Hey there !

So my company is currently working on a strategy game and were contacted by a publisher who seem interested in publishing the game.
We are a small independent company and the publisher is medium sized (think paradox, strategy first, kalypso media etc...). We never worked with publishers before so we are unsure what to answer when they asked what would the internation distributing rights cost them.

Should we ask for a fixed fee or royalities ? How much ?

Thanks in advance !

Are you familiar with Hollywood Accounting? Royalties are generally bad for people getting paid, generally good for the people paying them.

Consequently when you work with a publisher, you will often be paid partially by royalties. When you are paying a publisher, you will often pay up front.

This is true of all media, including books and movies, and not unique to games.

/edit:

It is your responsibility to ensure you are getting a good deal. Your lawyer will help you make sure you the wording is correct. One of many important details is that you are NOT working on 'monkey points', meaning the publishers profits. Those are way too easy to adjust, as Hollywood Accounting shows. You need to work in terms of actual costs, actual units sold, and actual revenue, NEVER in terms of profits. Business lawyers generally understand the nuance.

I knew about this kind of practice (though didn't know it was named that way) but I thought it applied mostly when it came to negotiate funding.
I might be wrong, but I think what they are asking for is how much we want for them to distribute our game internationally.
Not that it's any different do you think we should ask for a fee and then royalities ? Say ask 60 000$ and then 25% of the sales as royalities ?
I think this way it would at least prevent us from being screwed totally if things go wrong. I've heard lots of horror stories of developers who stopped receiving royalities after a year or so, despite the publisher still profiting from their game so as you might imagine I don't want to mess up like them.

You should not let them publish your game for anything less than 25%. Since you've already developed the game, they don't have to pay development costs.
Then again, they may request changes - maybe they'll want their logo in the game, for instance. Anything more substantial than that, you want to be paid up front and fairly for the work, and 25% for the game license.

So knowing that the game, a grand strategy game, cost us only around 10 000€ to make, 3 guies working on it, do you think something around 100 000$+ 25% in royalities is a good deal ? We assume they might ask for small changes like putting their logo in there.

Thanks for the help so far !

A customary profit margin on "work for hire" is about 30%.
If you never see a penny in royalties, if you wind up compensated for all your cost plus about 30%, then you did okay.

But you're asking for what -- it's hard to compare euros to dollars. If you still have a question, can you pose the question in just one currency?

My math might be off, but 100 000$ would be around 75 000€,and 10 000€ would be around 13 000 $. So you recommend you ask them for what it cost us + 30% royalities ?

I started off saying you should not accept less than a 25% royalty.
You're the one who threw in the big payment on top of that.

You can ask for whatever you want, but they're likely to only want to pay royalties.
Someone who's done what you're doing may come along and offer more input.

It may help to look at this from another angle. I suggest not asking for costs in this type of deal. Respectfully, you're not liquidating couches. As much as you want / need money to operate, remember that your ip has value. The difficult part is determining that value then getting a fair deal based on that value.

Asking for a king's bounty as an upfront payment could be a huge turn-off. What exactly is the publisher offering to do you for? How long is the proposed term? What kind of success have they had?

OP: You can always ask the publisher to make you an offer rather than negotiate against yourself. Typically distributors will offer to pay a royalty based on Net Sales which depending on the contract is often defined as gross revenues less cost of goods, marketing expenses, 3rd party distribution fees, taxes, etc. It is not uncommon to ask for an Advance against the Royalty paid upfront. You may want to ask the 3rd party pub the number of units they intend to manufacture and the per unit royalty you would be paid on each copy. This would be a rational approach rather than polling numbers on an internet forum. If you don't like the deal terms offered, then find another pub and pitch it to them. SImple, right? Good luck!