Crowd Funding and that magical 5%

I’m glad to see this forum has serious topics swiftly answered, yet the EULA’s 4/c point needs some clarification for the average insomniac end user who’s neither a lawyer, businessmen, bureaucrat nor englishmen to be able to expand our childish understanding and grasp the situation correctly:

Does this mean “5% of the total funding sum will be going to the engine’s owners”?

(Seeing crowd funding involves a tiny break in the space-time continuum when it comes to “gross revenue” one can’t argue that 5% should be directly calculated into the development costs for “engine licensing purposes” of sorts but please do point it out whether that would be the case.)

A binary answer would be highly appreciated!

Hi Skorbut,

There isn’t a binary answer, it depends on how your tiers are set up. No royalties are due on donations or T-shirts / posters, only tiers tied to product access. However, for those tiers, it would be due on the gross revenue from backers, before Kickstarter/Amazon’s cut.

With that in mind, you can budget the royalty as well as the crowdfunding/payment processing fees, cost of rewards, and any government taxes when calculating how much you’d need to ask for.

From the FAQ (Häufig gestellte Fragen - Unreal Engine):

What if my product obtains crowdfunding via Kickstarter or another source?

Royalties are due on revenue from Kickstarter or other crowdfunding sources when the revenue is actually attributable to your product, for example if the user is required to purchase a particular funding package to obtain access (now or later) to your product, or if that package gives the buyer benefits within the product such as in-game items or virtual currency.

Here’s an example of what we mean by “attributable”: Assume you provide two tiers of offers, a signed poster for $20, and a signed poster plus game access for $50. No royalties are due on ancillary products like posters, so no royalty is due on the $20 tier. On the $50 tier, the user is paying for the poster with a $20 value, and that implies that the remaining $30 of value is attributable to the product. So, for each $50 tier sale, you’d pay a royalty of $1.50 (5% of $30).


Thank you for your kind reply! That’s a very nice system implemented indeed :slight_smile:
I humbly bow my head to this world of technology and the network of people that has been gathered here! Thank you for your hard work! Looking forward to creating stunning virtual worlds together!

Thank you Noland this has also helped me out. :slight_smile:

I was curious about this as well, seams very straight forward and more than fair

I’m not sure if this has been answered though and it kind of ties into the OPs questions - How are royalties payed to Epic? Do we send a check, via PayPal, Credit Card? How do we actually pay them royalties, get a receipt for tax purposes and prove that what were are paying them is correct based on their percentage structure?

We are working to make this easy and automated, however currently (at launch) it is not. In the short term, if you have royalties to pay, we can put you in touch with our finance department who can make sure you have everything you need and get the documentation you need.

In the near future i would expect parts of this to move to your account settings tab, but I’m not sure how soon we can make that happen.

Awesome. I know the whole crowdfunding scene came out of nowhere and exploded over night so a lot of people are playing catch up, when claiming the crowd funding income on taxes it’s also a new realm for tax people i’m sure.

I have some additional quesitons:

  1. Do we have to pay royalties if we offer alpha/beta only access and not the full game?
  2. Example:
    Tier nr1 (price 10$) offers a t-shirt (no-royalties)
    Tier nr2 (price 20$) offers t-shirt+ game access (royalties on 10$ which is assumed as value of the game)
    Tier nr3 (price 1000$) offers a t-shirt+ game access+ name of the backer in the credits as producer (game access still valued at 10$ and name in credits valued as 980$)
    From what I understand we would pay only the royalty on the 10$ of the game as the “name in the credits” doesn’t add any benefits or value in the game, the same would apply to a “dinner with the developers” or “visit of the game studios”.
    Am I understanding correctly?

Right, it only applies to what people pay specifically for the game or things like DLC items in the game. Beta/Alpha access apply too since it’s still the game regardless if it’s finished or not.

Not really, income is income. It’s not handled any different on the tax side. If you get money from people on Kickstarter - you pay taxes on it whether it’s for shirts/development cost/etc. - even if you never ship anything.

Humm interesting question.

I believe the sprite and intent is to allow developers to fund their development through secondary means by association so personally I feel it would be fair to introduce a perk at a lower price point, and pay royalties at that price point, even though it sounds like an end run around paying the higher fee.

Seems logical, and a win win for both parties, to allow early access far below what the game would normally sell for, and pay fees on, that would help the developer pay the fix costs of what it takes to bring a game to market.

What I don’t like is middlemen getting into the mix as in my experience it never ends well and are general motivated by other reasons besides making the best game ever and crowd funding in general is a one shot deal and with Kickstarter you either get or don’t get the funds which opens it up to abuse.

The marketplace on the other hand opens up a few possibilities if done right and does not once again turn into another bit bucket of junk.

What about rewards involving in-game content?

“Design a boss” “Become an NPC” “Write a hidden message” or “design a quest” etc.