Intermediate licensing tier between Indie and Artist?

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Hi,

I am evaluating a possibility of buying Houdini Indie, as with the recent updates and improvements to workflow, it seems to meet my requirements almost perfectly. One thing that keeps me discouraged though is the extremely steep pricing jump between the Indie tier and Artist tier.

I could buy Indie version, invest substantial amount of time into learning it, and then become dependent on it for my livelihood. I've never ever made anywhere close to $100k revenue in a year, due to relatively low average salary and economic state of the eastern European country I live in. I usually make around half that. However as an independent game developer, there's a possibility I could reach or slightly cross this sum, if my game succeeds.

The Houdini FX Artist (FX because big part of the reason I'd get Houdini is to create explosion/fire effect flipbooks for my game) is $4500 the first year and then $2500 each subsequent year. If my game was a massive success, that may not be a problem, but if my game made let's say barely over the Indie limit, that would tip the weights of affordability a bit. The $100k limit is before tax. If my game made slightly over $100k, then Steam takes 30% cut, Epic takes 5% for the Unreal Engine, and I have to of course tax the remainder, so I will be happy to end up with 50% at the end.

Out of those, I'd have to spend almost 10% of my actual earnings on initial license, and then $2.5k subsequently every year, even if I did not make anywhere near the same $100k sum due to the drop in game sales, which is natural over time, but I would want to keep my Artist license maintained to not fall out of the maintenance and waste its value.

I am not saying the Artist license price tag is unjust. I respect any pricing SideFX deems appropriate, because Houdini is indeed a high quality powerhouse which deserves it, and there are many commercial entities using it to make profit orders of magnitude higher than the license costs. My point is just that with the introduction of Indie licensing, SideFX has set a precedent of pricing dependent on artist/studio income to reach multiple income strata.

I do understand the typical “If you make over $100k with the software, then you should not have a problem paying a few grand for it.” argument, but there are additional considerations, such as those expressed above, as a result of which, the net income may be substantially lower, as well as specific use cases, where Houdini is not the primary, but rather auxiliary means of earning that income.

So I am just curious if there's any considerations of more progressive pricing in the future.

Thank you in advance.
Edited by Ludvík Koutný - Oct. 15, 2020 15:03:02
https://www.artstation.com/artist/rawalanche [artstation.com]
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It just too much ifs here. You did not publish game yet, but you are already thinking about Houdini license costs …
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SreckoM
It just too much ifs here. You did not publish game yet, but you are already thinking about Houdini license costs …

Well, yes, of course. That is the point. To anticipate instead of get into problems which become hard to solve later.

I am confused, maybe I failed to communicate my point sufficiently. If I were to invest let's say at least 2 years into learning Houdini, developing workflows and tools I'd then be completely dependent on, then just barely exceeded the Indie income tier, I'd have to face a very tough choice between investing up to nearly 10% of my yearly income (after tax) into licensing a software I may not even be able to maintain following years, due to the extreme maintenance cost (and therefore losing big portion of the value), or having to give up tools and workflows I spent a long time building my dependence on.

I don't know your circumstances, but you sound like you probably either work for a studio which has paid for the license you use, or you exceeded the Indie income tier by a long shot. Otherwise I am having a very hard time imagining you'd be so indifferent to long term economical planning.
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Don't overthink it - most successful business people never know too much about money. That's for accountants to deal with.
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goat
Don't overthink it - most successful business people never know too much about money. That's for accountants to deal with.

While that's doubtful statement at best, even if that was the case, I don't run a business. That's one of the points. I am a solitary freelancer. That's why I am the one who has to take these considerations into account, as I can not afford to offload it to someone else. I mean sure, I will have an accountant do taxes for me, but I will hardly consult them about intricacies of computer graphics software value.

Also, point unrelated to your reply, just in general to the topic - I am in no way proposing any increase in the Indie pricing income ceiling. I don't have any expectation for Houdini to be cheap above such income limit. I am not after an amazing price, just an adequate one. For example here's how I, personally, would imagine an intermediate tier between Indie and “Artist” version:

  • Limited to revenue under $200k
  • $1500/year rental, no perpetual license.
  • Only single license of this type allowed per business or person. Can not be used in same business as Artist or Studio license. Can be used in the same business with Indie license but only if the business does not exceed $100 Indie income limit.
  • File format incompatible with Artist and Studio licenses, only compatible with Indie.
  • GUI Watermark
  • 1 Karma and Mantra token
  • Workstation locked, not floating
Edited by Ludvík Koutný - Oct. 16, 2020 08:18:25
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You are overthinking this. As an indie game developer who made a game that made over $100k (but not millions) I can tell you Houdini or 3d licensing fees in general are the least of your accounting concerns.

You'll want to look for ways to even out your income - aka setup a seperate company and publish the game under that company name, then pay yourself from that company, this way you can leave money in the company to pay yourself over time. I'm oversimplifying it but hopefully you get the idea. You can even setup a publishing company and a development company and have the publishing company pay the development company, then the development company pay you.

