If you intend to make your film (perhaps vs. selling your screenplay onward) it is extremely advantageous to know the true cost of the production.
You will need to know this for yourself. How much will it actually cost? In addition to the final number a film budget details how the funds are spent. A film budget is a roadmap to the production, detailed and calculated by a professional with experience on realizing the intent of the screenplay. A film budget explains how a movie is to be produced as it must be thought through in this manner in order to create the film budget. (Guesstimating is often found a bit laughable; potentially a conversational dead-end.) [Full disclosure: I own FilmBudget.com Worldwide and am a 25 year producer, executive producer, financier, line producer, and DGA Unit Production Manager for studio and indie film productions.]
You will need to know this for financing. Financiers and investors need to know what the negative (hard) cost of the picture will be. They need to know this for:
A. Does it fit into their financial model (this will likewise impact whom you approach)
B. Does it fit into the perceived market value (and hence return) of the production
You will need to know this for distributors. They need to know if it fits into their production and/or acquisition budget.
You will need to know this for film tax credits, production incentives, grants. This calculation impacts all of the elements of the film financing model and needs to be quite precise.
Likewise a Film Finance Plan, based upon the information derived from the film budget provides everyone involved with the answer to the fundamental financial question:
What is the equity requirement (beyond soft money, pre-sales, gap, etc.) needed to get the film made, in addition to who is making the film, what is the market for the film, what are the avenues to returns and profits?
These are just a few of the reasons you need a film budget (and a film finance plan) if you intend to make your film.
Investors want to know these three things: How much will it cost, how do I get my money back, and what is the profit potential?
Astute filmmakers need to have these answers at the ready.
Hope this is helpful.
Good luck in filmmaking and Happy Holidays!
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Jack Binder - this is such solid advice! Thank you for sharing! As someone who is self-financing a project right now, all the little things truly add up - have a line item budget is so helpful! What's the best formula for a calculated risk and moving forward when you don't have all the funds secured, but are still waiting on promised funds?
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:) Thank you Shellie! There is no formula for moving forward with partial funds unless you are micro-budget and investors are not expecting recoupment. (ie., don't spend money if you haven't secured the entire budget to complete the project.) If I understand the question, do not reply upon one source. Keep pushing forward with other sources, offer a match funding position against the promised funds, but keep looking for funding...and have an accurate film budget.
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Amazing advice. Thank you for sharing!
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Thanks for sharing. I have a question, however: everyone talks about investors, but where do you find those investors?
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Producers should definitely know the answers to “what is the market for the film, what are the avenues to returns and profits“, as Jack Binder’s smart post points out. Whatever your creative concept, you must deal with those key questions. The sooner you do, the sooner your vision will start becoming an actual film in development and production.
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This is such a smart post. Producers must have these answers. And it all starts with a realistic working budget for your project with actual costs. For any filmmakers or producers who need a budget for their project or who need to learn about the budgeting process I highly recommend Julie Buck’s upcoming lab where you will create a budget for your film under her tutelage. Here’s a link so you can check it out: https://www.stage32.com/classes/Create-A-Professional-Budget-and-Schedul...
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Thank you all for your replies and comments. Much appreciated. One follow-up point: Your film budget, film finance plan, your understanding of these critical elements, is a reflection on the filmmakers and their knowledge to financiers and investors.
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@ DonGagnon - that's a subject addressed in multiple posts and webinars here @stage32 if you dig around a bit.