A new UE4 user, need help getting clarity about royalty fee

Hi everyone,

I have several questions about the 5% royalty fee we need to pay when we decide to sell our product. I will start right off the bat and begin with an example:

GAME: Bunny Hoppers Xtreme
Price: €10

So far I understand it’s 5% royalties PER game PER quarter (there are 4 quarters in a year) AFTER 3000 dollars (2688 euros).
So if you earn 3500 dollars (3136 euros) you pay 5% fee over the 500 dollars (or 5% over 448 euro).

So IF this is correct then this is an example sheet:

–January--------------- You sell 400 copies (400 x 10) wich nets you 4000 dollars.
–February-------------- You sell 450 copies (450 x 10) wich nets you 4500 dollars.
–March----------------- You sell 350 copies (350 x 10) wich nets you 3500 dollars.
Total profit: 12.000 dollars. thats 5% fee over 9000 dollars = 450 dollars

–April------------------ You sell 300 copies (300 x 10) wich nets you 3000 dollars.
–May ------------------- You sell 400 copies (400 x 10) wich nets you 4000 dollars.
–June------------------ You sell 500 copies (500 x 10) wich nets you 5000 dollars.
Total profit: 12.000 dollars. thats 5% fee over 9000 dollars = 450 dollars

–July ------------------ You sell 600 copies (600 x 10) wich nets you 6000 dollars.
–August--------------- You sell 600 copies (600 x 10) wich nets you 6000 dollars.
–September---------- You sell 650 copies (650 x 10) wich nets you 6500 dollars.
Total profit: 18.500 dollars. thats 5% fee over 15.500 dollars = 775 dollars

–Oktober- You sell 150 copies (150 x 10) wich nets you 1500 dollars.
–November- You sell 150 copies (150 x 10) wich nets you 1500 dollars.
–December- You sell 150 copies (150 x 10) wich nets you 1500 dollars.
Total profit: 4.500 dollars. thats 5% fee over 1500 dollars = 75 dollars

Total profit BEFORE 5% fee: 47.000 dollars
Total profit AFTER 5% fee: 45.250 dollars
Total paid in fee: 1750 dollars

So I have 3 questions about this entire royalty stuff:

**1) Is the above stated list correct or did I forget anything (or made mistakes)?

  1. If the above is correct then for how long am I paying that 5% royalty fee for?
    Let’s say I release a game and it’s going 3 years strong, am I paying royalty fee till the game completely dies out and it isn’t selling anymore?

  2. If I would decide to NOT sell Bunny Hoppers Xtreme, but I give it away for free and on the website I have a donation button. Do I pay royalty on that?**

It seems to me that it is kinda a pain in the butt to keep sending the Royalty Payment updates to EPIC every 3 months for so long. It’s getting even worse if you have
3 to 6 products released. How in hell are you going to keep track of that?

Please let me know if I got the royalty fee thing right. I’m very curious to know also what the best way would be to track your income and the amount that needs to be paid
to Epic.

You can ask here Release and Royalty Tracking Guidelines - Unreal Engine directly, or search the forum, that question was asked many times, so far.

  1. your list is correct
  2. You pay royalties as long as you sell and earn money from your game
  3. A donation button is still money income from your game so you will pay royalties.

@ Luftbauch
Thank you for reading my thread, but in the time you made that remark and the effort into it, you could also just have anwsered my question. I have not seen my question been asked in such detail and I’m not willing to skim through the entire forum and through each thread with each reply to see if my question would possibly be anwsered.

@ Galeon
Thank you for your anwser. You gave clear anwsers on my question, I’m confidend now that I understand all the royalty stuff. I did not specifically see any documentation about the donation side of things. How do you know for certain that a donation button is seen by Epic as an income? Also, do you have any ideas on how to manage those things when selling the game becomes a thing?

Another thing that I’m curious about is the fact that some platforms have fees aswell. I have read somewhere on the forum that If you would sell a game on Apple Store for 10 dollars, that even though you only recieve 7 dollars from Apple (30% profit cost) you still generally pay over the 10 dollars on royalty fee to Epic.

This would mean that if the app sells for 10 dollars and at the end of Q1 I sold 9000 copies (9000 x 10) that would make 90.000 dollars. Then BEFORE you get the money Apple will take it’s cut (27.000 dollars) leaving
you with 63.000 dollars and THEN you still pay 5% royalty over 87.000 dollars (and not 60.000) wich will be 4350 dollars taken from the 63.000 you had left.

It gets even more confusing if you add the TAX/VAT too…

I just know that any money income related to a game is ruled by royalties.

You pay 5% royalties over your income that is 63.000$.

