What are set fees: Producer or Executive Producer

Belief Pictures

Belief Pictures

Active member
I wanted to run this by some of you. I completed my first feature film three years ago. I'm starting another where I am writing/furnishing the screenplay and I actually own the film production company. It will be based in Canada and incorporated.

In terms of getting financing for our 100-page feature film. What is an acceptable return if I serve as Executive Producer? I also plan to be the director too but that is something all together different. I also plan to have a Producer. Any idea of what the breakdown should be?

We are planning on a $30,000 budget minimum with it possibly ballooning to $100,000. Any idea of what is too much or too little?

Chris
 
Well I have no experience in this but I'd say the executive producer is the one who puts in the money.

I worked on contract once that the executive producer got all of their money back and then 20% of what was left over.

Let me know what you find because I'm going through the same thing right now.
 
A $30-100k film almost by mathematical equation WILL loose money. So the only $ you will even see will be the salary you will be paying yourself. Because of that you might think that you want to get as much as possible but that will jeopardize the film as you are already dealing with a super tiny budget.

The way i see it you should pay yourself $100/day during the pre pro (typically 2-4 weeks), then during production (3-4 weeks) and the post (2-3 months). So as a director you should be walking away with $6500-10000 on a low budgeted like that.
 
Just wanted to add that paying $100/day is ridiculously low if you are dealing with any kind of professionalism but in this example it's your "baby" and you should at least get the $ to support yourself for the period of the production and the post.
 
Not really true. You would be surprised at least in LA the level of professionalism you can get for minimum, but you need to know the people somehow and they have to be available without better paying work. It's not easy, though, it's definitely a challenge. The industry is super slow right now, however, and it's actually a lot easier than usual getting top crew for very little. It's such a blessing! Haha, maybe not for them though.

You don't pay yourself out of the budget on a film that low, you give yourself deferred pay unless you are going DGA (which makes little sense on that low of a budget, even $100K is tiny). If you are executive producing, it's your film, so you own 100% of the back-end until you start giving away points.

I don't know what you can do for $30K to $100K, it depends on who you are and the people you know and the story you have, obviously. But if you have a highly professional film it's not true that you will lose money or even that it's likely you'll lose money. In fact with a budget that low it's even easier to recoup your money because it's just so little to recoup in the first place.
 
Jonathan, put your money where you mouth is..... Show me an actual example (and please refrain from the megahit one time wonders such as Paranormal Activity and such) and show me how 100k film makes money. Cause i've shot (not directed, but through the producers know the numbers) 7 feature-lenght films and a few TV pilots (all worth over $2 mil in their budgets) and i would be stunned to learn that they recouped more then %20 of their budget.

The only time you don't pay yourself is when the money all came from your own bank account.
 
Last edited:
I don't understand that a film of that scope could lose the money mathematically. I mean shouldn't ANY sale or distribution deal be willing to cover something of that value. One oversea's deal or television channel pickup and you'd be into positive numbers.

Patryk you shouldn't respond so defensively and matter of factly. I agree with Jonathan on a few points. I see professional filmmakers working for $100/day all the time. More now than ever because things are so slow. Am I talking A listers here? .... No but a lot of people get around in this business. I've worked right next to people that have worked on Men In Black, Planet of the Apes.... so on and so on and they're working for whatever because the jobs just aren't there these days.

I agree with you on the paying yourself part. Gotta put food on the plate so don't short change yourself. Be fair to the budget but be realistic as well. Leave enough in the coffers to get the film made the right way.

Plus, Look at all the garbage/lowbudget movies out there that have been picked up for distribution. Films with no names and very little production value. Not sure of the actual budgets but here's a list of some.

http://www.rankopedia.com/256/Favorite-Low-Budget-Movie-%28$100,000-US-or-Less%29/Step1/13209.htm

I've seen a LOT of low budget movies so they got my money. A good number were on this list.

But you asked for examples of HOW those films get the money back. Oversea's sales is about the only one I know of. However I do know of 3 films that I've worked on that got these types of deals based on a roughly $20k budget.
 
