*shudders* I wasn't expecting a software business to cost this much, at least not right away. I'm especially surprised about this man's incorporation/legal expenses. I thought this was something I could afford while having a low paying job (because that's all I can find around here with my experience :/) data entry job on side, but now I'm not so sure. Hell, I'm currently only making about $15,000 a year, $4k goes to school, $4k goes to rent, etc etc. I need reassurance. Lie to me, if you must. Anyway, here's the post:

"although I am not unemployed. An earlier poster touched on the key point: paying rent. And I mean my own rent. A software company doesnt need an office. Here are my business expenses:

1) server colocated in datacenter with back-up dial-in line $300/mo + $2000/server
2) SSL cert, web site marketing costs, etc. $500/yr
3) answering service, mail box, fax service $600/yr
4) cell phone & DSL at home $100/mo
5) incorporation, filings, fees, business liability insurance, registered agaent $2000/yr
6) business checking account $500/open
7) software, $0. all open source

So the company costs me an upfront ~$5000 and $400/month after that for a grand total of ~$10k for the first year.

Personal expenses:
rent/mortgage, utilities, taxes, maintenance, etc.
car payment, gas, insurance, parking, maintenance
debt (credit cards, student loans, etc.)
food, clothes, fun money, living
insurance (health, dental, death, disability, etc.) (~$200/mo for individual health)
savings & retirement etc.

My personal expenses after cutting out A LOT of fat are $4000/month for a grand total of $48,000 for the first year. after taxes.

I have 12 hours a day 6 days a week for 50 weeks a year, burstable to 18/7 for short stretches. When you are responsible for everything you cant burn yourself out.

So you look at your resources, your overhead, do the math and figure out if its feasible.

This is completely ignoring the fact that most engineers make for very poor salesmen, financial planners, marketers, and strategists. Which are as essential to a business as good technology or product."

http://ask.slashdot.org/comments.pl?sid=94365&cid=8102579

That's funny you made this post. I was just getting ready to make a topic about "Indie Development Costs"

Some people say you just need a compiler. I beg to differ. Maybe once you have your business and all infrastructure setup, then costs might be minimal. But I can easily see spending between $4,000 - $8,000 to get an Indie game released. I'm not even including personal expenses such as food and rent.

His expenses certainly don't mirror what you need to sell some shareware. The hosting cost is way beyond what you would need for starters. Heck, I run a hosting company and I'm paying less than this guy. $55/month can get you 100GB of bandwidth, I doubt you need anything anymore. That runs to only $700 or so a year, compared to his cost of $3600/year + $2000. If you don't need even 100GB (and chances are you don't), you can be paying even less for hosting.

The $500/yr marketting and web site costs is realistic. $600/yr for answering, mail box, and fax you probably don't need. Get a PO Box, and buy a cheap fax machine and answering machine and that should be enough for a starter shareware compay. Point number 5 may or may not be what you are looking at, this varies from place to place, and also depends on what you believe you need. You'll notice a lot of people here don't necessarily have business insurance or even incorporation. Do you need it? Maybe, maybe not.

Cell phone and internet you are probably spending money on already, so it's not an added cost. It's very easy to get caught up buying a lot of stuff for your business that you don't truly honestly need. This is where having a well-thought out budget BEFORE you start spending helps a lot.

Hope that reassures you.

1) server colocated in datacenter with back-up dial-in line $300/mo + $2000/server

Not even close. Just rent a server at ev1servers.net, servermatrix.com, etc. 100$/month with no startup costs.



2) SSL cert, web site marketing costs, etc. $500/yr

A cert isn't necessary if you use a registration service, and komodo cert is a lot less than that anyway.


3) answering service, mail box, fax service $600/yr

Efax is closer to 100$/year, and an answering service isn't really necessary.



4) cell phone & DSL at home $100/mo

This one's about right.



5) incorporation, filings, fees, business liability insurance, registered agaent $2000/yr

It's only a couple hundred dollars to incorporate in most states. Check out mycorporation.com. And really, business insurance won't be necessary until your corporation grows. I have it now, but it wasn't necessary the first year or two.



6) business checking account $500/open

My business checking is free.



7) software, $0. all open source

I would never get by here on 0$, but I am not going to start an open source debate- I know better.

For me the majority of the costs would be on software and then paying for an artist. Fortunately, purchasing software is usually a one-time deal.

I'm a newbie about to sell my first shareware product, so I'm curious about this myself. My comments are my thoughts, please correct me if I'm wrong.

For (1) and (2), if you have a simple website that points to someone like eSellerate, wouldn't that be enough? Then your costs would be $20/month instead. I plan on offering a demo on my website, but it's only about 0.5MB in size. And my software is more high price / low volume than a game would be, so I don't think I'll run into my web provider's bandwidth limits.

