The Budget

In budgeting, we are often faced with the eternal conundrum: Do you budget according to script, or do you script according to budget? There is no absolute answer, as the conditions under which you make each film will be different. Only one thing is important: Your budget must be as complete and as accurate as possible. This point is more than important; it is vital. If you make a mistake in budgeting, committing yourself to making a film for what turns out to be an unrealistic sum, you're likely to finish up bankrupt. My answer is to put into the budget every single need I can think of and then a few more; I always overbudget rather than underbudget. You may lose a few films if you are bidding in a competitive situation, but it's worth it in the end. A decent budget will save you many a sleepless night.

Below are the major items that appear in most film and video budgets, and this list should serve as a good first guide. If something occurs to you that does not appear here, then add it, as you'll probably need it.

A. Research

1. Script research, including travel and hotels, books, photocopies

2. General preproduction expenses, including travel, meetings, etc.

B. Shooting

1. Crew

Cameraperson Assistant cameraperson Soundperson Lighting technician Production assistant Driver and/or grip Production manager Makeup artist Teleprompter operator

2. Equipment

Camera and usual accessories

Special camera equipment such as fast lenses, and underwater rigs

Tape recorders and microphones Lighting

Teleprompter

3. Location expenses

Vehicle rental Gasoline Crew food Hotels Air fares

Location shooting fees

4. Stock

Negative film Tape cassettes

Developing film and making work print Reels of quarter-inch tape Audio cassettes

Magnetic tape, including quarter-inch transfer Leader and spacing C. Postproduction

1. Editing

Editor

Assistant editor Sound editor

Editing room supplies and equipment, including video off-line

2. Lab and other expenses

Sound coding

Music and sound transfers

Opticals and special effects

Video window dubs

Making titles

Narration recording

Sound mix

Negative cutting

Making optical negative

First and second answer print

On-line video editing

Release print—theater, TV, VHS dubs, etc.

3. General

Office expenses, rent, telephone, faxes, photocopying, etc. Transcripts

Music and archive royalties

Insurance

Legal costs

Dispatch and customs clearance Advertising and publicity Messengers Payroll tax provisions

4. Personnel Writer Director Producer Narrator

Associate producer Researcher General assistant

D. Sponsor station overheads

E. Company provisions

1. Contingency

2. Company profit

Ninety percent of the above items occur in most documentaries. The other 10 percent depends on the size and finances of your production. If the production is small, there may be no associate producer or general assistant, and you may also find that you are not only writing and directing but also doing all the research.

Two notes: First, the crew is normally budgeted per day and the editor and assistant per week. So your cameraperson might appear in the budget for fourteen days at $200 per day, and your editor might be figured in for ten weeks at $750 per week. Equipment rental is also budgeted per day. Second, stock, both film and magnetic, is usually estimated at so many cents per foot—for example, twenty thousand feet of film stock 7291 at eighteen cents per foot.

Besides the above items, a few others occur from time to time, and they are worth noting in your checklist:

• Special wardrobe

• Special props

• Donations and presents

Some of the items in the main list are obvious, but others require some explanation, because a miscalculation can have grave effects on the budget. I have discussed a few of these items below in more detail.

Stock and ratios. It is extremely important to sense at the beginning how much film stock you are likely to require for your shoot. A film that can be preplanned to the last detail and has fairly easy shooting may require a ratio of only five to one—that is, if you want a half-hour final film, you need to shoot only two and one-half hours of film. A more complex film, however, may require a ratio of twelve or fourteen to one, which is fairly standard for major television documentaries. If you are going for verite, emulating the films of Fred Wiseman, Ricky Leacock, or the Maysleses, then you may be in for a shooting ratio of forty or fifty to one.

At the moment of writing, it costs about $350 to produce a twenty-minute work print, so you must be accurate as to what ratio you want to use; otherwise, your budget will be terribly inaccurate. I budget generally on a ratio of ten to one if most of the shooting can be thought out in advance.