Perhaps someone at Epic can confirm that one ?

since when donation button is a royalty-able income? afaik epic doesnt want tax(royalty :P) from donation. they don’t even want royalty from kickstarter money, unless the kickstarter package promises in-game items.

I have tried to look this information up on the website and the FAQ section. It says nothing about specific incomes like crowd funding or donations. I think that Galeon is right, maybe someone from Epic could clear this up. They could also make it all a bit more clear to everyone what the “rules” are on the actual page that discusses this.

Just the simple "Once you’ve begun collecting money for your product, you’ll need to track gross revenue and pay a 5% royalty on that amount after the first $3000 per game per calendar quarter.
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."
is not enough (for me atleast) to understand all the rules about this system. That is why I made this thread in the first place, so that people would have 1 place where ALL possible questions about this are asked. :slight_smile:

If any of you have additional information or have original sources about this, then please let us know!

Deckro, just to clarify: your examples use the word “profit”. The 5% gets paid on revenue, not profit. :slight_smile:

(And yes, if you have no other costs, they amount to the same thing).

Yes, that was indeed what I meant. The word “profit” was used in a way to determine the amount of money you would recieve from selling a product. Revenue is basically the same thing, just like you said, It’s a income of a product sold. If my use of the word profit was misleading in anyway, then my opologies. :slight_smile:

Do you happen to know any aditional information about this subject? Do you know how it works with the royalty fee and donations or even when a company want to buy your game? I’m very curious about the details of this agreement. It’s just that I would like to know as much as I can before I sell my product and get little surprises that I didn’t knew or counted on. :wink:

You probably missed last sentence in the EULA FAQ which leads to full EULA which mention donation, KS and everything else. You have to pay from:

You don’t have to pay from:

What exactly is not clear? Here is the super simple example, again, from EULA

Also, if you are a new user to the Unreal Engine, this is one of the last areas you should be looking at. Get your hands dirty with the code, and see how you get on with it. Don’t get distracted with the paperwork before you even get started. :slight_smile:

So many ppl are coming into the forum with questions, about the 5% and these donate KS stuff.
But i never seen a calculation to advantage of UE4, always some sort of “creative” math to projectadvantage.
A mystery…

Thank you for clarifying this up for me, I have indeed missed that information. I have tried to click the link that is going to the EULA and the link wasn’t working for me, only the chinese/japanese link worked somehow. Again, thank you for this information.

About the last part you mentioned form the EULA; if your Product earns $10 on the App Store, Apple may pay you $7 (having deducted 30% as a distribution fee), but your royalty to Epic would still be 5% of $10 (or $0.50). I don’t want to argue about this or anything, but it does say (like Jezcentral mentioned) that it’s about revenue. This actually means that it’s money that a company get in their hands after selling a product or service. So it SHOULD be 5% from $7 not %10 because that is the actual revenue, if I’m not mistaken. Anyway It doesn’t apply for the first 3000 dollars, so that makes it a totally differant story.

I would just be like;

  • I make a game and start selling it (lets say the apple store).
  • I would create a seperate bank account so that all money coming in is just from that product.
  • I would look how much money came into that bank account each quarter and pay 5% from that to Epic.

I have to say that Unity does this a bit more understandable. you just pay monthly for the use of their engine (pro) and you pay nothing else for the products you made with it, even if you earned millions.
You just have a monthly amount to pay for as long as you use their engine, so if your game is finished and you have no bugs/mistakes (wonder product) you don’t need the engine anymore and the payment stops. With unreal 4 it seems like you have to keep track of your product and the income you are getting all the time, making sure you have a complete picture of all the money trails.

I again want to thank you all for the help on this subject. I guess that if I have more questions about this in the future I could contact support?

I know haha, but I like to be well informed before spending any time into learning C++, Blueprint and Unreal 4. I have bought 4 books about blueprint and unreal 4 and I’m going through any tutorial I can find on this website AND on youtube. So it’s not like I went straight to the legal stuff. :cool:

Lie I said earlier, I just don’t want to be surprised by certain payment/legal stuff when I made the product and thinking of selling. That’s all…

In the case of Apple getting their share, your revenue would still be $10. You would have an income of $10, but also also have a cost of $3, as far as the taxman is concerned. The $7 dollars that went into your account is Profit.

Epic specifically mention that the cost of distribution is not factored into revenue. :slight_smile:

If you sell a game for free just for fun and you don’t have any way for anyone to donate, do you have to pay a royalty fee?

If you are not making any money from ads, donations or sales, you don’t have to pay anything.

Well, that’s clear indeed. Thanks! :slight_smile:

Or you can just answer it.

Not to bump a older thread but this one is still recent.

This information is not correct. It says you are exempt from until profits go above 3k
However, no royalty is owed on the following forms of revenue:

 1.  The first $3,000.00 in gross revenue for each Product per calendar quarter;