How to Calculate Steam Game Revenue

Recent developments in open source & public data sharing by industry veterans and altruistic companies & individuals has delivered a reliable method to calculate ANY Steam game’s revenue.

Combining survey data from Jake Birkett (Grey Alien Games) [1][2], Simon Carless (GameDiscoverCo) [3], as well as insight from aptly-named VGInsights [4], the industry has settled on a so-called “NB” (New Boxleiter) method. (Thanks, Mike Boxleiter!)

The base equation is relatively simple.

Take the number of reviews and multiply it by 50 – and then halve it!

Why multiply by 50? And why halve it?

Let’s break it down.

Estimate Game Sales

First you need to estimate a game’s sales. Survey data from the last few years (linked above) has showed that on average, across a broad range of titles sizes and game budgets, between 1 in 30 and 1 in 60 purchasers leave reviews on Steam games.

(We like to be optimistic in estimates, so we settle on 1 in 50!)

Take the number of reviews and multiply it by 50!

This will give you the Total Number of Sales.

On certain categories of games, the review rate will be higher (loyal fanbases, humour factor), and on other categories of games (e.g. adult/mature content) that review rate will be much smaller.

It can be as high as 1 in 20, or as low as 1 in 200.

With a multiplier variable or two in mind, you can get a “high estimate” and “low estimate” of Steam revenue.

Estimate Game Revenue

$9.99 _(price) * 128 _{(# of reviews)} * 50 _{(sales multiplier)} = $63,936 _{(gross revenue)}

Take the game’s base price, e.g. $9.99, and multiply by number of reviews, then multiply by your sales multiplier.

This will give you Gross Revenue.

Of course, this number is not yet an accurate reflection of what games will take home to their respective publishers & developers.

Estimate The Cuts

We need subtract a bunch of other factors…

Steam take a baseline 30% cut of revenue, which is a huge amount gone from the offset.

If a title is lucky enough to earn over $10 million, this cut is reduced to 25%, and if it’s over $50 million it’s 20%! [5][6]

(This isn’t a great deal for smaller indies, but not much we can do there. It sure makes sense for Valve!)

This value is the Steam Cut %.

After this, you should consider that, actually, most people don’t buy games whilst they’re at full price.

This value is the Discounted Sales Percentage %.

After this, you should consider that, an amount of players actually Refund the games. ☹️

This value is the Returns %.

Any more for any more? Well yes, actually!

Not all sales will be from the United States or Europe or other strong Western economies.

Steam implements regional pricing adjustments (also known as purchasing power parity pricing – “pppp”) so that players in developing countries can pay an equivalent value for the game in their native currency. (Plug: we also offer this for Coverage Bot! Get in touch!)

This value is the Regional Pricing Adjustments Percentage %.

After subtracting all of these, you will have Net Revenue from Steam.

That must be it, though, right? Nope.

It’s very likely that you, or the dev studio/publisher will be paying VAT or Sales Tax in various regions or their own region.

This value is the Sales Tax %.

You can (on average) knock another 20% off.

Show Your Working

Here’s our Gross Revenue from earlier:

$9.99 * 128 * 50 = $63,936 _{(gross revenue)}

Let’s calculate Net Revenue from Steam:

That’s almost exactly half of the original total! Looksie! So there’s why we halve the original estimate.

Conclusion

It’s important not to assume that all games on Steam make a load of money. The reality is that most games don’t!

After subtracting development costs, many projects will be in the red. It’s a tough life for the average indie game developer.

Here are some takeaways:

• If you’re pitching for investment or publishing: use these types of benchmarks in your genre/audience to show you understand the games market. 💪
• If you’re self-funding, or staying independent: please stay realistic… 🙂

- Ashley