How do you split profit in % of total sale for each role?

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GratoNite
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How do you split profit in % of total sale for each role?

#1 Post by GratoNite » Sat Jun 10, 2017 11:31 am

I've already built the team, The project is on progress right now, we are putting our best efforts and if it goes well, the game could be launched in stores like Itch.

I was planning to split the profit of TOTAL sales.
My team currently consists of :
-Coder / Assembler (Person that built the game)
-Writer (might be less than 20k words in total)
-Composer (around 10 tracks)
-Sprite Artist (around 5-6 characters)
-VFX/GFX Artist (animated stuffs such as moving portals)
-BG Artist (maybe around 20 bg)
-CG Artist (might be less than 10 cg for this project)
-GUI Artist (text box, menus)

How would you split the profit in percentage regarding to the difficulty of each roles?

Thank you before, I just want to make sure that I'm being fair later.

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Re: How do you split profit in % of total sale for each role

#2 Post by LateWhiteRabbit » Sat Jun 10, 2017 1:24 pm

The accepted practice is NOT to split profit when developing a game.

Each person - artist, coder, composer, writer, etc. is paid for their work on the game at a set, agreed upon amount. For instance, the sprite artist would be paid for each sprite they produced, the composer for each track, etc.

Being paid on a percentage of profit is an unholy nightmare to keep up with from a legal and accounting standpoint, and is general considered a rip-off (at least by most artists). The game could make nothing in profit.

And last but certainly not least - who is going to keep up with the profit from sales a year from now? Two years from now? What if it is still available digitally 20 years from now? Are you going to keep up with everyone's location and contact info for that long, even if they move? If you ever decide to sell the game again the future, you would need to hunt down every team member again if you used percentage of profits for payments. And everyone that received those payments would need to file new tax paperwork with their government every year the game is on sale and they received anything from it, even a dollar.

Even major companies have been bitten in the butt by doing things like that. There are games that are tied up and can't be released again because of it.

My advice? Don't do it. Pay your team upfront for the work they do, shake hands, and walk away.

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Re: How do you split profit in % of total sale for each role

#3 Post by GratoNite » Sat Jun 10, 2017 11:17 pm

LateWhiteRabbit wrote:The accepted practice is NOT to split profit when developing a game.

Each person - artist, coder, composer, writer, etc. is paid for their work on the game at a set, agreed upon amount. For instance, the sprite artist would be paid for each sprite they produced, the composer for each track, etc.

Being paid on a percentage of profit is an unholy nightmare to keep up with from a legal and accounting standpoint, and is general considered a rip-off (at least by most artists). The game could make nothing in profit.

And last but certainly not least - who is going to keep up with the profit from sales a year from now? Two years from now? What if it is still available digitally 20 years from now? Are you going to keep up with everyone's location and contact info for that long, even if they move? If you ever decide to sell the game again the future, you would need to hunt down every team member again if you used percentage of profits for payments. And everyone that received those payments would need to file new tax paperwork with their government every year the game is on sale and they received anything from it, even a dollar.

Even major companies have been bitten in the butt by doing things like that. There are games that are tied up and can't be released again because of it.

My advice? Don't do it. Pay your team upfront for the work they do, shake hands, and walk away.
You are right.. i didn't think throughly, okay i'll pay them upfront. thanks for opening a new mindset for me, i never thought profit splitting would be complicated later

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Re: How do you split profit in % of total sale for each role

