The warning – as always these ramblings are my unfiltered experiences through the filmmaking process. A little additional warning here, this about a particular and wide reaching aspect of filmmaking but it is sort of a how the sausage is made exploration so if you don’t really care how sausage is made then click away now, otherwise welcome to my world.
“We don’t make movies to make money, we make money to make more movies.”
Walt’s words are very true when it comes to independent filmmaking. Only a foolish filmmaker would make a movie with the goal of making it rich, most of us just want to make enough to justify making the next film. To do that and to be able to keep making films you need to be both a master of and a slave to your budget. Hopefully this bit of information helps not only other filmmakers but also those working on indie films and even those who work for a small private business.
Building A Budget
Having spent a number of years in finance, and having owned businesses that both succeeded and failed I can speak with some authority on budgets. How you come up with a budget really isn’t complicated and the following formula is probably more valuable in the real world than a handful of business classes.
PROJECTED REVENUE – EXPECTED PROFIT = BUDGET
Essentially you arrive at your budget by working your numbers backwards. Think of it as how much can you spend not how much will it cost. This is a creative field and part of the creative process is figuring out how to creatively achieve what you desire within the limitations you have (such as the budget).
FIGURING OUT PROJECTED REVENUE
This is the art of finance and generally you will get better as you do it. You need to start with market trends and recent revenue figures to have some comparables. Unfortunately often these numbers are hard to come by for smaller genre indie films since Video on Demand numbers aren’t reported and most if not all of the revenue for many smaller films is from Video on Demand. Distribution deals are also often not reported (excluding the headline making ones from major festivals like Sundance but those films usually feature A list named stars). So you are going to have to do some digging, some asking and hope you get enough information to build an educated guess around. You also need to weigh the different distribution alternatives you may face because there is a big difference in a major studio distributing your film theatrically and you self distributing on Amazon and ITunes and there is a host of players and options in between those two scenarios. So it is usually best to know the options and plan for the worst while hoping for the best and build your budget to work within those options.
So in reality most of us would be happy to make just enough to justify making another movie make sense, but there are other people who are relying on a profit as well. The cast and in our case the crew as well all have residual deals on top of their compensation and in order for them to earn a proper amount for their efforts we need a profit. In our case we are self financed but if you have investors you owe it to those investors to do everything you can to provide them a reasonable profit to compensate for their risk and reward their trust in you. So make sure you are looking at the compete picture when estimated your profit expectations.
NOW THE BUDGET
So using this basic but beautiful formula you now know how much money to have to make the magic happen. This is where the internal war between the indie filmmakers many personalities takes place. On one have you have the writer you who lives in a world where numbers are meaningless and anything imaginable is possible, go ahead and punch that you in the throat trust me he is more trouble then he is worth once you are in preproduction. Next you have the director you who has a vision for what he wants to do and how he wants the story to visually play out, now while it may be tempting don’t punch him in the throat. He has to work with the producer you who is the one responsible for the budget and the one who has to figure out how to make the magic happen with the budgetary constraints. Having spent the past few months in this battle I can tell you it is not always pleasant but a necessary step to make the jump from idea to finished film.
BREAKING DOWN THE BUDGET
Now that you have the total you can spend on your film that number has to be broken down. Trust me if you don’t break down your budget then your budget will cause you to have a break down. Again it is wise to work backwards as you do the breakdown so figure out how much your going to need to spend on marketing and where you are going to spend it (even if you are 1,000% sure your film is going to get swept up at a festival for a fat wad of cash from a big distributor it still costs money to let them know your film exists in the first place.) As a general rule it costs about three times as much to let people your awesome product exists as it does to create your awesome product so you can use that as a starting point. You want to break down the costs so you know how much you are spending and where you are spending it as best you can.
Next move to post production expenses. This is where many movies fail, they don’t have the funds to properly complete, can’t afford to bring in a new editor for a fresh set of eyes, can’t afford a proper soundtrack, can’t afford to prepare the DCP, can’t afford needed ADR, or can’t afford any reshoots. Basically they are hosed because they didn’t calculate these projected expenses into their budget in first place, so don’t hose yourself.
Now we get to production, which is the fun part of movie making, the making of the actual movie. This is a large category chocked full of expenses that will make your head spin because everything costs money. Within the production process you will find an endless battle for limited resources. Here is also where you can make the most impact on your budget so you will spend a lot of time here trying to figure out how to get things done for cheaper. Since filmmaking is a collaborative effort here is where most of your human capital will be employed and you will need to figure out exactly what you need and find a way to entice them to work within your budget restraints. This is a budget subsection that can easily be underestimated because you fail to realize that everything costs money so as you plan out figure everything you want in your film has an associated price, find out that price then try to figure out how to get it at a lower price.
Finally you hit preproduction. Here I lump general expenses like websites, legal, interview related expenses, rehearsal related expenses and equipment expenses. I put equipment here and not in production because I generally prefer to buy equipment and since I will be dialing in the look in the preproduction stage those expenses will occur during this stage of the process and it is an easy way for me to separate out asset purchases from non-asset purchases.
These apply to various stages of your budget.
- Remember everything has a cost so find that costs then figure out how to achieve the same result for less.
- Offer something above cash compensation if your offering less than market compensation to your cast and crew.
- You can never review your numbers enough.
- When you need to cut production costs, and trust me you will need to cut production costs remember there are three things you can do, cut scenes, change the way scenes are shot to be able to move quicker or at a cheaper location or prepare ahead of time better so you can move quicker through the scene.
- Embrace the limitations – all great art is the result of creative minds moving within a world of limitations.
- Don’t expect everyone else to understand. When people find out your making a movie many assume your sitting on a pot of gold and can spend at will, you can’t but they won’t get it and that’s ok. You are in control of the budget so you decide what is worth the expense and what isn’t. If they want that level of decision making then let them throw their cash in the pot with you, if not it’s your money so it’s your decision.
- Remember this basic rule of finance – net profits are generally more impacted when you spend money then when you earn it.
- Be honest – when something is outside the reach of your budget be honest with people, when you have to cut things for budget reasons be honest with people, when your basing compensation on budget limitations be honest with people, seriously just be honest and you will be surprised the creative solutions to your problems other people will come up with.
- Don’t pay yourself –this always rubs me the wrong way having seen many investor packages for films. If you are going to be a large equity owner then your compensation is that equity. I know people have to pay their bills but this isn’t a bill paying business, this is a big risk and hope like hell for a big reward business. By the time we release I will have three years in on this film completely self financed and will not of received a dime in compensation, my compensation comes through my equity stake if the project is successful and if you want to be the boss that is the price you pay to do so.
- When it comes to movie making time is always money but different times cost you different amounts. Production is the most expensive time, followed by post and lastly preproduction. So if you need to cut time to save money start with the production and figure out a way to shoot quicker to meet your budget requirements.
- Remember there are always other options. You can always stay on budget by allowing yourself to think creatively and being flexible enough to find other ways to accomplish your goals. If a location doesn’t work on find a lower priced one, if you need to alter the look to make it work within your budget do so, if you need to shrink the cast do it, anything can be worked around if you are creative enough, and hey this is a creative business after all.
So hopefully I didn’t bore you too much, and really I am impressed if you managed to make it to the end, pat yourself on the back. This clearly falls within the aspect of movie making most people don’t want to read about, kind of the how the sausage is made level of information. So thank you for joining me on the little rant and now I must get back to preproduction tasks cause the magic doesn’t happen magically.