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about the terms of $100,000 gross revenue

Discussion in 'General Discussion' started by gamer123454321, Jul 11, 2020.

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  1. gamer123454321

    gamer123454321

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    Hi everyone! I just want to make things more clearly. For the Personal Edition of Unity required earn below $100,000 in revenue in 12 month period. Does that count after deducted the fee for steam or Google play? And what about the refund in steam?
     
  2. kdgalla

    kdgalla

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    I'm looking at the terms of service:
    https://unity3d.com/legal/terms-of-service/software

    In the eligibility section, it refers to "Total Finances", which I interpret to mean the same as "Gross Finances". That would mean that you could not subtract any expenses to get below the $100,000 limit. That's just my interpretation- I'm not a lawyer though.
     
  3. Ryiah

    Ryiah

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    The answer to this is in the definition of "gross revenue". Gross revenue is the amount of money you made selling a game before any deductions come into effect. If you sell a game for $60 then your gross revenue on the game is $60 regardless of how much of the money you get to keep. The term used for how much you get to keep after deductions is "net revenue".

    https://www.investopedia.com/ask/an...venue-reporting-and-net-revenue-reporting.asp
     
  4. gamer123454321

    gamer123454321

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    ic Thank you!!! But in that case, logically after customer refunded then the price of he/she purchased won't add to the gross revenue right?
     
  5. Zuntatos

    Zuntatos

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    If you only sell your game on steam, you're not actually selling any games. Steam sells your game, not you. You sell a license to steam with a certain compensation scheme. That is your revenue. So your revenue is after the steam cut, after VAT, after refunds. Those are all steam-accountant-issues, not your-accountant-issues.

    Obligatory, I'm not an accountant, lawyer or anything, so take it with a grain of salt.

    P.S: This is also why I'm happy to let steam have a decent cut, it saves me a lot of headache.
     
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  6. gamer123454321

    gamer123454321

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    very clear. Thank you!!!
     
  7. Ryiah

    Ryiah

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    Correct. A refunded customer is no longer a sale.

    Once again gross revenue is prior to the expenses. If you have been counting your revenue in the manner that you state here then you have been doing it wrong. Since I can't seem to find a statement from one of the Unity staff members (eg @UnityMaru) I'm going to instead include UE4's statement on "gross revenue". Relevant part in bold.

     
  8. AcidArrow

    AcidArrow

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    I’m not sure how the Steam agreement looks, but for other platforms the set up is like:

    You are selling the game.
    Platform is doing you a service (or managing the sale)
    Your gross revenue is the full price.
    The 30% is an expense that you pay to them. (Regardless of whether this is done automatically or not)
     
  9. Zuntatos

    Zuntatos

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    All the unity ToS says about it is this: ( https://unity3d.com/legal/terms-of-service/software )
    The unreal engine quote in your message clearly says "The royalty is based on gross revenue from end users". The Unity ToS makes no mention of anything similar. It does not specify game-related-revenue either; just any gross revenue and funding.

    The Steam Distribution Agreement is known to say you license the software to them to distribute. You get compensation for that. It's not a "we provide a system through which you sell your software". It's more like a "we have a system through which *we* sell your software".

    So my gross revenue as a company regarding the Unity ToS is my licensing revenue from Steam + whatever else my company does to gain revenue.

    Disclaimer; again not legal advice or anything remotely similar to that

    Edit: covering my ass legally a bit better
     
    Last edited: Jul 12, 2020
  10. Ryiah

    Ryiah

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    We're on a forum. Covering your ass here is more or less automatic. That said if you want to truly cover your ass contact an accountant and/or Unity directly to verify which way it is. Actually that's what the OP should be doing here. Contact people who have the authority to tell them which is which. Best we can do is give our opinions based on our knowledge.
     
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  11. Owen-Reynolds

    Owen-Reynolds

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    Agree. My take on that is the royalties are a whole different thing. For decades people have done little tricks to launder the gross to cheat people out of royalties. Movies were famous for cheating actors that way. Steam could pay game-makers only 10%, then kickback the other 60% in some overly complex semi-legit-seeming way, cheating UnReal out of most of the royalties. On a high-selling game, that could save hundreds of thousands of dollars in royalties, so would be worth it to custom-make a scheme. A clause like "gross revenues from end users" is a practical defense against those known tricks.

    But Unity is getting a flat smallish amount, no matter how much you sell. Tricks to knock down a game's gross won't matter. If you paid $100,00K in salaries to make and advertise it (or any other game you make) that counts for Unity. If you're just barely over and have some trick that drops it down to $99,050 on your yearly filings, whatever. You didn't cheat Unity out of much money, and next year you'll be over.
     
  12. Zuntatos

    Zuntatos

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    I was covering my ass for agreements with steam not with Unity :)

    But yeah I do believe Unity is quite responsive to licensing questions when contacted appropriately, so if you (the reader) want to really be clear about it you can send them an email or something. Maybe the form here: https://support.unity3d.com/hc/en-us/requests/new .
     
  13. neginfinity

    neginfinity

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    This is almost certainly incorrect.
    The gross revenue is amount of money BEFORE steam fees or taxes applied to it..
    It is revenue, not profit.

    As you said, you're neither a lawyer nor accountant.
    In OPs situation the best idea would be to contact a lawyer, or at ljeast unity support. This has to be a fairly common scenario, so they should know how it is normally done.
     