#4 Post by PyTom » Sun Jun 11, 2017 1:05 pm

LateWhiteRabbit wrote:The accepted practice is NOT to split profit when developing a game.
{{citation needed}} Is there really an accepted practice here, when it comes to indie works? There's a big difference between commercial games, indie games from established teams, and indie games from teams that are just starting off. If you're given a reasonable amount of creative control, than I think it can often make sense to take on financial risk to be able to have a game that embodies your vision. It's not for everyone, for sure - but working on a profit-share arrangement seems is a valid life choice.
Each person - artist, coder, composer, writer, etc. is paid for their work on the game at a set, agreed upon amount. For instance, the sprite artist would be paid for each sprite they produced, the composer for each track, etc.
That puts all the risk on a single person, though - even if other creators want to shoulder some of that risk (and the corresponding potential for reward) when the game is made. Sprite artists and musicians aren't simply mercenaries for hire.
Being paid on a percentage of profit is an unholy nightmare to keep up with from a legal and accounting standpoint, and is general considered a rip-off (at least by most artists). The game could make nothing in profit.
It's not that hard to do if you're numerate, and much of the legal stuff is the same as you have to do when making the game in the first place. If I pay you more than $600 for art, I'm required to file a 1099 for it. And if there's a team of creators that wants this game to exist, then it's not unreasonable that they'd spread the risk of failure (and the benefits of success) around them. It's the difference between being a co-founder of a company, and being an employee. Both are valid choices, and you shouldn't pressure people into being one or the other.
And last but certainly not least - who is going to keep up with the profit from sales a year from now? Two years from now? What if it is still available digitally 20 years from now? Are you going to keep up with everyone's location and contact info for that long, even if they move? If you ever decide to sell the game again the future, you would need to hunt down every team member again if you used percentage of profits for payments. And everyone that received those payments would need to file new tax paperwork with their government every year the game is on sale and they received anything from it, even a dollar.
Well, someone is getting the money into their bank account. It's their responsibility to disburse the profits. It's everyone else's responsibility to to make sure they keep their info up to date. It probably makes sense to say that profits will only be sent out when $20 builds up. While you do have to do paperwork, it's not a huge deal. In the US, you report the 1099 with your taxes, if you get one. Otherwise, you can probably call it hobby income, and put the money minus hobby expenses on line 21 (other income) of your form 1040. It might make sense to have a clause that says if profit isn't paid for 2 years straight, the game reverts to the public domain.

There are a wide range of people in the VN community now. Some people need to pay their mortgage, some people are pure hobbyists, and some might be satisfied sipping the beer or starbucks their hobby has bought them. It's important to be clear about what sort of project each is, and how much control you want to have over the finished product in exchange for giving up potential money.
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Re: How do you split profit in % of total sale for each role

#5 Post by Aviala » Sun Jun 11, 2017 4:12 pm

I think it really depends on the project and the nature of your team whether profit sharing is a valid option.

I'm leading a game project (Your Royal Gayness), and it's partially profit share and partially up-front payment. My core team, who are my underclassmen in the game design program I'm in, agreed to do profit share. But the thing here is that I know these people and talk to them face-to-face regularly, so it's much easier for them to trust me than if I was some person online using an avatar and a nickname. Also, many of my team members get study benefits from the government so they have a small but guaranteed income to live on. They can also use the project to get study credits and compulsory internship credits. If they weren't working on this project, they'd probably be working on something else, probably for free. So there are many reasons for them to trust me and stay motivated to do the project.

But if you're gathering your team online, they have no reason to trust you at all. Even a good contract can be broken, especially if you live in different countries, which makes actually suing someone in case of a contract breach much, much harder. That's why I'm paying all the freelancers I hire online. If you pay someone, they're also much more likely to actually stick with the project till the end. It's hard to keep employees motivated on a promise of "you'll get paid someday".

As for our persentages of our profit share deal, each person gets paid according to the hours they do. I think it makes sense, as long as you know your team and can trust them to mark their hours down correctly. There isn't really a set persentage of what each role should be paid. If you want to do profits sharing, you'll just have to make an agreement with the individuals involved.

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Re: How do you split profit in % of total sale for each role

#6 Post by LateWhiteRabbit » Sun Jun 11, 2017 10:31 pm

PyTom wrote: SNIP
There are a wide range of people in the VN community now. Some people need to pay their mortgage, some people are pure hobbyists, and some might be satisfied sipping the beer or starbucks their hobby has bought them. It's important to be clear about what sort of project each is, and how much control you want to have over the finished product in exchange for giving up potential money.
All valid points. I'm just going off my experiences from my college days where we usually released a new game with a team every 6 months to a year. All chummy while the project is in development - but I saw some friendships die when the game made money and there were arguments about who did how much. And all our professors who did indie game development (and we had a few who had done professional game development) all warned us not to do profit sharing, and we did it anyway, and we always regretted it.