I'm planning not to incorporate until I make some decent money. So I'll be a Sole Proprietorship (this is in Canada) for a while. So I don't think I'll need (3), (4), (5), or (6). Why would I need a phone or fax? I'll do everything over the internet.

(7), on the other hand, is currently one of my higher expenses. (Visual C++, etc)

henning

Your overhead depends on what type of software you'll be creating. I've traditionally done Palm/Pocket PC titles and modest Windows puzzle games, and for the first few years, the cost of web space was about $15/mo, including e-mail + $35/yr for the domain. I ran (and still run) as a sole-proprietorship, (no incorporation fees, though no protection against litigation) and share my personal checking account with my business. As Henning points out, you can also use someone like eSellerate, DigiBuy, Regnow, etc. for sales. They all either lack or have low startup fees.

7) software, $0. all open source

Given that the article was originally from Slashdot, this is not a surprising claim, but I'll disagree here, too. Expect to purchase compilers, graphics/audio libraries, image editing software, and so forth. Much of the open source stuff out there is good, but it may save you time to purchase commercial software. (E.g., Gimp is good, but I use Corel Photopaint as my primary.)

My monthly overhead is a whopping $15 dollars right now. This includes web hosting and file hosting. If you want to include my cable connection (which I had before my business and would have without my business) it would add an extra $45. My bandwidth has slumped, but after it picks up again, it may increase my costs another $5-10. I think this is bare minimum to start selling an indie game. After more and more profit comes in, I will increase promotional costs, which will in turn increase bandwidth costs, etc... but if you start out with the best of everything you may never get out of the hole. Keep everything small at first... except the quality of your game ;)

Mike pretty much debunked that post, but I figured I'd add a few things since I just opened shop.

1) server colocated in datacenter with back-up dial-in line $300/mo + $2000/server

Mike covered that, but when you first start even $10-20 a month shared server will be enough.

4) cell phone & DSL at home $100/mo

Broadband costs probably depend on where you live (costs about $50/month for 5 mbit cable around here). Do you need a cel phone for your business though?

5) incorporation, filings, fees, business liability insurance, registered agaent $2000/yr

Cost me $280 to register Valen Games as an LLC in New Jersey (and it took less than a week). State fee is $150, other fees were to expedite the filing and to get a tax ID. Though, I did do it through a friend's lawyer and he didn't really charge me anything other than what it cost him. It would've cost me maybe $400 or so otherwise. You can serve as the registered agent yourself in New Jersey, check your state laws (or better yet, talk to a lawyer). You may not have to pay registered agent fees at all.

6) business checking account $500/open

I haven't opened one yet (will do that soon), but as Mike said you can probably get $0 yearly fee business checking account. You *may* have to have a minimum amount in them though, that $500 is probably the minimum amount that guy had to put in the account to open it.

7) software, $0. all open source

I do use open source development libs, but as far as software goes I use PSP, Sound Forge (lite pricetag edition), Visual C++ 6, etc. It may cost you some in this area.

To summarize though, it certainly doesn't cost that much unless you want it to. :)

Yep, all those fees are pretty much optional.

Many of them will become more of an issue as you grow, the worst of which is uncle sam. :mad:

However, if you are light on cash, don't let that stop you from moveing forward.

It's not like you are starting a bakery wher e you need a building, equipment, staff, ect ,ect

If your company is just YOU, then you can do it on the cheap to get started.

You need to dial it in for YOUR needs, and what you can and can't live without.

Allways seems like the slashdot posts and comments are always doom and gloom. Folks venting on thier sad lives yadda yadda and how the world is screwed.

Setting up a shareware biz, is about as easy as it gets, appart from maybe a lemonade stand or selling used books on amazon:D

My costs other than living costs are:
Software(windows XP home, and milkshape3d), $138 USD
Monthly hosting. $29 USD
Conference expenses: $400 USD
Domain registration fees: $20
Computer hardware: $1000 USD

Could get by with cheaper hosting, but I have a bunch of other non game sites on my server.

That is it. I am paying a little for advertising($10 so far, which was more of a donation). Once my game is finished I have planned to pay around $500 for advertising over a few months. If my game does not sell after that I will put no more money in to it. However this is after seven months of not paying for advertising.

I lost seven months of income making the game(around $20,000 USD). Probably lost more than that as the company I left paid out massive profit sharing bonuses recently. I probably would have gotten a raise as well. I also spent around $7000USD of savings for living expenses. I doubt that I will make that back from selling my game. Maybe if I can make a number of other games I may make that back over many years.

