Disclaimer: This article focuses on the business aspects and projections of expected game sales. It’s not a replacement for professional accounting or legal advice. Our goal is to help you make realistic estimates so you can plan your game development business effectively.
Contents
The Magic Formula
Throughout this article we will identify a golden ratio – a factor you can multiply your base price by to get a realistic estimation of what can actually be received per unit sold, so that you can easily try out various scenarios. It's as simple as that:
$$\text{NetPrice} = \text{GoldenRatio} \times \text{BasePrice (USD)}$$
$$\text{NetRevenue} = \text{ExpectedSales} \times \text{NetPrice}$$
It's your task to determine the expected number of sales! But after reading this article, you will be able to realistically estimate:
- your net revenue based on any given number of sales
- the required number of sales to reach a desired net revenue (e.g. break-even)
$$\text{BreakEvenSales} = \frac{\text{DevelopmentCost}}{\text{GoldenRatio} \times \text{BasePrice (USD)}}$$
Terminology
For clarification, here is how we interpret certain terms when discussing individual game sales.
All Values are in your currency except the Base Price in USD:
- Gross Revenue: The total amount of sales made on Steam before refunds (100%).
- Net Revenue: The total amount of revenue that arrives in your bank account after any fees and deductions.
- Base Price: The full sales price in USD for the US market.
- Gross Price: The average of all gross prices across countries, converted to USD.
- Net Price: The amount per unit sold that actually lands in your pocket as a publisher.
Steam Sales Structure
First we need to look into the details of a Steam purchase. Steam is the merchant of record which means that Steam handles the payment process for you. Other platforms, such as Kickstarter, might not handle this and then things become very complicated. This is a big plus for established marketplaces like app stores.
The Value Added Tax (VAT) or sales tax varies across countries, typically ranging from 0% to 25%. These taxes must be paid to the tax authorities in each country individually. In the EU, average rates are 20%. The US averages below 1%. Japan, Australia, or Canada are around 10% – 15%. You must usually consider taxes on digital goods if applicable, which are typically lower than on physical goods.
International sales are no joke and can quickly become an administrative nightmare if you plan to sell outside of platforms like Steam and similar marketplaces.
Exclusive and inclusive taxes
Most taxes are inclusive, meaning that the customer sees the full price on Steam. Taxes in the US and Canada are exclusive, meaning that they are added on checkout on top. There may be some other taxes added on top in certain countries with taxes as high as 80%! But these kinds of taxes are other exclusive taxes which are not part of gross revenue and hence our calculations.
Steam's share
From that, Steam typically takes a 30% cut for your first $10 million in revenue, then 25%. Though bigger publishers or successful games may receive lower rates. Yet VAT and platform shares already significantly impact revenue – average net revenue in the US is about 69%, but in the EU it shrinks to about 56%.
Here we show a chart that illustrates the common deductions explained in this article. The yellow bars show the variable range of the aggregated min and max values. So the top of the yellow bar shows a reasonable best-case scenario, while the bottom shows a reasonable worst-case scenario. Hence the red bars show the minimum deduction of each step you should account for, if applicable! With your calculator below, you can adjust all of these values.
This might be confusing at first, but it's the best we came up with to show many possibilities in one image. Even though Steam has a flat 30% in this example, we carry over the yellow bar from the steps on the left!
Common Fees and Deductions
Withholding Taxes
Withholding tax is a tricky topic that you must deal with correctly. The good news, many countries have a tax treaty with the U.S. and pay no or little withholding tax. The bad news, if your country does not have a tax treaty agreement or you fail to provide the required verification data, such as a TIN (Taxpayer Identification Number), then you will end up at a flat 30% rate. Read the Steam guide for more information.
Publishers usually operate in countries with tax treaty agreements, so working with one can be an option for developers in certain regions to reduce the burden of taxes and bureaucracy-though, of course, at the cost of an additional revenue share.
Transaction Fees
There may be minor transaction fees, such as PayPal or credit card processing fees, in customer payments to Steam. However, these are generally negligible for high-volume transactions, and we could not find any trace of them in our sales reports-they appear to be included in Steam’s revenue share.
Currency Exchange
However, one important fee to consider is when receiving your funds. This can become a few percentage points depending on your account type and required currency. Currency exchange fees apply when converting USD to your local currency.
Often, local banks charge higher rates than other services, so check your bank’s rates and whether there are better alternatives. However, an established bank often provides more security compared to an up-and-coming fintech startup. We’ve heard of cases where release-month payments were blocked due to money-laundering suspicions – and that’s much easier to resolve when you know who to talk to.
Especially for low volumes you might be surprised that minimal fees of $15 are common. If you only receive $100 from Steam that month, that's 15%! Remember that you can adjust the minimal payout threshold on Steam between $50 and $1000 to minimize that issue.
Refunds
Refunds and chargebacks are inevitable and typically range between 5% and 18%. Yet this rate largely depends on market reach, pricing and promises being either met or missed. 40% are equally possible in more extreme cases. If a game is cheap, sold in a bundle or with a 70% discount then refund rates are likely going down. On the other hand, if a game for $40 crashes often or is simply not fun then refunds are more likely.