Well

Well

It depends on the level of professionalism you're bringing to the table, but to suggest that just shows an amateur understanding of the business that is common on these forums but I think does a great disservice to people who are ambitious and want to do things the right way. I say that with all due respect to the people here who do know what's up and are doing it year in and year out. I just know that what you read here and what you hear from industry professionals and know from the business are two entirely separate things.

I kept hearing on here over and over again that ALL indie films lose money and that it was a huge waste of money. Then I started making a number of producer friends and meeting people who have done this again and again and they all said completely the opposite -- any film under $300,000 is very easy to make money on if you do things right. My producers have made several low budget films in that range and made money on them. A UPM I shot a music video with discussed this with me as well and said the same thing -- slam dunk on making your money back on an ultra-low budget film unless it stinks hardcore.

So either there are a lot of people here making stinkers without professionals working their cast and crews, or there are simply a lot of really green people who just don't know any better and that's what they say. It really depends what you're doing. There's no nice way to tell people that your work probably sucks very badly. 95% of indie features are completely terrible, so if you're going to tell me that your work is great I'm probably already going to be thinking, yeah, if you spent $100,000 and couldn't even make back that pathetic budget, your work sucked REALLY badly. I'm sorry. That's reality. You can argue that reality all you want but that's just the facts. A good film made for $100,000 is a slam-dunk to make back its money because the minimum sale to half of the foreign markets will already add up to $100K. But again most people here don't even know how to sell anything to a foreign market and don't know anyone who does, either.

As for professionals, if you are saying you can't get highly professional, amazing crew for cheap, you aren't a filmmaker in LA -- you have absolutely NO clue what's going on, lol. We have a crew of about 25, and the reason we do is because they don't have better offers. They are happy to be working at all. If you're in Los Angeles, you probably aren't working right now. If you were working you'd be out of town on a shoot. That's exactly what our steadicam guy said and he's amazing! Again, don't get me wrong, it's not EASY in the sense you can't just post on craigslist necessarily and put together a top notch crew. But if you have the right connections / the right script, you can get that level of professionalism. It is possible, at least.

I just hate to see anyone here discouraged by bad advice, which I was for quite a while when I kept reading repeatedly that all indie films are a HUGE risk and lose money and only idiots invest in their films, etc. I hesitated a bit, until I realized it was worth taking the risk, and it has been the best decision I made and I realized that if you're working with the right people, it's reasonable to expect to make money on a low budget film.
 
Last edited:
Patryk has listed many of the films hes worked on and the budgets and financial results in the past and I am very appreciative for the information. I also very much appreciate the posts Jonathan has made on his current project. I don't know what the answer is except for me which is to use my own money and be extremely cognizant of the risks going in. I wish all of you the best of luck on your current and future projects.
 
Well, the fact of the matter is that JonathanLB's advice is total hearsay. He hasn't done it yet. He's working on it now, but so far he hasn't finished and sold anything. So when he tells you this stuff, he's telling you what other people are saying, not what he's done. So factor that in.

Secondly -- is it possible to make your money back on a $100k film? Depends on a lot of things, but first and foremost, and something I don't ever see mentioned in Jonathan's dismissive/rude posts, is the favorable tax treatment you can receive. Jonathan's shooting in Los Angeles, so he's already given up about $40,000 in guaranteed returns he could have gotten, had he chosen to shoot in Michigan or some other high-incentive state.

The chance to make your money back in film is better now than it has likely ever been, specifically because of government incentives. Due to Section 181 of the U.S. tax code, film investment can be immediately tax-deductible (but that section expires this year). And if you combine that with a state that has a high tax bracket, and shoot in an area that has a high incentive, you can get almost all your money back WITHOUT EVEN SELLING THE FILM!

How does that work? Take a rich guy who lives in California. His combined tax bracket is going to be about 45%; that's 35% at the federal level and 10% at the state level. Let's say this rich guy makes a spare $100k this year. Maybe his total income is $2 million, and his lifestyle is such that he lives comfortably on $1.9 million, so ... what's he going to do with that last $100k? Probably stuff it in the bank, right? So at the end of the year, the taxman comes calling, and he pulls $45,000 out of his bank account as taxes on that $100k, and sends it to the government. Net balance in his account for not making a film, and for just keeping his $100k: $55k. By not spending the $100,000 he has managed to keep $55,000 and he sent the IRS and the California tax authority $45,000. Stinks, but that's the way the US tax system works.