If you are doing a videotape documentary, you have far fewer problems, since your twenty-minute videotape will cost $18 or less, as compared with $350 for shooting on film.

Equipment. Some people own their own equipment. I don't, though I share an editing table with a partner. Generally, I prefer to rent the equipment according to the needs of the particular film; sometimes I might want to film with an Aaton, sometimes with an Eclair. Even if you own your own equipment, you should put a cost for it in the budget. This helps you at the end of the year to assess whether the equipment has really paid for itself.

Crew and shooting time. One reason for doing a decent script before shooting is that it helps you predict the shooting time needed. These days the minimum cost for a crew and equipment is somewhere in the region of fifteen hundred dollars a day. If you want the best cameraperson and the fanciest equipment, your costs may go up to three thousand dollars a day. If you have underestimated the number of days needed for shooting, you will be spending anywhere from fifteen hundred to three thousand dollars in out-of-pocket expenses per day. So again, overestimate rather than underestimate.

Be sure that you know exactly what you have agreed upon with the crew. Is the arrangement for eight, ten, or twelve hours per day? Can you make a buyout arrangement, offering them a fiat fee whatever the length of the shooting day? What arrangements have you made about travel time? Is the crew to be paid anything on their days off when they are forced to be away from home? Do you have to deal with a union? What are you paying for a location scout? These questions must be resolved; otherwise, you will think you are paying one rate but will end up with an unexpectedly inflated bill at the end of the day.

The trouble is that you are dealing with a lot of imponderables. The only useful guideline, then, is to err on the generous side. This is also true concerning editing, as it is often impossible to say whether the editing is going to take eight weeks or ten.

One way around some of these problems is to agree with the sponsor on the number of shooting days and editing weeks and get them to pay extra if it goes over. This approach is discussed at greater length in the section on the production contract.

Mixing film and video. It is becoming increasingly common to shoot on film, then transfer to video for the initial editing process. If you plan to do this, you must be sure your budget covers all the transfer work.

Royalties. Royalty payments may be necessary for the use of recorded library music, certain photographs, and film archives. Most of the time that you use ready-made recordings you will have to pay a fee to the company that made the recording. The fee is usually based on the length of the selection you use, the geographic areas where the film will be shown, and the type of audience for whom the film is intended. The rate for theatrical use or commercial television use is usually higher than that for educational purposes. Occasionally, you may be able to arrange the free use of a piece of music if the film is for public-service purposes.

If you are unsure of the final use of the film, it's best to negotiate the rights you want and fix a sum that will be payable if you alter the use. My policy is to get everything fixed before the film is made; if you try to negotiate later and the seller knows you badly want the rights, you may be in a bad bargaining position. In other words, make a provisional clearance that will stand you in good stead if you need it.

The position with photographs is slightly different. If the photographs are not in the public domain, you will have to make an arrangement with each individual photographer. Newspapers are usually fairly good at letting you use photographs for a small fee, whereas individual photographers will be much more expensive. It makes sense to hunt around for options on different photographs or to find photographs in the public domain. The extra trouble may save considerable sums later.

The main thing is that you must obtain permission before use. I know that many people don't, pinching from everybody and paying nothing. It seems a stupid policy, one that ultimately works against the film and the director. On the one hand, you lay yourself open to a lawsuit, and on the other, you may find that a television station will not accept a film unless you can produce written permissions.

Most of the above comments also apply to stock footage or film archive rights. Like music and photos, the cost of the rights will vary according to the purpose and destination of the film. A few years ago most archive rights were comparatively cheap; battle footage from World War II could be had for a few dollars a foot. Today, though, film archives have turned into big business, demanding immense sums for archive clips. It is not unusual to find an archive asking fifty to sixty dollars for a final used foot; this figure translates to one hundred dollars for three seconds in a completed film. Thus, if your film deals with history or a well-known personality, you may have to budget a huge sum to cover archive rights. In a film I did about World War II for a New York educational TV station, our archive payments came to over thirty thousand dollars.

