Sunday, 12 February 2012

Financial goals and rewards of an indie developer

When I first started off on this project back in October I made some pretty bold goals of both time and financial reward. Obviously, these were bold as they wouldn't be a target but having reached the 300 hours mark over the weekend I thought I would do some research just to see how achievable this is likely to be and the app download goals I need to be setting myself.

For obvious reasons I am not going to divulge my mortgage which was a target to pay off but instead I am to work to average prices. I live in the South of England which on average is the most costly in the United Kingdom. According to research at as of December 2011 the average price is £269,940 ($425,288 using convertbot for my exchange rate). If you also recall my other goal was to pay for my two children to be privately educated.

Again, I am working on averages and have used schoolfeesaver to work out the amounts. I have worked the logic to my two children going to Pre prep school (ages 4-7) at an average cost of £2000 ($3100) per term, Prep school (7-13 age) at £2,700 ($4333) per term and finally senior school (13 - 18 years) at £3500 ($5515) per term. Calculated over the lifetime of their schooling comes in at £434,314 ($684,256).

This gives a total goal of the project of £704,253 ($1,109,544). Needless to say I was depressed at this point as that seems a very tall order for 5 years work starting off as a novice. I am working it to 5 years and not 18 (term of children's schooling) as I am realistic that the app boom and my enthusiasm is unlikely to last that length and my 10,000 hours all being well will end in 5 years.

Rather than chucking in the towel I thought I would try and determine just how viable these sorts of figures are. The download and revenue figures seem to be shrouded in mystery but I thought I'd apply some logic to give me some rough idea.

First off I found an indicative survey highlighting a decent field of research of gamers of all types and statures and their returns from the appstore. The survey results can be found at

For the benefit of my analysis (and brevity) the key points are that 50% of those surveyed are a single developer. Of those surveyed, 50% achieved less than $3,000 in lifetime revenues. Only those in the 90th percentile achieved earnings in excess of $400,000 over the lifetime of their development. The latter point of course is more around the software companies as opposed to indies. Right, so if this is to be believed things aren't looking rosy and heh I'm a realist I didn't think it was just going to be the case of printing money. However, there is a slightly more encouraging note and there is statistical evidence to show that those who wrote more apps made more money. Obvious, you would say, but making more apps means more exposure, learning from mistakes and ultimately writing better games. So mindful of not having an Angry Bird success from my first app I dug deeper.

I now turned to the price tier within the Appstore to understand the numbers I was dealing with. It was publicised last year around alignment of the Appstore markets to be the same (against exchange rate) value of sale. Being in the UK we were hit hard with this but as a result the calculations are pretty different. As you will see the results become a little skewed due to exchange rates so please just take this as indicative.

Ok, so if I were to base it on my £704,253 total revenue required and based it on the revenue allocation per paid download at £0.42 per unit. After Apple's cut this would mean that over the course of my project (5 years or 1825 days) I would need to achieve 1,676,793 downloads in total or a more encouraging 919 downloads a day. For my US friends thats $1,109,543, a total of 1,585,726 downloads at 856 per day. This is where the figures are a little misleading at its skewed by both the exchange rate and the differing percentage revenues i.e. US store receive 71% of the revenue as opposed to 61% in the UK.

The last point made me look into the worldwide revenue distribution and having worked out across each actually shows an average return of 67% of revenue to the developer. I appreciate the more established markets of the US etc will be the heavy bias of sales but for a more realistic worldwide sales ratio lets go with it.

If I work this back to my original figures this means £704,253 ($1,109,543) works out at a lifetime download of 1,530,985 downloads or 839 per day, now taking into consideration exchange rates and standardised revenue distributions.

This seems much better. Its still a lot to achieve but I now know what to aim for 839 per day everyday for 5 years. Obviously there will be peaks and troughs throughout the project but we all need to target smaller numbers to achieve a large goal. This is why I do 3 hours a day on this project everyday rather than focusing on the 10,000 hours.

Not sure if this will help anyone but has given me a reality check as well as a focus on what I need to do to achieve my goal. Given the results of the survey of writing more games which ultimately mean the 839 will be distributed across multiple titles and across a multitude of different stores, I think its achieveable.

This also doesn't take into consideration the Android Marketstore or any in-app purchases or ad revenue I may make along the way.

We all need a goal and I have focus again.


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