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So two other friends and I are a very small game dev studio. So far we haven't released a game but we have 2 games almost ready to launch. A bigger studio saw our work and now they want to work with us; they need people to develop mobile games for them (iOS, Android).

They want us to set the price for the projects (can't tell the specifics we signed a NDA). They will give us all the assets (graphics/sound) so we only have to code. And because they only work with Unity3D we have to learn it.

How do we decide how much to charge for the projects?

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Your question may be out of scope for this site. Either you go with fixed-price (which you take the hit if it takes longer) or you charge per hour (so they take the hit if it takes longer). –  ashes999 Sep 28 '12 at 13:33
    
@Byte56 They're not asking others to set a price for them, but rather for a way to find out what price they can charge. That's a big difference, and while the former may indeed not be constructive, the latter is more general and is probably one that a lot of developers or teams trying to negotiate their first contract wonder about. There are also some good and general answers already, that should be helpful for others who are researching this question. –  Christian Sep 28 '12 at 15:03
    
@Christian OK, I've edited the question to make it clearer as to what's being asked. Thanks for your input. –  Byte56 Sep 28 '12 at 15:24
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3 Answers

The best short answer I can give you is:

T = guesstimate how long it is going to take.
M = Check what is the average monthly pay for a programmer in your country.
P = Amount of people on your team.

Your offer to them should be:

T * P * M * 3

This advice of course is not offered as professional counseling and not intended to replace it.

They will likely try to negotiate for a better deal. Stick to the price as much as possible, nobody loves your better in the business world for being a flimsy negotiator.

After your first project when you see how much your earned you can start to adjust the prices for future projects accordingly.

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@Gregory Weir makes a point charging also the tools! –  Zhen Sep 30 '12 at 17:23
    
Charging a customer separately for tools is impractical, will you charge for a laptop, a desk, a monitor and a chair? Unless the tools are specific to that project, a company has to include it's expenses as a percentage increase on the work cost. So you could say 100% for profit, 100% for tools, 100% for food, electricity, office rent, fuel for your car to get to work etc.. If I'll go to a doctor and she'll tell me, I have to pay separately for the stethoscope before she could examine me, I will probably look for another doctor. –  Arthur Wulf White Sep 30 '12 at 17:34
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The answer to this will vary wildly, but it's going to be based on a similar process for everyone.

Estimate how long the project will take, both in terms of person-hours spent coding and in terms of calendar days spent on the project. Now figure out about how much you want to be paid per hour and/or how much you want to earn over that span of dates.

EDIT: Make sure to include fixed costs like the cost of Unity Pro licenses! For a three-person team, the $3000 or so per person will be notable.

You may be talking about a fixed price or hourly rate (as ashes999 said, fixed-price is more attractive to the client), but in either case you'll be basing it on the above calculation.

They already want to work with you. Don't be afraid to explain that you're inexperienced with the pricing stuff. If you're willing to be flexible, they're likely to be forgiving about a number they can't work with.

Finally, don't be afraid to walk away! If they will only accept a number that's too low for you, move on without burning bridges.

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For my experience this is a fake question, it's not a real question and it's more like a start for a trade, you can set whatever price you want to set but they will always drag you into a trading discussion.

My suggestion is since any price is going to be subject to their approval, think about this as the how much this is goind to cost for you and what is your expectation about how much you are going to earn from this: cost + expected earnings = base price .

Since you are most likely to have a discussion with this people is better for you to have clear in mind the lowest price possible that can be a reward for you and just go for the highest price that they will accept.

Consider the time spended with Unity as a big cost, this will be not so easy, also consider the possible legal issues that comes with a third part closed source game engine.

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In my experience and in what I've heard from other developers, Unity is quite easy to pick up for someone with development experience. Unity also has pretty clear licensing requirements; what sort of legal issues do you mean? –  Gregory Avery-Weir Sep 28 '12 at 14:03
    
@GregoryWeir just read the license that comes with Unity, also i'm a programmer and for me Unity is horrible, the support for Android is probably worst than Unity itself, just to say that i have a regular license for Unity for Android but i prefer to code my own stuff since Android really needs optimized code wich is the opposite of what Unity is. Don't forget that Unity can easily become extremely pricey, just like the UDK it adopts a royalty system and has a lot of restrictions. –  Ken Sep 28 '12 at 14:07
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I'm not familiar with the Android support, so I can't speak to that. I do think you've read the license incorrectly; Unity is royalty-free, even with the free version. The license at unity3d.com/unity/unity-end-user-license-3.x also places very few restrictions on the nature of the end project (none that I can see except that it not be a competing app to Unity). –  Gregory Avery-Weir Sep 28 '12 at 14:13
    
@GregoryWeir absolutely not, you are also supposed to pay 1 Unity license for each person and other people are not allowed to develop with your Unity license unity3d.com/unity/faq , this mean 3 people = 3 licenses for what you are targeting that you need to buy, for example 3 people working on Android = 3 Android license to buy. Royalty are complex and probably you want to discuss this with your producer and Unity before going public. –  Ken Sep 28 '12 at 14:18
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I haven't read the license completely, but all results for a quick search for "royalty" or "royalties" are "royalty-free". Also, from the license FAQ: "No, Unity does not charge on a per title basis and you do not pay royalties or pay revenue share! Even for games and applications made with the free version!". I'm pretty sure @GregoryWeir is right that there are no royalties involved. That said, you are right about the license - you need one for each developer on the team. –  Christian Sep 28 '12 at 14:48
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