Also one thing to note - revenue would be after steam's 30% cut. This is because when you get checks from steam the 30% has already been taken out so it's never counted as revenue. That's why Epic actually has to specifically call out “gross game sales” or something to get their 5% of gross.

Another point - can't you just use the indie licence then if you make a game that makes some money bump up to an artist license for a couple years then go back to an indie license if your revenue drops?

Anyway, you'll probably find a ton of financial systems aren't well equipped for making nothing for a couple years then having a huge spike - it shoots you into high income tax brackets etc. You should talk to an accountant and or lawyer who understands this stuff before you publish to make sure you have a good company setup and accounting plan.

Hope that helps, good luck.
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Thanks, that is actually the kind of useful answer I was hoping to see.

Barrett Meeker
You'll want to look for ways to even out your income - aka setup a seperate company and publish the game under that company name, then pay yourself from that company, this way you can leave money in the company to pay yourself over time. I'm oversimplifying it but hopefully you get the idea.

Yes, I understand this quite well, as here (in Czech Republic) this is actually the only feasible way to have a business as a game developer if you plan make any substantial amount of money at sub-corporate size. There is this basic solo trader status, but it's capped at $43k year. After that, the only financially sensible way is to start what's called s.r.o., which is pretty much equivalent of LLC in the US. And then I have to do it pretty much the way you've described it, where I make a company I am the sole employee of and pay myself a salary. I hate how overcomplicated it is, but well, it is what it is

Barrett Meeker
Also one thing to note - revenue would be after steam's 30% cut. This is because when you get checks from steam the 30% has already been taken out so it's never counted as revenue. That's why Epic actually has to specifically call out “gross game sales” or something to get their 5% of gross.

This is actually most helpful point, which changes everything. If Houdini Indie license income limit considers actual income to the artist, not the gross revenue generated by the product, then even at the very worst case, when I'd make $100,001, that would still make Artist license relatively affordable as it would not cross 5% of the entire revenue.

It's still not cheap, especially if I don't use Houdini as a primary means of making that income, but only as an auxiliary software I open like twice a week for couple of hours to generate some content, but it definitely crosses the threshold of at least affordable.

Barrett Meeker
Another point - can't you just use the indie license then if you make a game that makes some money bump up to an artist license for a couple years then go back to an indie license if your revenue drops?
Technically yes, practically it'd be pretty much throwing $2000 down the drain (Annual Maintenance - Artist License price) as soon as I do that, if I want to keep using Houdini in the future and were to ever cross the Indie limit again. Because I suppose, once you drop out of maintenance train, you can not jump back on it, so if you want to get the latest Houdini version, you'd have to dish out the initial price again.

Barrett Meeker
You should talk to an accountant and or lawyer who understands this stuff before you publish to make sure you have a good company setup and accounting plan.
Sure, I don't plan to do financial side of things myself. I was just worried about that worst $100,000-$150,000 revenue case where the affordability curve shoots straight down through the floor before it evens back up as the revenue axis progresses.

I understand the line has to be drawn somewhere. It's just that given the steep step between the Indie and Artist license, you can really get to a situation where crossing this threshold just slightly can make a difference between having to pay 0.26% or 4.5% of your total earnings.

I've created a graph to kinda visualize it, taking my proposed $1500 intermediate license into account:
I started at $20k/year as I found that to be a floor of what an average competent Houdini artist could make in worse case scenario second world country. I do get it though. Why would SideFX do something that has possibility of reducing their income. It kind of makes sense as the area of the curve below red is much larger than the one below green

Bottom line is that if the $100k indie limit is net revenue, not just any revenue generated with it, then my concerns are no longer valid. Of course, I will have to double check that, as I am still not completely sure that is really the case.

Thanks again.

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Sorry to say this, but from what I read the majority of sole indie game developers is hardly having any revenue. Median gross revenue of these games on steam is said to be around $13k (per game, not per year).
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Konstantin Magnus
Sorry to say this, but from what I read the majority of sole indie game developers is hardly having any revenue. Median gross revenue of these games on steam is said to be around $13k (per game, not per year).

I am well aware. It's a calculated risk. I am not worried about the lack of success. Or rather, not in the context of Houdini license expenses at least
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The license for H Artist is perpetual, if you're using it just for fire/smoke fx, then you probably don't need to pay for every update out there. I've been succesfully working with Maya 2015 until 2019. If it works for you now, then it'll work for you later. You upgrade your process when your business scales.
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If you start in year 2021, then the year 2020 fiscally didn't bring you $100k from the game .
If 2021 brings that (and more, let's hope), then the 2021 revenue will be $100k+, so you then can upgrade the license in 2022.
Depending on where you are, your taxes and all are paid once per year , so the yearly income is calculated at the end of the fiscal year.
If you make less than that within the year, continue using Indie.

Per upgrade plan per year, you can chose not to pay it and still own the software, unlike some competitor options.
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