You may argue whether you should see refunded games as actual sales, but Steam does record those as lifetime (gross) sales. Net sales are without refunds and chargebacks. It is common practice to calculate with gross sales.
You don’t pay taxes, Steam’s cut, or publisher shares on refunded games.
Localized Pricing and Currency Rates
Another crucial factor to consider when pricing your game on Steam is localized pricing. Steam offers developers the flexibility to set different prices for various regions, reflecting the local market demand and economic conditions. This strategy makes games more accessible to players worldwide. In regions with lower average incomes, Steam often suggests significantly lower price points to encourage sales. You can explore more about Steam's pricing recommendations for different markets and find more information at SteamDB's pricing tables.
The USD price is the benchmark; in most other locations, the net price in USD is typically lower – often around 50% in countries with lower purchasing power. The most extreme case we found is Argentina, where you only receive about $1.24 for a game sold at $24.99 in the US. The other extreme is Switzerland, where you earn roughly $32.17 per unit, due to the country’s strong currency and economy.
Additionally, Steam periodically updates regional pricing based on currency performance and inflation, but developers must stay proactive! Ignoring these shifts could mean earning less than expected, because either the game becomes too cheap or too expensive.
Combining all of that
Taking VAT into account makes things more complex. To be precise, you’d need to combine the local price with the applicable VAT rate and multiply that by the currency exchange rate at the time of each sale — which is far from trivial. But here’s an example we’ve put together for some important markets.
The “Others” column represents a simplified, population-weighted average of 20 additional countries. AVR denotes the average exchange rate based on the USD base price across these markets. We believe this provides a reasonable approximation, though the actual values for unlisted regions may differ, especially since that market share isn't negligible.
| US | DE | EU | UK | CAN | TRY | UA | JAP | CNY | Others | |
|---|---|---|---|---|---|---|---|---|---|---|
| VAT | ||||||||||
| Gross (USD) | ||||||||||
| Net (USD) | ||||||||||
| Currency | ||||||||||
| Local Price | ||||||||||
| Exchange Rate |
The data of this table is from 08.11.2025
Ratio of local sales
Finally, you must assume the ratios of how much you might sell in all of these locations and multiply those with the numbers above. Unfortunately, these are many unknown variables and highly depend on the localization and marketing efforts of your game. Since we are located in Germany and the products were localized in German and English only, our ratio of "DE" with 19% is rather high compared to the rest of the EU. So your personal situation can be very different from that.
Keep in mind that if you focus on markets like China, your sales might increase significantly. However, you’ll generally need about two sales in China to earn the equivalent of one sale in the US.
Select target markets
Change the ratios below and see how they affect the average net price! We also have a few presets for you.
| US % | DE % | EU % | UK % | CAN % | TRY % | UA % | JAP % | CNY % | Others % |
|---|---|---|---|---|---|---|---|---|---|
The sum of ratios must not exceed 100%!
If we combine all of these values, meaning we multiply the sold ratio with the USD prices above for each country, then we get these aggregated average values. Hint, the VAT is in relation to the base USD price of 24.99 and shows the total amount of VAT spent.
A gross price of 21.82 USD including VAT of 12.07% (5.82 USD).
From this Steam will likely take USD and you pay at least USD transaction fees.
Your GoldenRatio is 0.55, leaving you with a net price of 12.80 USD.
Here we are, these are your sales numbers! You can now multiply your expected sales with that net price.
Discounts
When calculating expected sales and revenue you have to account for discounts as most customers wait for a discount to buy your game. At the beginning you may sell your game with a 10% or 15% discount, while some say that 20% is the minimum. At least the older your game becomes, the higher the discounts, such as 50%, 75% or even 90% and above.
For your first year of sales you may assume that you sell 1 amount at full price (0%), 2 amounts at a discount of 15% and 3 amounts at 30%:
$$\frac{1 \times 0\% + 2 \times 15\% + 3 \times 30\%}{1 + 2 + 3} = 20.0\% = \text{AverageDiscountRate}$$
You can multiply the expected sales or revenue with one minus that value: (1 - 0.2 = 0.8).
There is another pitfall with revenue estimations that discounts are usually not accounted for! Not only do they often simply multiply the USD gross price with the estimated sales number, but they also completely ignore the discount rates. Don't make this mistake, most games are sold during sales!
Your average discount rate is 12.5% % with a factor of 0.875.
This will further reduce your golden ratio down to 0.70.
Now you can calculate your average discount rate and reliable revenue expectations!
Steam Sales Calculator
This calculator uses the values and formulas from the input fields in the article above. Make sure to adjust the sales ratio per country and discounts accordingly!
What about production cost and other taxes?
While tax regulations are highly individual we want to give a general advice:
Yes, in general you can deduct your production cost from your earnings. Income or corporate taxes are usually charged on profit, not on revenue, especially in the EU or comparable western countries. If you for example pay programmers and artists, say $30,000, and you earn only $40,000 on Steam, then your income is usually $10,000 which then may be taxed. The issue arises when you do not have proper invoices or business registration. For example an individual cannot simply deduct all personal expenses such as rent.
To be safe and to not make a fundamental mistake which can easily happen, especially when you work in a team of individuals, consult an accountant. If you know situations in your country that are exceptional, please let us know!