Having been working as a project leader in a service development company, I can give you a rough estimate in this activity sector about the ratio between production and structure costs : for a small company, this ranges from 20% to 50% additional cost for non productive work (that's management, marketing, pay, HR, electricity, hardware and so on). In big companies, it goes quickly to 100%

In the end, in a business without any advertisement on a product (even if there is some for recruitment and company image) you need to consider the production cost of a project and double it to get the real cost.

Of course, if you say that a product has a cost of 2 millions, that means you take account of the non production costs. For the simple reason that non production costs need a way to get financed.

And quality, translations, maintenance... All of this is into the productive part.

Something else to consider is that PE wont have to pay for any sort of IP. I think the cost of licencing an IP is almost always paid by the publisher, but it's still a cost factor in the final development cost.

Also no one mentioned that the net profit per sold game unit will be far better for the developer:

A 60$ console game is typicaly* split like this:

Console Maker: 20% or 12$

Publisher: 30% or 18$

Marketing: 15% or 9$

Retailer: 20% or 12$

Developer: 15% or 9$

 

If OE sells the game for a discount price of 40$ and pay 30% to retailers etc. (I'm not sure about steams cut, but et's say it's 30%) then every copy sold would give OE three times as much as a copy of Fallout: New Vegas sold.

 

*I read that on the internet. I guess it makes sense, but it might not be universal truth.

Thanks for the great replies.

 

If the Witcher 2 realy cost "only" 8M to develop then this project should be doable on the 2.5 by swapping 3D/combat work for scenario. Also it seems like a game like the Witcher 2 could be funded in part by Kickstarter.