The interesting thing about Shovel Knight is that the game's developers have been very open on the development process of this game. 

Yacht Club Games posted the following image on their blog: 

They explain that the average cost of an employee to a company is estimated to be $10.000 per month. For Yacht Club Games this cost was actually halfed, so one person only costed the company $5000. 

"The man month total number can vary widely for games, but for Shovel Knight, we figured it was something around 144 man months to finish the game."

Yacht Club Games consists out of 6 people. 144/6 = 24 months, i.e. Shovel Knight had a development cycle of 2 years. Now how much did Shovel Knight cost to develop? This is a simple calculation:

5000 * 144 = 720.000

So the game had a development budget of $720.000. As most of you probably know, Shovel Knight was a kickstarter project. They managed to collect $311.502. That still leaves $408.498 unaccounted for.

Now how much did Shovel Knight actually sell? 

Yacht Club Games announced on 6 December that the game sold over 300k copies across platforms. 

Around 15k people backed this on Kickstarter:

15.000 * 20 = 300.000

These people got a "free" copy of the game.

That means at least 285k people bought the game since 6 December:

285.000 * 15 = 4.275.000

4.275.000 + 300.000 = 4.575.000

4.575.000 - 408.498 = 4.166.502

But of course Yacht Club Games has to pay royalties to Nintendo and Valve. According to this source the royalties on the Eshop are similar to the Appstores. According to this source the royalties are around 30% of the generated revenue on Appstores. So I will be using the 30% figure in this analysis. Yacht Club Games had to pay around $1.249.950 of royalties to Valve and Nintendo. So the profit is actually $2.916.552.

So each developer earned $20.253 per month during the 2 year development cycle (not including monthly paychecks). 

Of course, Yacht Club Games is currently working on free dlc, which means the actual development cycle will be longer than 2 years, but the game will continue to sell during that development process. So they shouldn't run into any budget problems for 2015. The game has yet to be released on PS3, PS4 and PSVITA and it will include exclusive content in the form of a Kratos boss battle. So there will be a nice incentive to buy it on a PS platform. Also keep in mind that this analysis doesn't include a whole month of sales data. We don't know how much the game has sold currently. We only know that it sold over 300.000 copies since 6 December.

So the conclusion is that Yacht Club Games have earned a very nice profit and they made the right decision on becoming independent developers.

Sources used: 

http://yachtclubgames.com/2014/08/sales-one-month/

http://nintendoeverything.com/indie-devs-on-eshop-revenue-cuts-gunman-clive-set-for-3ds-store-unity-comments-more/

http://www.develop-online.net/news/steam-dev-revenue-split-flexible-but-fair/0109256

Please read the this blog if you are confused about some of the numbers used in this thread. They explain it more in depth there. 

I guess people don't like to read "long" threads? :p

I dont think the industry average per year in most areas of game development is $120,000.

If they made more quality titles they can pretty quickly grow as thier reputation, library and $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ grows..

I am considering to buy this game for the sale price of £8.99. (3DS version is my preference. Looks same but smaller.)

Free dlc?....................................... REALLY?! :D

Yeah, they are the stretch goals of their kickstarter campaign. They couldn't afford to wait until the entire game was released, so they decided to add the stretch goals later for free als DLC.

I thought it was discussed long ago already. You forgot to mention that the game was heavily promoted by nintendo, generated 2/3 of revenue on nintendo platforms, so its far from typical indie. Actually worth of marketing efforts from nintendo may far exceed the official budget, so it may be like this - 720k development budget, 5kk *hidden* PR budget from nintendo, 4.5kk revenue. Also most copies are probably from sales, so lower the real revenue. Reminds me of Infinity Blade which is most profitable Epic game, with Apple doing all the PR, yeah.

I'm glad that their efforts and crunching paid-off, but Shovel Knight made me give up on indie games actually. Given the nice kickstarter, nintendo support, competent developer, and the result? Nice 16bit-era game with 8-bit graphics. I wonder if any indie dev will ever be able to make a game of original Resident Evil caliber at least.

Read the blog. And it's not $120.000 per year.

If a company has 100 developers the average cost of development would be $12.000.000 per year.

I think I trust actual insiders over some random guy on the internet. Anyway, it's just a rough estimate, not a fact. 

Buy it before 8 January, the price is reduced for 33% at the moment. 

@SamusAran.....I'm thinking about it. I need to watch and read more reviews and gameplay.

Enjoy not playing great indies. Congratulations.

As of 6 December there were NO SALES for this game. It sold at full price. Currently the game is 33% off, but those sales are NOT included in the 300k sales figure. 

And I doubt Nintendo spent money on marketing a third party indie game that isn't exclusive to their console. It was the developer's choice to market this game heavily on Nintendo platforms and it paid off well. Around 62% of the sales came from the Wii U + 3DS. 

You have no sources for anything you claimed.