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The budget is one of the most daunting pre-pitch steps. Let’s demystify it.
Your budget details how much money you expect to spend developing your game and how you intend to use it. It specifically focuses on what you're asking publishers for—your studio's production budget.
It'll cost more than that to launch your game, though. Consider the following costs (which won't be on your budget sheet, as your publisher will foot these costs):
Publishers often spend upwards of $100k on marketing.
Localization can cost $15k-20k+.
Porting can cost $15-20k per platform.
QA can command up to 25% of a game's budget.
If you’re relying solely on a publisher for these activities—as many studios do—you can assume that your publisher will spend well over six figures getting your game launched. It's vital that you recognize the total cost of developing your title. Knowing these costs distinguishes you from other indie devs and shows that you've done your homework. Publishers love that—it's a display of competence.
With that disclaimer out of the way, let's walk through a sample budget. I've created this budget template, which you can feel free to copy and use as your own. Let's start with the “Example” tab. I’ll draw your eye to a few important areas:
Columns A through J show your total costs. You can see that costs are broken down into four cost categories: Core Personnel, Short-Term Contractors, Platforms, and Administrative. Each is detailed below. Most of these columns are collapsed for readability.
2. Rows 1 through 7 show a snapshot of your production schedule. It’s a helpful visual indicator of your project’s status from month-to-month; just be sure to keep it high level. Notice the milestone headers in row eight and the stage headers in row nine, but don’t worry about them for now. This section is optional.
3. Rows 44 and 45 illustrate publisher disbursements and cash flow. More simply, these rows show how much money your studio has and when it gets more. It ties in with milestones, which we’ll get to later.
The rest of the sheet shows your studio costs each month.
Let's walk through the three main areas.
Before I go any further, let me recommend the phenomenal resources Michael Futter has created on his website. You can tear through his two books quickly. They’re quite specific, and they feature interviews with developers who share their successes and failures.
Cost Categories
Here's a brief overview of the cost categories you'll need to account for. For help determining these costs, check out Estimating Your Costs.
Core Personnel
This category includes personnel vital to the success of the game. I include anyone here who invests significant time and energy into your project (including long-term contractors). I exclude short-term contractors, lawyers, accountants and friends.
Short-Term Contractors
Short-term contractors join the project for a brief period and are often identified mid-production. They can practice any discipline, but voice acting and writing are common ones. If you hire a studio for localization, they would also fall under this category.
Platforms
Platforms are the infrastructure you need to create and run your game. You’ll be fronting platform costs for full-time employees but not for contractors (for example, you won’t be paying for the digital audio workstation (DAW) a contracted composer uses).
Administrative
Since you’re now running a business(!), you need to handle contracts and payroll. Lawyers and accountants can help. They make up the bulk of your administrative costs, though you might also put office space in this category if you're renting.
Production Schedule
I like to include a snapshot of the production schedule at the top of the budget. It helps answer a couple of important questions: why are you asking for so much money, and when do you intend to use it? Mostly it inspires publisher confidence.
As I mentioned before, this is optional. I’ve seen plenty of budgets that don’t include it. Decide for yourself!
I do recommend padding your post-production timeline. I think it’s important to add budget fat in both time and money, and budget fat is important.
The industry agrees that delays are inevitable. Estimates most commonly suggest that budgets and timelines are about 20% off. Your game's probably no exception, and you should defend against delays as much as possible. Delays are expenses, which leads to a renegotiation of terms, which means less money for you. You want to avoid renegotiation.
I recommend a minimum of three months for post-production, which allows ample time for QA and platform submission, but also gives you a bit of frantic time to get the last bits of work done. This is a pad; plan to have development on your game done by the start of post-production.
Publisher Disbursements and Cash Flow
When you sign an agreement with a publisher, they won’t give you the money all at once. That’s a big risk for someone who doesn’t know you that well. Instead, they’ll spread out their money over the course of the project in the form of disbursements. You earn disbursements when you complete work associated with key milestones throughout the project. You can read more about milestone distributions here, though we'll get to them in a couple articles.
Knowing your costs is just the first part of the challenge. The second part, and the harder part, is estimating them. Read more about estimating your costs here: Estimating Your Costs.
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