Part of the answer is to hunt for film in the public domain, such as film held by the National Archives. Where this is not possible, and where people are not willing to charge you nominal sums because your film idea is so great, you just have to budget adequately.

Even though archives usually publish a price per foot at which you can obtain their material, you may find it expedient to talk personally with the management. If they particularly like your film, they may arrange for you to have the rights at a reduced cost. Sometimes they will acknowledge that students aren't millionaires or big television corporations and will make allowances. It doesn't always work, but it's worth a try.

Insurance. We have insurance because of Murphy's law: What can go wrong, will go wrong. If you are insured, it helps you face chaos and catastrophe with a certain equanimity. Insurance should cover equipment, film, crew, properties, and third-party risk. It should also cover office and equipment, errors and omissions, and general liability. Within reason, your coverage should be as wide as possible. You should insure the film during the shooting and up to the striking of a master negative, paying particular attention to faulty equipment and damage arising during processing. The usual compensation covers the cost of re-shooting.

However, insurance will not cover faulty original film stock. Therefore, be absolutely certain to test your stock before shooting. Nor will insurance cover damage and fogging by airport X rays. This is a severe hazard these days, and insurance used to be available. Unfortunately, most companies have now deleted such coverage. The only answer is to have the film hand checked (not always possible) and/or carry the film in lead-lined bags. Most airport authorities seem to be more aware these days of the dangers of X rays to film stock, and most machines state that they are safe for film up to 1000 ASA. That may be so, but my heart always trembles until I see a processed film without damage.

Sometimes you may need bad weather coverage, but cost can be exorbitant. Usually I don't bother.

I always insure sets and properties as well as film equipment. I don't insure crews unless we are going on an overseas assignment. I also cover third-party risk in case the filming damages any property or any person. I didn't do this until one day my lights melted a plastic roof and almost set a school on fire. That was the only lesson I needed.

It is possible to be too cautious and find yourself paying out enormous sums for risks that are hardly likely to occur except in someone's imagination. You can usually safeguard against this by going to a reliable specialist film insurance broker.

Most insurance companies these days are unwilling to insure one individual film, preferring to work only on a yearly basis. The answer is a cooperative in which the insurance costs can be shared among various friends who between them will have several films going during the year.

Legal matters. At some point in your film, either in the negotiations with the sponsor or later, you may need to seek legal advice. This becomes particularly important if you are negotiating a split distribution deal or foreign sales. You may also need advice on the basic contract between yourself and the sponsor, even if there seem to be few complications. It is therefore advisable to allow at least a token sum for this in the budget. Under the same argument, you may wish to write in a sum to cover bookkeeping costs.

Whether you do the contract yourself or use a lawyer, there are two or three key commonsense points worthwhile keeping in mind as background before entering into the contract.

1. Check who you are dealing with and research their reputation. This is of particular importance when dealing with distributors.

2. Make sure you have a clear chain of title to all intellectual property.

3. Make sure you understand the contract and the meaning of terms and conditions like "net profit."

4. Try and limit your representations and promises. A TV station will try and make you warrant that your soul is pure. Try and add the phrase "to the best of my knowledge," if you can get away with it.

Personnel. Payments to the writer, director, and producer usually appear as lump sums, though the director may also be paid by the week. What should they be paid? There is no fixed rule, though many people pay the writer about 5 percent of the overall budget and the director about 12 percent. A lot depends on the bargaining position of the parties. If the writer is a member of the Writers Guild, then you will have to pay at least union scale, and the same is true if the director is a member of the Directors Guild of America (DGA). The situation becomes complicated if you want a guild director, as you may have to sign a contract with the directors union and also employ a guild assistant.

Payment to the narrator varies according to his or her fame and bargaining power. A half-hour narration might be as low as a few hundred dollars or as high as a few thousand. If you want the best or the most well known, then you have to pay accordingly. If you have a really prestigious public service film, you may be able to get a "personality" to do your narration for free or for a token sum donated to charity.