Now, scenario two: the rich man decides to take that spare $100k and instead of stuffing it in the bank, he gives it to Mr. Indie Filmmaker (IF) to go make a film with. His savings account balance is now zero, but ... wait... he doesn't have to send any of that money to the IRS or California! It's tax-deductible, so ... he's reduced his tax bill by $45,000. That's $45,000 that he gets to keep, that he would otherwise have had to pay to the tax man. So his potential bank account doesn't go down by $100,000... it only goes down by $55,000. Yes, he's managed to buy a $100k film for only $55,000, thanks to the tax laws. That's real money saved.

Now, because Mr. IF is smart, and because Mr. Rich Guy is smart, they are of course shooting the film in a state that has strong film incentives. That means Michigan. Michigan will write you a check for 42% of what you spend, in their state, on making a film. 42%! 40% generally, and an extra 2% if you shoot in certain districts. Well, what fool would you have to be, to walk away from that 2%? And Michigan is extremely indie-friendly because they don't require you to spend $300,000 or more to qualify for incentives, you can qualify with just $50,000. So after shooting a $100,000 film in Michigan, the state of Michigan writes Mr. Rich Guy a check for $42,000. Say what? Okay, "what". There, I said it. So now, Mr. Rich guy, instead of sending a check to the IRS for $45,000, is instead RECEIVING a check for $42,000.

So -- he gave Mr. IF a hundred grand, and in exchange, he's received $42,000 already, and he's received the right to *not* send California and the IRS $45,000. So he's out $100,000 and he's received $87,000 back.

What does that mean? It means he's recouped 87% of his investment already.

AND THE FILM DOESN'T EVEN HAVE TO SELL, EVER, for him to qualify for that.

So if he chooses to invest $100,000 in a film, he'll receive $87,000 cash back, and he'll own a $100,000 film too.

If he instead chooses to stash $100,000 in a bank account, he'll waste $45,000 of it in taxes, and keep only $55,000, and won't have a $100,000 film asset.

$87,000 return of investment. vs. keeping $55,000. Plus, he owns a $100,000 asset, the film. If the film sells for $13,000 (i.e., if he can recover only 1/8th of the budget!) he's totally broken even, and breaking even is far better than what the taxman will let you do! Plus, not only did he break even, but everyone who worked on the film received paychecks. If he'd stashed the money in the bank account, he wouldn't break even, he'd lose $45,000 and nobody would have received paychecks because there wouldn't have been a film to work on.

Plus, any revenues that the film does receive, will receive tax-advantaged treatment because of Section 199; the first 9% of revenues are untaxed. It doesn't add up to much because of all sorts of qualifications and restrictions, but it means (at the end of the day) another 3% or so tax break.

So -- forget the pipe dreams of selling the film for big money -- it's not going to happen, and besides that, you don't have to. If you do, great -- then Mr. Rich Guy makes a ton of money, and so does Mr. IF. But even if all you can do is sell it for 1/8th of what it cost to make it, you can still make all your money back, if you wisely manage your taxes and government incentives.

And, as always, this is general info -- how it actually applies to any given situation is of course between you and your accountant. Some of this may not apply due to passive loss rules or passive income, etc.

And Jonathan -- please report back when you've actually sold your film. When you have real, hard data to report, rather than telling all the hardworking people on this board who have done it over and over that they're just stupid or clueless. Thanks.
 
Last edited:
Thanks for your post Barry. I thought section 181 already expired, I'll have to go back and check it out.
 
It was renewed for one year, but... yeah, now that you mention it, I don't know that the president has signed that bill yet! It may indeed be expired as of now, but the bill to renew it was retroactive to January 1st, so ... if it does get signed, it's going to be good for the whole year.
 
That was an impressive post Barry. If I was Mr. Rich Man and someone proposed that to me I'd be hard pressed not to look into the investment.

