You might want to skip this post, it’s all tax talk and the numbers are specific for Austria…
Anyway, what I wanted to share are some of my calculations as to what’s the bare minimum a single indie-game-iPhone-developer needs to sell to survive. (If you ever want to go on vacation, get a car, have kids or something like that, you should aim a little higher…)
If you stumbled upon this looking for actual app store iphone game sales numbers, get some here, here, here, here, here, maybe here or if you really want to even here for god’s sake. But now to my story:
Hypothetical iPhone Developer X has made a little game and is selling it on the App Store. How much does he need to sell to make a living?
Let’s say he has 3210 sales in one month (about 107 a day) at EUR 0,79. (or 1600 at 1,59 | 855 at 2,99)
3210 sales x EUR 0,79 = EUR 2.535,90. Wow, no trouble surviving on that, right?
End of story.
Or wait, we forgot to subtract a few things. Apple keeps upwards of 30%, the rest of the money is transferred to him from 7 different places so he might have to pay a transaction fee of about EUR 10,- for all payments coming in a different currency from outside the EU and what he gets also depends on where his game was bought (what the actual price is in that country) and what the exchange rate is at the time of the transaction.
X’s bank account
What makes its way onto X’s bank account will be more like EUR 1.500,- I’ll call this his turnover
- 20% Value Added Tax: well, not in this case, no VAT left in the money he gets from Apple.
- work related expenses, let’s assume EUR 200,- for internet, phone, domain hosting, work-related insurances (liability, legal protection) and all other stuff he can deduct from tax.
Income Before Tax
EUR 1.300,- left now. This is called Income Before Tax and the following is subtracted from it:
- 25.18% for Social Security (EUR 327.34)
(16% retirement insurance, 7.65% health insurance, 1.53% self employment provision)
- EUR 7,84 Accident Insurance (fixed amount of EUR 94,08 annually)
What’s left now is his Income: EUR 964,82
- income tax: Almost none in this case, as the first EUR 11.000,- per year are tax-free, but let’s assume he has an income of around EUR 1.000,- per month or EUR 12.000,- per year. That’s EUR 1.000,- above the limit and X has to pay 36.5% taxes for that amount, which is EUR 365,- annually, or EUR 30,42 income tax for this month.
So of the initial EUR 2535,90…
- Apple gets about EUR 1000,-
- EUR 335,18 are payed for social security
- EUR 30,42 are payed as income tax
- EUR 200,- were assumed for work expenses
and that leaves X with EUR 970,30 to pay for rent, food, transportation, savings, entertainment, etc.
PS: Of course all the taxes aren’t calculated monthly, where would be the fun in that? Instead for social security for example you tell them expected annual earnings, they calculate the tax off of that, you pay it quarterly in advance and at the end of the year there’s a tax invoice being made that has all the right numbers.
Put half of what you get into a separate bank account, don’t touch it for the rest of the year (until after the next tax invoice) and you should be on the safe side…