General overheads. Overhead can amount to a surprisingly high proportion of your costs, and adequate allowance should be made for it in the budget. Thus, you must think about office rent, telephone bills, secretarial help, transcripts, messengers, duplicating services, and any general help you will need. If you are shooting abroad, you must add not only general travel costs for the crew but also possible costs for film dispatch and customs clearance. Even if you bring the film back home by yourself, the customs authorities may require an agent to clear it with them. So that's another item on your list.

Station overheads. When you begin working with a PBS station to back your film, many will want to add an overhead of 21 percent or more to the budget. This theoretically is for all the help and publicity they will give you. However, the catch is they will also usually charge you for room space, editing, and so on. So try and find out what you are getting for that 21 percent. It is an awfully big chunk of the budget, which you will do most of the work raising, so see if you can lower it.

Contingencies. However well you budget, you may find that the film costs are running out of control. The usual problems are that you need more shooting days than you thought or that the editing goes on longer than you reckoned. But the problem can be something else entirely. A few years ago, for instance, the Hunt brothers tried to corner the world's supplies of silver, and for a few months, the price of silver rose astronomically. As a direct result, film stock prices also suddenly rose. This meant that contracts signed before the rise did not adequately cover the real price of stock.

The contingency element in your budget shields you from the unexpected; it's a hedge against overruns. I usually budget about 7.5 percent of the total budget as contingency. This sometimes leads to arguments with sponsors who fail to see why a budget cannot be 100 percent accurate. In that case, I usually omit the contingency but specify in my contract with the sponsors a fixed number of shooting days and a fixed amount of stock. If more time or more stock is needed, then I get the sponsors to pay for these items.

Obviously, you have to use a certain amount of common sense and discretion in all this. It's no use arguing your rights, feeling your position is totally justified, and then losing the contract. This means that the contingency sometimes becomes mostly a matter for internal consideration: You budget, then add the 7.5 percent to see what a really comfortable budget should be. You then know both the preferred and the bare-bones cost for the film.

Profit margins. Should you put in a figure for company profit? And if so, what should it be? People, and sponsors in particular, have a funny attitude on this score. They reckon that if you are the writer, director, and producer, then you should be satisfied for the amounts paid in these roles and should not ask for a company fee. This is nonsense and applies to no other business. If I run a garage, which is mine but registered in a company name, I expect both to be paid as manager and for the company to make a profit. The same reasoning is absolutely true in filmmaking. You may spend half a year making a film and the other half writing scripts, chasing down other projects, and trying to get various ideas off the ground. Meanwhile, rent has to be paid, taxes accounted for, and electricity and telephone bills settled. It is only the company profit element written into your film that allows you to exist the other half of the year.

That answers the first part of the question, but what should the profit margin be? This is hard to answer, but 15 percent is certainly within reason. However, that 15 percent is taken on the total budget without the contingency. Similarly, the contingency is taken on the original budget without the profit margin.

Videotape. There are a few differences, most of them fairly obvious, between the budget for a film and a videotape. Clearly, stock costs will be different, and items such as developing and printing will disappear. Major budget differences appear in postproduction. On some things you will save—no negative cut, no first answer print—but other costs can be exorbitant. On-line editing, cost of a betacam or one-inch work, and special effects can be very expensive, so check those elements thoroughly before signing on the dotted line.

Budget example. Up till now, I have tried to provide you with a broad overall view of what to expect in a film budget. However, in order to let you see how all this works in reality, I've set out a detailed budget in the appendix. This was the estimate for a major network film, Peace Process, with everything costed down to the last dollar.

Film Making

Film Making

If you have ever wanted the secrets to making your own film, here it is: Indy Film Insider Tips And Basics To Film Making. Have you ever wanted to make your own film? Is there a story you want to tell? You might even think that this is impossible. Studios make films, not the little guy. This is probably what you tell yourself. Do you watch films with more than a casual eye? You probably want to know how they were able to get perfect lighting in your favorite scene, or how to write a professional screenplay.

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Responses

  • abrha michael
    What do i budget for an "answer print"?
    8 years ago

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