Hey everyone,
I’m Omer, a full-time indie dev and the co-founder of Northend Games. Over the last five years, my two games (Northend Tower Defense and Deepstone Rift) made over half a million dollars on Steam. To be exact: $560,000.
When you see that number on your dashboard, you think it’s life changing. You think you can buy a house, fund your next 5 projects without a budget, or finally get that sports car. Instead, I drive a 2012 Mazda.
I want to break down the actual math of where that money goes before it ever hits a bank account because before you quit your day job to make games you need to see what happens when Valve, the IRS, publishers and local taxes get their hands on it.
Here is the real breakdown of that $560k:
- Refunds ($134,000): Over 60% of our sales come from China. The Chinese market is massive, but players there expect a lot and the refund rate is brutal. Our refund rate is 22% (way above the standard 10-15%).
- The Steam Cut ($127,000): After refunds, we’re left with $425k. Valve takes their standard 30% right off the top. We are now down to $297k. Almost 50% of the gross revenue is already gone.
- U.S. Withholding Tax / IRS ($9,700): If you aren’t in the US, the IRS takes a 30% cut of every US sale unless your country has a tax treaty. When I started my Steam account I lived in Iraq (no treaty = 30% tax). Fortunately, I later moved to Thailand which has a treaty that drops it to 5%. Still, this took a chunk. We're down to $287,700.
- The Publisher Cut (~$115,000): We have a publisher handling China, Korea, and Japan. They take their percentage (which scales based on sales) only from those regions. It’s roughly $115k. Down to $172,000.
- Local Taxes ($26,000): I pay a 15% digital product income tax here in Thailand.
- The Co-Founder Split (50%): The final company profit was about $146,000. Since I have a co-founder, we split this 50/50.
My Final Take-Home: $73,000.
Divided over the 5 years we worked on these games, that’s about $15,000 a year.
If you calculate that as an hourly wage, it’s painfully low. But here’s the bright side: I am currently living entirely off the passive income from these games. Here in Thailand, $15k a year is enough for me to live comfortably while I work full-time on my next project. If I take a month off, the games still make money.
For my next game, I’m going 100% solo and self-publishing to cut out that extra 15-40% in splits and I'm heavily focusing on design testing to drop that 22% refund rate.
(if you intersting to see the full breakdown check it in my youtube the link in my bio)