Market research counts the costs of your time. This gives companies a realistic indicator of what it actually costs to create a game. Thus if your time is valued at $25/hr, 800 hours of work means that the game cost $20K to make. Note that such formulas hold true even if you think of yourself as "working for free". You still have things like a place to live, a computer to use, food to eat. Just because you're subsisting on income from some other source doesn't mean that you didn't spend that income in some way to make the game. That's why it makes sense to structure your returns on the game in such a way where you first pay yourself back the amount of money you're owed for your time, then consider anything above that to be profit. That tells you what your real returns on investment are. If the amount of money you make from a game is less than what your time is actually worth, then your ROI is a lot poorer than if you had simply gotten a job to do it for someone else. (Of course, there are complexities that need to be taken into account. You might not expect to actually turn a profit until, say, your third game. It's up to you to track that and work it into your business model.)
The first figure depends on the platform. Wii titles, for instance, even on the high end, cost nowhere near what PS3 and 360 titles cost. And I gather high end PS3 exclusives, or 360 exclusives, cost less than high end PC development as the home consoles are "static" models, so testing different configurations isn't a factor. Portable game system development I've read ranges from $50k - a little over $1 to maybe $2 million or so for DS, with PSP development on the high end (think the Monster Hunter or God of Wars of the world) costing multiple millions, approaching last gen home console levels. This is probably why more devs go with DS development. That mobile development is less should be no surprise. Different sort of market, after all. And that's why the "little guy" has a lot more of a shot on the iPhone/touch than he/she would anywhere else.