  14. Zuntatos

    Zuntatos

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    Steam sells a game for $100. Steam makes $100 revenue.
    Steam pays me $70 licensing fee for that sale. It is an expense to steam. Steam makes $30 profit. (Let's presume there's no tax or other costs).

    I get paid $70 in licensing fee. I make $70 revenue.
    I have to pay unity $10 (whatever), and some dude I hired $20. Expenses of $30. I make $40 profit.

    Please enlighten me to your stance on this.

    Edit: Compare this to the Unreal Engine situation. They get royalties of your end-user sales. That situation isn't like they count 100% of those sales as revenue and then write an expense for 95% of that right?
     
    Last edited: Jul 12, 2020
  15. Ryiah

    Ryiah

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    I've already explained my stance. Gross revenue, which is the term employed in the license agreement, is the amount of money that the product was sold for before any expenses are taken into consideration. A store's cut of the sales is an expense for the developer and is thus not taken into consideration when you calculate gross revenue.

    If a developer creates a game for the Steam store and sells 10,000 copies at $60 each that's $600,000 in gross revenue.
     
    Last edited: Jul 12, 2020
  16. Zuntatos

    Zuntatos

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    Edited my post since with the added unreal engine bit.

    But you are not selling your product. You sell 1 license to steam which contains permission to sell and distribute your game on certain terms.
     
  17. Ryiah

    Ryiah

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    No. You do not nor have you ever licensed your game to Steam. You are licensing your game to the people who purchase it from Steam. Steam is merely a middle-man. Since you clearly have no understanding of how any of this works I highly recommend you hire a lawyer to explain the agreements and an accountant.

    Why an accountant? If you're making a misunderstanding of this you very likely are misunderstanding a great deal when it comes to finances and your records are very likely wrong in many ways. If an audit were to come your way for any reason whatsoever you would be screwed and possibly very badly at that.
     
  18. neginfinity

    neginfinity

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    Steam sells $100 game on your behalf.
    That's gross revenue. Your gross revenue.
    Steam takes $30 as a cut for providing expenses. That's expenses. Yours.
    That leaves you with $70. Which is your profit before taxes. But not gross revenue.

    Like I said, you need a lawyer, an accountant or need to contact unity support. Instead of trying to argue with me.

    Handling a revenue in steam game is a common topic, so the unity support surely has an answer for this query. So far you have not contacted them, as far as I can tell.

    Additionally another problem is that you're trying to approach this from common sense position.
    Common sense does not apply here, as you're dealing with established legal and financial definitions. Instead, you have agreements and law. Those should be used instead.

    I second @Ryiah 's advice and also recommend to consult both lawyer and an accountant.
     
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  19. Zuntatos

    Zuntatos

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    I'll poke my accountant about it. He's the one which came up with this stance though, so I'll have to see about that. (Unity, if you're watching, it makes no difference for you)

    (For context, this is in the Netherlands, though I don't think it really matters regarding what way is the right way)
     
  20. JohnnyA

    JohnnyA

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    It is really quite simple, your accounting statements will show a gross revenue. This is your gross revenue.

    Generally, as discussed here, store agreements are set up such that the gross revenue includes the full amount your game generates, with the stores cut being charged as a fee to you (i.e. an expense). However any such agreement would be superseded by the laws of your own country, and so it does matter where you live.

    Your accountant would be the person to talk to: their stance is not the norm, but it may be right for your country. You should at least point them to the agreements and discussion around them, noting that you are paid a royalty and that a fee is deducted from the royalty. There stance may simply be a lack of awareness on their part.
     
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  21. angrypenguin

    angrypenguin

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    I suspect that a lot of this is actually going to be vendor specific. I can't share details, but some of what people have said here is specifically not the same as some of the agreements I have with regard to sale of products.

    Consider: if I'm selling printed copies of a book, I get a factory to print me a bunch of copies. I then sell these at a wholesale price to one or more stores. I set a Recommended Retail Price which is higher than my wholesale price, but the actual retail price (ie: what customers pay) is up to the store. The difference between the wholesale and retail price is not a "fee" or "expense" to me.

    Of course I'm not selling printed copies of a book, and the way that any particular vendor handles things with any particular developer isn't necessarily standardised.

    From an accounting perspective, yes. Note that in the UE4 example someone posted they're explicitly defining what they're calling "gross revenue", in which case it's based on that definition for the purpose of that contract.

    There might be another distinction of note, there. UE4 is talking about product revenue from end users. I think Unity is talking about business revenue in general. Those things aren't necessarily the same, so I don't think the UE4 example is actually helpful here.
     
  22. zombiegorilla

    zombiegorilla

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    That is not accurate. Steam is a distributor, not a publisher. You self-publish on steam. The fee is just that a fee. You are not transfering a license to Steam. However, it is important to note, that this is something that if you are confused about, you need to bring it up with steam or in the steam forums. Not here. No one here, including Unity staff can authoritatively give you answers about steam policies and agreements. (for steam or other services). Refunds shouldn't be a factor. if refunds are affecting your revenue a degree it is impacting things like 100k & 200k rev caps, you are doing something very wrong.

    As noted above and clearly in the license agreements, the rev caps are based on gross revenue, revenue before any fees/operating expenses/etc. See here: https://unity3d.com/legal/terms-of-service/software

    I am going to close this because 1) it is answered, both by members here, and by the TOS. (it is gross revenue). and 2), specific details of the distribution model of Steam/Play/App Store/Etc should be directed to those sources, anything here would just be speculation, and not something you should act on..
     
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