If you do sound/music, graphics and coding you do not have to pay for artists. However if like me your game may look sub-par with your programmer art ;) So teaming up with an artist or two may be an idea. Other people probably know how much artists can cost.

I have not needed a phone or fax. I can use my home ones for that if needed. Note lots of modems can send/recieve faxes. You can pick up used modems for free in computer junk bins(those millions of unused modems go somewhere you know). Or as I have done for the occasional fax go to a friends house, or the post office.

You do not really need a business to start with. Even after you have your game finished and selling there are reasons why you may not need one right away. So your start up costs for registering a business can be nill.

Conference expenses were from travel mostly. I was going to go to two conferences. Went to the AGDC in melbourne Australia, which was kind of good as I met a lot of people, and got a little press for my game. I was planning on going to the IGC, however because of the rugby world cup the planes were full. Because of my cheap ticket I got stuck in bangcok for a few days and missed my flight to LA. In terms of money spent it was probably lucky I didn't get that flight as I planned to spend about $1500USD. Which ended up allowing me to spend a couple more months before I had to get a job again.

In my ever so humble opinion, probably having two and a half years of living expenses saved up would be the minimum I would need if I was to do it all over again. That would give me the time to make and sell at least two decent sellable games, as well as one bad one ;)


Those were my(enron style accounting) expenses. Hopefully you can do better :)

Have big time fun!

I'm looking at a sole proprietorship, which is going to cost around $120 (maybe $100 if our house sells and I have to pay the city fee yet again...) I'm avoiding doing this until I absolutely have to have a legal entity.

I managed to work out webhosting for free for about 18 months - a lucky scenario which comes from having friends who run an ISP. I'm planning on handling online sales through a third party, which is mostly just a hit on the percentage.

I was able to get some tools on a discount, and many of them are useful to me with or without my small company --- my total hit here has been about $250 so far. I'm trying to use open-source tools wherever possible.

Computer, Cable Modem - already have these, would need them regardless.

Domain name registration is about $10 per year per domain.

Marketing costs (include website design - my homebrewed efforts are pitiful but relatively functional) are going to start creeping in before I actually ship the game. That's pretty much as much as I want to put into it.

I may be missing something so far, but right now I'm seeing a total start-up "overhead" (not including actual marketing of the product) at less than $500. Yes, I probably saved around $350 or so on the web hosting (at least for the next few months). But I'm planning on starting small, and growing no bigger than I *know* I have means to grow.

This means my company can't support me full-time for a while - it's not going to be a slam-dunk, let-me-retire-in-5-years kinda thing. But I've seen many startups (and mature companies hitting major expansion phases) die from this mentality, so I don't think it's a bad thing.

I don't know how it is in the States, but in Canada a sole proprietorship isn't a legal entity. You don't even need to register it if you're doing business under your own name. If you want to go under a name, you only have to register the name, nothing else.

henning

Geez... when I started up, my expenses were $9/mo for web hosting, $49 for Paint Shop Pro, and $99 for Ray Dream 3D. Plus, of course, whatever time I wanted to put into my project.

About open source : all we do (http://www.mrio-software.com?dex) uses open source software almost exclusively. We use Paint Shop Pro, though.

All I can say is: Whoever made this post originally is smoking crack.

We run a mmog, the MOST hardware intensive and most expensive type of game.

Our yearly expenses are about...

4,200 dollars. Startup cost was definately under a thousand, inlucindg filing, lawyers, and other things.

48k, lol, what a joke. For the record, our current system for that 4200 dollars is enough to support around 7,000 customers and can be expanded to about 12,000 for another 3,600 a year.

People are fools.
Terin

You're starting off with a business that's far more costly than it needs to be. In addition to earlier comments about cutting costs....

Try www.maxemail.com for a fax-to-email service. It's only $15/year, and the support has been much better than Efax (not just my opinion).

Dump the answering service. It's a luxury.

Many hosts will let you use their SSL certificate either for free or for a nominal monthly charge. Pair.com is an example of a host that offers this service cheaply.

While as a general principle, it's important to stay ahead of your growth curve, you're definitely overdoing it as a startup. You can always add things like an answering service or a dedicated server when you really need them.

I've heard that Sam Walton was still driving his beat-up pickup truck even after becoming a billionaire.

Here's an article you might also was to peruse:
http://www.dexterity.com/articles/going-full-time.htm

Good luck!

Think of going Indie as the Zen version of starting a business. Simplify everything. You're not done preparing until you have removed everything you possibly can from your expenses and time requirements. Outsource whatever you can (sales through one of the services, hosting, etc.), and as a friend of mine puts it, "make every penny scream" from being pinched.