would not get any share, or that share would be subject to the whole teams agreement. The other option is to assign % share based on the responsibilities from the start (it's your project so you have final say and anyone not agreeing can leave at the beginning or put up with it). I think agreement at the start is the best path.

The other option is not to give any of the revenue away but plunge it all into a 2nd project and divide the studio between all the members wishing to work on a 2nd project (any new people who weren't involved in 1st project get half the share anyone else get's).

Thanks for the feedback!

@forsandifs - that is an interesting idea, but per contribution basis isn't exactly fair IMO. One track might be great and get approved straight away, while the other might require several polishes and refinements before it reaches it's final form. And both of them would be worth 0.001%?

Anyway, I asked a few friends that have knowledge of law and it now seems a bit simpler - we could entitle one person to sell the work on our behalf, then deduce tax from that income and hand out the money like normal friends do with one another. The true problem is, as you guys pointed out, how much to give and what to make of people who leave half way.

Now that I think about it, I guess I was right to place the sentence "should the project generate income, new rules should be established and the old ones (for non profit) made void". Still, there are way too many variables (especially with remote work), so IMO such a system is really hard to grasp and make everyone happy. So yeah, some projects that will make money will trully become a battlefield for profit... I'll have to rethink all the stuff and maybe trust my first ideas yet again, to make the game free to play and then decide on additional payed content. Then the work would be treated differently and with more detail than the already started and messy-contributed-unsolidified-team first game. Even so, money creates a lot of problems, hopes and time-consuming thoughts

[1]What if you have to add more content after you've handed out 100% shares allready ?
[1]What if you don't reach 100% ?
[2]How do you determine the relative worth of a task ?
[2]High pologon models doesn't necessarily take more time to make than low polygon models.

[3]Lets say its a multiplayer game that needs server hosting and management or you want to buy advertising, can you hire someone on a salary to deal with that ? (thus reducing the profit), can that person you hire be a close friend or family member ? , can you hire yourself or buy those services from a company you own ?

1 - There could be a sliding scale built into the contract so that the total always reaches 100% The parties signing the contract would accept that the inital estimation of percentage share is only a placeholder and might change subject to changes in the ammount of work needed in the project.

2 - Worth estimation of work done would have to be done the way it is done with any other pay scheme. The examples I gave were just examples. The general idea is to place a relative worth on each contribution to the project. I don't think that's too difficult.

EDIT: but we should beware of using time spent as a gauge because it depends heavily on worker efficiency and experience, both of which might be very varied and inconsistent in an amateur indy project.

3 - EDIT: The contribution you specify would be attached a fairly estimated profit percentage worth like any other contribution. I don't understand why whether someone is a friend, family member, yourself, or your company is relevant. If an entity contributes they deserve a share imo.

@forsandifs - that is an interesting idea, but per contribution basis isn't exactly fair IMO. One track might be great and get approved straight away, while the other might require several polishes and refinements before it reaches it's final form. And both of them would be worth 0.001%?

Please see answer 2 above.

You could assign a value in credits to every piece of work - a 3D model, an hour of coding, whatever; you 'pay' these credits to the people involved so they accrue a balance... and you know the total number of credits issued. Now each $1 of profit is split between all credits existing at that time. So credits can keep being created... like real money by banks... and work is automatically valued.

The way I might approach this is to say that each piece of work contributed would be worth a certain share percentage. Say for example a 3-D model consisting of 1000 polygons might be worth 0.0001% of the profit. Another one consisting of 2000 polygons might be worth %0.0002 of the profit. Or a 3 minute sound track is worth 0.0001% , etc...

This idea makes as much sense as measuring contribution to aircraft design by weight added.



Here is why all these "when it makes money" schemes fail and a very real world example why it caused the current recession.

Businessman/investor/company owner enters a market with intention of making profit. To do so, they need some work done. Owner doesn't have money, so they cannot pay, but is willing to share after product becomes profitable. So, the solution is simple - owner gets a loan, uses loan to pay, when product turns profit, they repay the loan. It's how business works.

Except it doesn't. In practice it looks like this:
- Owner has no money, but convinces people to work for free (zero risk)
- people start working for free (net loss, they have bills to pay, their time could be spent on paid projects)
- project is completed:
a - project doesn't become profitable (owner writes off sunken costs, which to him are zero and sells off assets), thereby turning profit
b - project is profitable - why pay - the product is done, the workers transferred their rights, owner has pure profit

There is never any rational reason to pay for anything that is not, by definition, a charity. Might as well give money to red cross.


This scheme is incredibly effective for business owner, since it transfers the risk of business and investment to workers. When business collapses, the owner loses nothing, the workers just never get compensated.

Normally, a business making an investment would need to present a business plan, get investors/a loan and if venture failed, would need to repay it from own savings or property or go bankrupt.

Simply put - business get something for nothing. What is being traded here is not earnings, income or profits but risk. Employees/workers buy the risk away from owner.

No matter which "fair" plan you think you have, no matter how one is compensated, it's basically a scam and the cause of current recession - banks trading money that never existed, making profit for themselves but bankrupting everyone else.

If you feel your idea has market value - take a loan and pay the people.
If not - then give it away for free and state that there will be no payment.