Let''s assume a staff of 10 employees + self (that''s what my current dream scenario would be!). So you''ll pay the employees and yourself (because that''s just how I feel it should be run) about $45,000 per year; so that''s $495,000 per year. Then everyone needs a PC for about $3,000 per person (nice PC''s), so $33,000 more. We''ll need a really nice graphics workstation for 3d rendering; that''s about $15,000. Then we''ll need a server and network equipment for about another $15,000. We''ll need office space at about $1,500 per month ($18,000 per year); this includes utilities. Probably about $50,000 in software. We''d like a T1, so that''s another $1,700 per month for the setup I''m going for ($20,400 per year).

So: $495k+ $33k+ $15k+ $15k+ $18k+ $50k + $20.4k= $646,400

Some of this will be recurring cost and some is just initial setup. But this should run an ideal (for me) game studio for one year. Keep in mind, I believe in starting small and running lean. Some people would probably like to just run it all as bloated as possible; but I think growth requires a lean business model.

Charles Galyon

No offense intended here, but your not thinking lean enough. Firstly why buy when you can rent? Rent some decent computers for 50 bucks a month. That''s 600 bucks a year as opposed to the 3grand you were thinking of dropping on each one. That will save you some costs. Also I assume you are thinking of a Game Development Studio as I''ve never herd of a company that just does game design.
45k a year salary? That''s some pretty nice cash for a beginning game development shop. I know game development companies that pay that much and they have products that make money. I think the salaries are a little high for a company that has yet to prove itself and is just burning through cash.
You need to get your initial startup figure as low as possible to be successful. The reason for this is that the games you make need to start paying your bills as soon as possible or you have to start giving up control of your company to Venture Capitol and Lenders.
Also don''t expect VC money to even look at you unless you have either a proven team of game industry veterans, or a solid product that''s already complete.
1,500 a month for rent and utilities, you can be a little more creative then that and half that number. Convert your two car garage; rent a studio apartment, anything. If you want to be successful you have to get your annual bills down to the absolute minimum so you can reach the cash flow positive stage as soon as possible.
Most game companies will never see 600k+ a year in sales, and the ones that do, don’t achieve it in one year (typically, they’re always rare exceptions).

$45,000? Who do you want to hire for that much money? In my opinion this are top-position salaries. And they are making games! That''s a dream job! I would look for people wanting 30%-50% of this salary.

For the money no object scenario, I wont bother. You could go crazy and say "Im gonna hire Miyamoto, and he WILL work for me, because I''ll pay him enough". Total cost: $5.83 billion/year. I''ll let you fill in the blanks from here to there.

Now, to be sane and budget minded...

Staff:
1 Programmer, 1 Artist, 1 Manager/Marketing/PR/whatever person. Depending on the project, maybe a second programmer, but more than that and you probably arent talking budget studio anymore. The artist you may even be able to contract out, but for a lot of stuff (concept art, fleshing out ideas, etc) it helps to have someone on hand even if its only part time. As far as music, unless its an integral part of your game (pretty rare) you are probably better advised to contract out. Lets assume that we can get by on avg $25,000/year per person and offer some type of stock or royalty incentive. $75000/year salary + $5000/year contract. Might even do better than that on the contracting, depending on how extensive your needs are.
Total Cost: $80000/year

Equipment:
For the manager, peformance isnt as critical, you can get by $1500. For the programmer and artist you can still get by for the same price, but lets assume we dont want to keep their productivity up and dont want them losing ideas waiting for compiles and such, so well say $3000 each. No real need for a centeral server at the budget-minded scale, just use a windows filesharing network, put all your dev files into a one location and backup to CD-R each night.
Total Cost: $7500 up front

Software:
For software, we could assume everything was free, but lets figure in some standard packages. My equipment prices above figure you buy a bundle from one of the big names. You could custom build it for less, but those figures include some basic software (OS, office suite) that would be more expensive if purchased separately. For the manager, the office suite should take of it (word, excel, access, and powerpoint can go a LONG way if you are forced to be creative). For the developer, lets go with Visual Studio professional (approx $600). For graphics artist, we could go with Paint Shop Pro ($100?) buts lets go with photoshop just because ($600). For the modelling end, I''m not really familiar, but I hear some of the free or <$100 ones are more than capable. If we went with the standards (Maya or 3DS Max) were talking about a few grand, so well skip those for now. So, were up to about $1300...lets throw in another $500 just for misc.
Total Cost: $1700 up front

Internet/web site
For a connection, lets assume you are in a suitable location and you can get a business class cable or DSL connection for $150/month (maybe even less). Dish out your web hosting to a 3rd party and you can get something more than respectable for under $50/month. For the web site, you probably dont have an extensive site for starting out. You programmer could probably do it, but lets not distract him/her from their primary task. Lets contract out some web site design and implementation for a simple to sell your 1 introductory product. Lets say a few grand a year ($2500?), and your artist can provide some photoshop files for the contractor to use.
Total cost: $4900/year

Facilities:
Maybe you might be able to convert your garage or basement, but we dont want our work to mingle with our personal life (it does enough of that already). Lets say you can find a decent house in a location that allows business activity (a lot of cities allow this for houses on main roads, for instance). You can probably purchase for under $1000 a month, maybe rent/lease for less. Another $250/month in utilities (gas, electric, phone, water). If you purchase, another $2000 a year for taxes if you purchase, plus about $5000 up front.
Total cost : $17000/year, $5000 up front


Total cost for everything:
$101900/year
$14200 up front

Of course, there will be other misc expenses in between, probably a few things I missed, but there are certainly oportunities to trim even some of these numbers if you are frugal. You could even trim these figures a lot, but I''m figuring this based on a budget minded professional business startup, not a serious-amateur development studio.

Sorry for any confusion; he was asking for the unrealistic and realistic figures. I was just giving my dream scenario.

I hadn''t considered renting computers before, though. That''s an interesting idea and something I''ll have to look into more.

Charles Galyon

We pay testers 60k right out of college but the greater software industry is no indication of the game industry. From various Game development houses around here in Seattle I can say that 45k a year is typical for a core developer. Part of this is due to the fact that developers sometimes share in the profits of the game, but I believe that it is largely do to the fact that the game industry is so competitive. There''s allot of qualified developers who would like to make games for a living, so many that companies can afford to pick and choose between applicants. Hireling passionate developers who are willing to work for less.