Proposing a budget. Questions.

[Ryan-Guy]

Not sure if this is the right place because I can no longer find the "Business" section, so mods can relocate it if needed.

I have a rare opportunity where a financier is asking me to pitch some B level movie ideas to him. I have some good ideas and some preliminary budgets that each would need, but my question is: in the movie industry does one usually ask for more than the proposed project would need, or do you ask for exactly what it would take to make the film, plus a small cushion?

I understand that obviously in a normal business environment, negotiations always start with a high, or low bid depending on the role, and find middle ground. But I guess I'm wondering if the business culture of the film industry is different. For example, I pitch for a $100k film, expecting to get $50k, but the financier passes because in the film industry its expected that if I pitch for $100k, I'm essentially saying that it can't be made for any less.

 

[MichaelP]

Sounds more like you're negotiating, than offering a real budget. Any finance person wants to know what it is really going to take. All budgets have contingency in them as needed as a percentage. Your expertize as a producer is to prepare a budget that meets the successful completion of the film. Now what is in the budget, especially for above the line items can be negotiated. Are you getting paid as a producer or are you working for equity and a percentage, etc.? There are other ways to put this together such as minimum spend for tax credits in the state, and build out from there. Hawaii has some basic tax credits that may work for you (up to 20% on the smaller islands). See: http://www.hawaiifilmoffice.com/incentives-tax-credits. The minimum spend is $200K. So if you take that approach, work backwards and see what kind of film can you make at $200K that will get a return on investment (sales). At the end of the say, it is about "ROI" for any investor/financier. What do you have in place to reduce that risk? Perhaps a sales agent already on board indicate High/Low sales estimates for all countries and rights. Look to the "low" side and see if it meets or exceed the budget minus the tax credit. Also, when you say "B" movies, what genre? Success in lower budgeted films are usually restricted to well made horror and the such due to their lack of star power need, etc. to make sales.

Michael