Now, lets’ look at overhead.  Overhead is the cost to have an employee, this includes the cost to rent the space, power, internet access, snacks for the team, possibly the foozeball table (all startups are required by California law to have a foozeball table, really!) phone service, all that choice stuff.  In biotech (where I was first schooled in budgeting) the rule of thumb on overhead was that the overhead for an employee was the same as their annual salary, so a lower-level pipette specialist at 25k a year would cost you an additional 25k per year in overhead.  BUT, games are significantly less (not least in part because of the insurance riders that come with working with chemicals that can eat your skull but leave your face intact; the Wii devkit is arguably less hazardous).

 

So for the games budget, let’s go with 20%.  I’ve seen budgets use 15% – 25%, so I’m picking 20% as a middle ground (though I am not aware of any official “rule of thumb” as of yet for games).

 

Month:                      01         02           03         04         05         06     

Producer:     5400     5400      5400      5400     5400     5400 

L. Progrm    8333     8333      8333      8333     8333      8333 

L. Artist       5000     5000      5000      5000     5000      5000 

 

Sub Total:  18,733  18,733   18,733   18,733   18,733   18,733

Overhead     2809      2809      2809     2809      2809      2809

 

Total:          21542     21542     21542     21542     21542     21542

 

Now here comes one of the interesting bits.  What about your timing?  While it would be nice to get a big, fat check up front on Friday, spend the weekend partying in celebration and have everyone show up to the office, bright-eyed and bushy-tailed first thing Monday morning, you’re going to need to include some ramp up time, ideally to work with a milestone schedule.  So lets say this merry band of leads is your “core” team.  After a month or two you’re going to be ready to add more people, and the budget will need to reflect this.  In this case I’ve brought in a junior level artist, programmer and an audio engineer.

 

Month:                      01         02           03         04         05         06     

Producer:     5400     5400      5400      5400     5400     5400 

L. Progrm    8333     8333      8333      8333     8333      8333 

Jr. Progrm          0         0             0       4166     4166     4166

L. Artist       5000     5000      5000      5000     5000      5000 

Jr. Artist             0         0             0       4166     4166     4166

Audio                0         0             0             0     3122     3122

 

Sub Total:  18,733  18,733   18,733   22,065   25,187   25,187

Overhead      2809      2809        2809       3309       3778      3778

 

Total:          21542     21542     21542     25374     28965     28965

 

Another key consideration is going to be your startup cost.  You didn’t expect your employees to all bring their computers from home, did you?  Well, okay, if you are working with an indie studio that may well be the case.  If you plan to go bigger you’ll need to think about it.  What are they going to need?  Dev-kits?  Cubicles?  Chairs?  (and if you even *think* about budgeting for $500 office chairs in this day and age, the hairy, hoary gods of accounting will hunt you down with red ink and sharpened pencils).  Same process goes for Engine licenses, you’re going to want to consider how many seats you want.  Best to plan for what you know the license will go for up front (if a deal can be struck later on to bring that cost down then you can adjust the numbers, but at this point you want to err on the side of realistic). I usually include those in the “startup costs” because they take time to get used to if you’re not already familiar with them, so they are going to be one of the first things your team needs to get their hot little hands on.

 

Now keep in mind, all of that was an employee-based budget, looking at a game if you are a full-blown studio, with a real-live office and all those formalized elements.  If you’re an indie studio, or a game designer working up projects piece by piece, you’re going to want to be thinking in a slightly different fashion.  Still the same fundamental process, but instead of working with an eye towards a recurring 12 month cycle, you’re going to want to look only at the duration of the project and you’re going to want to be paying your people on a per-project basis, rather than on a salaried basis.

 

Let’s take a mobile title as an example and we’ll give it a 3 month development cycle.  This may be longer or shorter, obviously, depending on your specific project.

 

Contractor type      Cost          Month 01          Month 02          Month 03

 

Programmer          7,000            2,333                 2,333                   2,333 

Artist                     3,000            1,000                 1,000                   1,000

Audio                    3,500            1,166                 1,166                   1,166   

 

Now, the cost of contractors is a highly variable thing.  For one thing, you are paying for efficiency and reliability, the more proven a quanitity a contractor is (years of experience successfully working freelance, the amount of equipment they already have at their disposal, etc.) the higher the cost.  One of the key benefits to working with individual contractors is that you won’t need to factor in things like overhead, withholding taxes, cost of equipment health benefits or any of the costs of maintaining an employee.  One of the key downsides is, well, they can pretty much walk off the project if you piss them off too much.

 

The point being that the “standard” figure is much harder to pin down and will depend very strongly on what you can negotiate with the contractor in question.

 

Secondly, the payment schedule is going to have to be negotiated.  Some contractors will ask for 50% or a portion of their payment up front, some will want a milestone type setup where you deliver cash based on completion of assets according to schedule.  So you might have something that looks like this when you are done:

 

Contractor type      Cost          Month 01          Month 02          Month 03

 

Programmer          7,000            2,333                 2,333                   2,333 

Artist                     3,000            1,500                    750                      750

Audio                    3,500                    0                 1,000                  2,500   

So I had this phone meeting last week.  I’m normally pretty savvy with these things, but this week…  Well this week was just ONE OF THOSE WEEKS and the long and short of it was I couldn’t get anyone to watch my youngest child while I made this business call.  So, being the clever and resourceful parent that I am, I took advantage of one of our local resources.  One of the higer-end supermarkets has childcare so you can do your shopping in peace.  No muss, no fuss, they have games and computers and fabulous caregivers and my kids absolutely *adore* hanging out there rather than watching me try to calculate the price difference between varying brands of yoghurt. 

So I head over to the supermarket and begin my deception.  First I tool around the aisles for a few minutes, selecting things I am, genuinely, going to purchase.  The time comes for the call, I dial up and head to a quiet corner of the market, you know the one, back on the benches by the drinking fountain.

Then the condenser for the drinking fountain starts up.  No problem.  continuing my call, I move away from the rattling.

Then a loudly gabbling family comes back to get a drink.  I fell back into the relative safety of the aisles.

Then I get the call.  Over the loudspeakers.  “Will Kimberly please come to Childwatch.”

Oh crap.  They only call you for bathroom breaks.  My smallest child is 99% potty trained, and we’re trying to make sure we take him *every* time he says he has to go.  There’s no way out of this one.

I continue with my call, trying to wrap it up cooly and quietly.  I’m having flashbacks of Rush Week in college, where you had to be able to close a conversation with a possible candidate on a timeline or you would get smacked by the Rush Committee.

“Kimberly, please come to CHILDWATCH.”

Oh crap.  This call is IMPORTANT.  But there’s nothing else for it.  I wrap the call more clumsily that I ought.

“KIMBERLY!  Please come to childwatch.”

So I pop my head over the counter with a smile, the awkwardness of my surely failed business call still ringing in my mind.

“I’m here.”  I say to my littlest one.

“Hi Mommy!  Remember to get me a donut.  With sprinkles.”  My youngest son points to the corner of the store that houses the Krispy Kreme stand, then goes back to the game he was playing.  No potty emergency.  No nothing.

*sigh*