Also, I believe Arizona just passed some film friendly incentive programs or tax deductions. I don't have the details but worth checking out Lambert Or OP I guess if that is relevant to your original question.
 
Thanks Zblock. Lets hope it gets signed if it hasn't already so that more crews can keep working and get paid (maybe extend it through 2011!)
 
Barry, i love that post!!! Was aware of the %40 credit from Michigan but adding the bank account analogy makes your post so much sweeter!
 
Jonathan, it's not negativity, if i looked at the issue in a negative way then why not pay yourself, $300-400-500/day and leave 52 cents for the film itself? Truth is with $100/day approach you guarantee that you won't waste everyone's time by working 9-to-5 job and then be pretending that you put equal amount of effort to pre or post produce your film. Paying yourself $100/day (or whatever you choose at least to sustain yourself) will guarantee that for next few months making the film will be your de facto 9-to-5 job.

Two, not being able to make your money back from your film is not a sign of failure of the film! Thanks to netflix i've seen more then a handful of film that won major awards at major film fest, were fantastic film (yes, that noone heard off) and ... lost money.
 
If your taking a fee to produce you should explore every possible realistic and responsible method to save the production/investors money (they may not work for a particular situation but they should be examined) imho. Part of that responsibility might also be keeping abreast of political changes that might impact a production. Until a year ago Iowa had a fifty percent return (program is currently suspended until 2013 do to alleged financial shenanigans and some productions that shot in Iowa may not get the money they counted on). Thanks to Barry again for his excellent post.
 
Barry_Green said:
Now, scenario two: the rich man decides to take that spare $100k and instead of stuffing it in the bank, he gives it to Mr. Indie Filmmaker (IF) to go make a film with.
Click to expand...

I've seen section 181 described before as something that film makers might use to go round up investment money, but my understanding is that section 181 actually only applies to active participants, not passive.
 
CB_Radio said:
I've seen section 181 described before as something that film makers might use to go round up investment money, but my understanding is that section 181 actually only applies to active participants, not passive.
Click to expand...

which is easy enough to implement. you can make an investor an active participant by giving them creative input on the screenplay, casting, and/or edit. that’s input you may or may not use, mind you. just know that an executive producer credit is not enough. keep them involved but limit their authority on creative matters. most importantly, document it. have them write up their notes and file them away.

*not a lawyer, but this is one way I know film producers have made it work.

Also, one can take advantage of section 199 for an additional 9% because if you don’t know, domestic motion picture production is classified as manufacturing.

*again, consult with a lawyer and accountant (although you may have to educate THEM on some of this stuff).

This summer we’re visiting New Mexico, Michigan and Louisiana to begin building relationships and to develop films that suit the available locations. Making use of the federal and state incentives is, imo, essential to nurturing our pool of investors so we can make not just the next picture, but a lifetime of pictures. It’s easier than you would think and the only thing stopping you... look, nothing is stopping you. NM doesn’t even have minimum requirements for budget, spending, or shoot days.

Speaking to that, I consider myself less a filmmaker now, and more an artist-entrepreneur. The label is meaningless in the grand scheme of things but it helps people understand that we take the business side of this art form as seriously as we take the creative. I personally have no interest in directing studio pictures. Ive been on enough of those sets to know it’s a machine that I want no part of. So I’ll stay independent and build my own mini-major to sustain the filmmaking career i want.

I’ve been in dialogue with all the major digital platform aggregators and the truth is, that most filmmakers cannot expect to make over $30,000 in a year on iTunes, hulu, Netflix, etc. So either you make your films for half that, or you step it up to $1mm plus and cast stars that will drive foreign sales, plan a theatrical release by following demand, budget for marketing and adopt a genre hook that appeals to audiences which opens a path for them to discover the deeper levels of story and character in the film itself. That’s the path we’ve chosen. We’ve made our sub-$100,000 microbudget films and are proud of them. Next, we’ll use those expertise to make a $5mm picture look like $50mm.

We’ve more to say, but i’ll save that for a later time when its less sensitive. But I do look forward to sharing the journey in an epic thread here on DVX User.
 
You must log in or register to reply here.
Back
Top