5% royalties by epicgames

hey , I want to know about that 5 % royalties that unreal engine is charging if I sell games above 3000$ . so what about if my game just made 300$ ? do I still need to pay 5% royalties to them? and how many times should I pay ? for example I made a game that was sold for above 3000$ so I paid 5% royalties but I still need to pay it again for same game? and why people still feeling bad about about 5% royalties ? only few rare games make above 3000$ even if their games made that much they don’t mind paying just a 50$ for engine. cause they got huge profit . and generallaly how much an single person project will make ? I know it deponds but I want to know atleast average amount . and please don’t give me link to the thread where they explains about THAT 5% ROYALTIES CAUSE I ALREADY READ THAT BUT STILL DIDNT UNDERSTAND AND ALSO DIDNT GET ANSWERS TO THESE QUSTIONS

Hi, it can be a bit hard for me to understand and explain everything clear because english isn’t my primary language, but i’ll try:

Frequently Asked Questions - Unreal Engine says:

How much do I have to pay for Unreal Engine 4?
UE4 is free to use, with a 5% royalty on gross product revenue after the first $3,000 per game per calendar quarter from commercial products. Read the EULA FAQ for more details.

these states seems important:

“gross product revenue” - Difference Between Sales Revenue & Gross Profit Fool.com: Stock Investing Advice | Stock Research , http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/gross-profit-2077 or What Is Gross Profit? - Definition, Formula & Calculation - Video & Lesson Transcript | Study.com

“calendar quarter” - By: LawInfo
Every calendar year is divided into the following four parts, known as “quarters” 1st Quarter: January 1 through March 31 2nd Quarter: April 1 through June 30 3rd Quarter: July 1 through September 30 4th Quarter: October 1 through December 31 http://resources.lawinfo.com/labor-employment/ohio/what-is-a-calendar-quarter.html

but note that on Release and Royalty Tracking Guidelines - Unreal Engine is written:

Royalty payments are due 45 days after the close of each calendar year quarter. After the end of each quarter, you will need to provide the following information.

“per game” - i think it doesn’t mean “game” as every single sold instance, but as product name because you can have multiple games, $3,000 gross product revenue for single copy nearly impossible

“after the first $3,000 per game per calendar quarter from commercial products” - untill your game sales make such gross product revenue you don’t need to pay this 5%, but once you achieved such i think there’s no way back

if these notes still doesn’t clear things for you, as written on Release and Royalty Tracking Guidelines - Unreal Engine contact epic royalty@unrealengine.com and ask for more details/explanations, don’t forget write your minds here when you get answers :slight_smile:

p.s. steam grab 35%

hi happyhorror,
isn’t it 30% steam royality?

yeah, maybe so, in any case i think common explanation on how this 5% should be calculated enough clear and understanding problems comes from complexity if statements definition, like “calendar quarter” or “gross product revenue”

p.s. for badass gamer don’t forget mark question as answered when problem solved, so anyone else later can have same question and may find solution faster, if you find solution on your own, don’t forget write it too

I’ll try and explain this as clearly as possible. It can be quite confusing at a first glance, I know. However, Epic has made it surprisingly flexible and easy to handle, allowing even small developers to succeed.

Essentially, the short of it is, that you pay a fixed 5% fee based upon your overall earning. The first thing to know, is that you are only required to pay royalty fees after your game earns more than $3,000 in revenue. Up until this point, you don’t have to worry about making royalty payments to Epic. This process is explained below, by Epic themselves:

“Generally, you are obligated to pay to Epic 5% of all gross revenue after the first $3,000 per game or application per calendar quarter, regardless of what company collects the revenue.”

To be clear (as you have asked), if your project was only to earn $300, then you would not be required to make any payment. And yes, you will have to continue paying this 5% royalty fee over time, assuming your game earns more than $3,000 per calender quarter. Again, if it doesn’t, then you have nothing to worry about.

Furthermore, you’ve asked about potential sales of a game. This is incredibly hard to answer and depends on a number of factors, including the genre, quality level, marketing, and so forth. However, if you were to take a game that was available on Steam and priced at $5, which was to sell 1,000 units in a single year, then it would equal to $5,000. This isn’t a hard thing for a game that arrives on Steam to achieve. In a case like that, the developer would be required to pay royalty fees, for example.

I hope this helps clear a few things up for you. Best of luck! =)

You said $5,000 in a year, but in calendar quarter it equals to $1,250 which is not above $3,000. Correct me if I’m wrong.

So, Gross revenue calculated before or after steam royality?

Gross revenue is calculated before Steam royalty.

That’s a fair point, although your calculation assumes equal sales each calendar quarter.

The First $3000 is for only the developers, that is why it is free of royalty. But distribution fee or “Steam” royalty is not allowed in calculating Gross (Net) Product Sales Revenue. Here is an example of calculating gross revenue for a quarter of a year (the first quarter of the first year in sales life) given in the picture from this “Form” for tracking royalty dues.

Form Link: http://help.epicgames.com/customer/en/portal/articles/2313883-how-do-i-submit-a-royalty-report-for-my-ue4-project-?b_id=9727

It is only $50 due for the first quarter if “Gross revenue is $4000” thus “$4000 less $3000” or $1000 is the “Current Quarter Less $3000 (which is the allowed deduction per game)”. More pictures to help you calculate.

106343-capture+unreal+royalty+calculation+2.png

106344-capture+unreal+royalty+calculation+3.png

Practical example:

Let’s say you sell a game on Steam for $19.99, and it sells 30,000 copies in three months, January-March.

You can calculate how much you’ll have to pay Epic in April using this formula:

(UP0.7) - (UP0.05), or (Net after Steam) - ((Epic Fee on total royalties - $3,000)

where
U is the number of units shipped, and
P is the price of your game.

So in our above example, we would write the equation as:

Gross Revenue = UP = 30,00019.99 = $599,700
Net revenue = (UP0.7) - (UP0.05) = (30,00019.99.7) - ( (30,00019.99.05)-3000) = $392,865.

Steam’s royalties, estimated at 30%, are cut from the transaction, so we omit the 30% right from the start with (UP.7). Epic Games takes its cut off of the gross revenue, which is calculated before Steam takes it’s cut (off of U*P). So the formula takes our net revenue from Steam transactions and subtracts our fee for Epic Games calculated based off of our gross sales over and above $3,000.

I have a little hard time following your comment because it states, correctly, that Epic’s royalty is based off of gross revenue and not net, but your calculation complicates things by calculating net. In your example, the royalty is calculated 3000 units times $19.99 = $59,970. You subtract $3000 because you first $3000 is royalty free, which gets you $56,970. Then you take 5% of that, which is $2,848.50.

Oops! Copied that all wrong from my notes. That’s what I get for a late start on the coffee. Fixed! Thanks for pointing that out.