I think anyone new to this should know what a pain it can be to do profit sharing if they approach it that way. And IMHO someone (or two someones) DO need to be in charge and shoulder most of the responsibility. Otherwise you run the risk of "too many cooks in the kitchen". I think profit sharing between two people - a creative team - that has constant and close contact with one another and good familiarity with each other as friends or business partners CAN work, but I really don't think 9 people can profit share on a project without problems or bad blood. Our teams typically had 4-6 people on them, and there was ALWAYS a falling out with at least one person, and those games can't be released anymore because of those people.

I think it's good for you to give GratoNite the counter-balance to my negativity, but I definitely wanted them to see the horror show that can go on in the sausage factory that is game development. And (not knowing whether this applies to GratoNite's specific case or not) I think it generally good to pour cold water on the "work on my game for free and we'll all be rich when the profits come in" sales pitch.

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Re: How do you split profit in % of total sale for each role

#7 Post by hyesunxoxo » Mon Jun 12, 2017 2:06 am

If you don't know your team personally of haven't had experience with them before, it's better that you don't.

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Re: How do you split profit in % of total sale for each role

#8 Post by papillon » Mon Jun 12, 2017 6:18 pm

I share profits with Spiky because I've known him well for a long time, we're not likely to lose touch with each other, he trusts me to be telling the truth about the finances, and he's not going to be upset if I get busy and am a little slow updating the records sometimes. We're partners.

I have one other profit-sharing arrangement with someone I know much less well. The contract we signed puts strict limits on exactly how often I need to provide sales data (not very), and how long I have to get the payment out - much longer than I actually need, just in case. Thankfully, that other person seems to be willing to trust my sales figures and not demand detailed proof that I owe what I say I owe. However, if something happens to her someday, we do not have ties, I wouldn't even know about it unless an extremely detailed lawyer handling her estate went through every single contract she has on file and located me... and I might simply have to stop selling the product at that point, rather than try to negotiate legal issues with whoever inherits the rights.

I have enough administrative overhead headaches as it is, running the rest of the business. I do not want to make my financial paperwork any more complicated than I absolutely have to. I do not have a finance department!

Generally if people want to do profit-sharing I encourage them to put limits on it, and to do a mix of profit share plus up-front payment. Pay your workers _something_ so everyone feels that they've benefited from the project, give them a share of profits from the first X years of sales as a bonus.

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Re: How do you split profit in % of total sale for each role

#9 Post by GratoNite » Mon Jun 12, 2017 11:35 pm

Thank you everyone for the responses but my question is still not answered xD
I'm asking how much of % of total sale for each role?
A.k.a if there's only 3 person (1 Coder, 1 Writer, 1 Artist) if it's equal.. it would be divided with 33% of total sale splitted to each roles
and i have many persons in my team, i trust them well.. (we've been together since 2015)

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Re: How do you split profit in % of total sale for each role

#10 Post by morinoir » Mon Jun 12, 2017 11:54 pm

That's the deal you should discuss with your team. I usually divide it based on the amount of work each person assigned to. If your game doesn't need much programming and only has basic visual novel feature, then maybe the programmer get lesser amount than writer or artist. If your game is heavy on art assets, the artist gets more and so on. That's how I did it anyway. If you want to stick with 33% for everyone and no one object, by all means, go for it.
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Re: How do you split profit in % of total sale for each role

#11 Post by puppetbomb » Tue Jun 13, 2017 8:57 pm

PyTom wrote:
LateWhiteRabbit wrote:The accepted practice is NOT to split profit when developing a game.
{{citation needed}} Is there really an accepted practice here, when it comes to indie works? There's a big difference between commercial games, indie games from established teams, and indie games from teams that are just starting off. If you're given a reasonable amount of creative control, than I think it can often make sense to take on financial risk to be able to have a game that embodies your vision. It's not for everyone, for sure - but working on a profit-share arrangement seems is a valid life choice.
I've been working as a game artist for eight years in mobile games. I had the misfortune of taking on a few profit-sharing contract. I was never paid.

When I see "profit-share" in a contract, it looks like "unpaid work".

I was also that crotchety artist in the corner that warned everyone to beware of profit-share.

Granted, I think it can work under very specific circumstances (the biggest one being that no one should expect a profit).

Games can be in development for months or years after one person's involvement. Add the time it takes to make a net profit (if it profits at all), that equals to a long time to go without being paid. As someone who has relied on contracts for game art as a legitimate source of income to pay bills and make a living, this is not a viable contract.

Yes, indie games will have a smaller budget. I usually give them a reduced hourly rate because I know this. But I don't believe that being a first-time creator or having a limited budget gives anyone a pass for saddling multiple people with a contract that has a pattern of benefitting only one person.

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Re: How do you split profit in % of total sale for each role

#12 Post by Imperf3kt » Tue Jun 13, 2017 9:46 pm

GratoNite wrote:Thank you everyone for the responses but my question is still not answered xD
I'm asking how much of % of total sale for each role?
A.k.a if there's only 3 person (1 Coder, 1 Writer, 1 Artist) if it's equal.. it would be divided with 33% of total sale splitted to each roles
and i have many persons in my team, i trust them well.. (we've been together since 2015)
What everyone is trying to say is; we cannot really answer such a subjective question.

The best answer we have is talk with your team, see what they are prepared to accept.
If you do more work organising the project, taking care of finances, significant personal investments to recoup etc, suggeat them a 40, 30, 30 split arrangement and explain your reasoning. If they're not happy about that, only they can tell you. At this point, you should discuss why they think it unfair and what they think is fair.
Be careful not to create an argument, be willing to compromise.
Remember to discuss how and when they will be paid - small, monthly or so transactions will eat into your profits thanks to fees, larger, biannual transactions run the risk of your partners thinking you're holding out on them.

Don't forget to discuss product 'end of life' - is the game no longer selling? Is everyone okay with making it free or dissolving shares?

When everyone is satisfied, get everyone a signed document of some kind written up by each 'share holder' for future disputes. Ensure everyone is clear on the exact specifics of their role, responsibility and payment.

Personally, I would avoid it unless you are very familiar with your team.

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Re: How do you split profit in % of total sale for each role

#13 Post by Frullo » Wed Jun 14, 2017 4:29 am

I can't help to answer your direct question, I would say generally it's a good idea to pay proportionally for the hours of work each person put through, although there can be significant differences due to expertise and "seniority" of each team member (or field of work, but that is a tricky subject)

Regarding direct paying vs profit split, an interesting system i'm using for my writers is to garant them a percentage of income in the long term and paying them a fixed "advance" whic motivates them in the short term. This idea came from my experience in the publishing industry. Though i'm not sure it would work well for team members who are not writers.
Last edited by Frullo on Mon Jun 19, 2017 10:46 am, edited 1 time in total.

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Re: How do you split profit in % of total sale for each role

#14 Post by sasquatchii » Thu Jun 15, 2017 7:29 pm

Sorry since my response is going to be totally useless at answering your question, but I have to agree with LateWhiteRabbit. Do you really need to rev share with that many people??

I would rather just pay people a set amount up front for their services (and be paid up front) - rather than doing a revshare. I'm a UI designer, and even if a game I created the UI for made a million dollars I would not regret doing the work and getting paid a much tinier fraction. Orchestrating, producing, finishing, and marketing/selling games is the hardest part. I think the people in charge that sweat blood and tears to finish and sell their games deserve the final payments, but not someone like me who only created the UI design.
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Re: How do you split profit in % of total sale for each role?

#15 Post by Xerofit51 » Fri Nov 17, 2017 12:01 am

I split my revenue with my team, but that's because they did volunteer to help and they do have a major impact on the game itself, I can't really say I hired them to do it you know? We develop the game together and I can't really say it's just me and my team who I hired cuz I gave them the creative freedom to do what they want. I told them what is needed on the game and they did it as they can or what's preferred of them. The benefit I have is I'm working with friends, like old friends like 4-16 years old friendships. I calculate the percentage by how much they would monetize the work if it was anyone else, but even then they gave me their lowest points, which was sweet. I based their payment on that, example A usually gets paid this much, B this much, add all of em up and use that to split revenue, it works fine, I keep tabs on the income and everything, with photo proof so no one can dispute or be suspicious of it. yes there was that on that kinda disagree but that was cuz she didn't realize that her help was minor to the others, but she did in the end agree with it since there's proof of it (you can count how much assets were created by that person compared to others). Another way is to calculate the amount of assets or words created by that person, compare it to the total assets/words/work and tadaaaa.

It helps if you do state that you're not sure if it makes profit or not or get it out in the open, if it doesn't financially succeed, would your team be willing to continue or not.

I do suggest you pay up front for members you hired outside/not too friendly with.

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