As a sales agent, I always delicately inquire to producers what their real cost to recoup on their film is. Much of the time producers are honest with me and disclose their real budget, and often producers are dishonest and over-inflate their budget.

Regardless of whether the admitted budget of an indie film is on the line or not, the number I am given is what the producer inherently assigns in their mind as what their film is worth in the market, and typically the expectation is well beyond that number.

The Reality

The reality is that more often than not, the budget spent on an independent film is arbitrary to the actual market value of the film. Just because you spent a million bucks, doesn’t mean the film is automatically worth that.

Savvy producers will arrive at a budget by reverse-engineering the numbers.

Global estimates are created by a sales agent based on a proposed package: genre, script, director, cast, etc. The global estimates are derived from a combination of metrics including market trends, market demand, what’s currently in the pipeline, business done by other comparable titles, etc.

Once realistic estimates are derived, the producer will then look at the “global take price” – meaning the cumulative projected global value.

Let’s say that number is one million dollars.

After factoring in costs of doing business and distribution fees, I will likely conclude that my overall budget needs to be 20-30% below my global take projection. This leaves a buffer so that all costs beyond the budget, like distribution fees, are covered even if the movie only hits the low-end projections.

Then maybe I would factor in a regional incentive or rebate that gives me even more breathing room. If the film over performs, then even better!

Regardless, I have established a realistic value of my film and my budget is derived and backed into based on that real world knowledge.

When The Scope Doesn’t Match Your Budget

Depending on the scope and projected cast of your film, that strategic budget cap may be very restrictive. That’s where you as the producer have to remain unemotional. Scope often has to be reeled in.

A project I’m currently producing is a 1970s period piece with a large ensemble cast, large scenes with period cars and crowds, and other elements that drive significant cost. But as I get into the trenches of figuring out what the film is worth, I am having to simplify and condense some of these elements to make them coincide more gracefully with the budget restriction.

Don’t Overpay on Talent

Another key budget component is you have to be extremely careful not to overpay for talent. An even bigger discrepancy than budget versus actual value is the discrepancy of talent salary demands versus actual talent value.

Aside from the biggest A listers who have real box office metrics by which to measure their salary demands, most A- and B actors – as well as their reps – are completely ignorant of what the talent’s actual value is in the world of distribution. They assume their value is higher than it is because equally ignorant filmmakers are willing to overpay.

Most of the time when too much money is spent on an indie film, it’s because the producers overspent on the actors. I have had instances where I’ve had the dream actor on the hook and had to abandon it because their salary demand and overall cost brought my budget to a level that couldn’t be justified.

Unfortunately, some movies do not move ahead as a result, or they must go back to the drawing board and restructure.

Distributors Value Your Film Differently

Always remember that distributors are budget agnostic. They are focused on maximizing the revenues from your film, but that does not have any direct correlation to what you actually spent.

I’ve heard many producers call out distributors and sales agent claiming they are terrible because they under performed. Many distributors and sales agents do under perform, however, the metric by which many producers establish their own bar for success is arbitrary and not backed by intel and numbers that are viable and calculated.

Where distributors and sales agents are the most underhanded, is when they court a filmmaker in order to lock down their film and present estimates that are not representative of reality. I’ve lost the opportunity to sell some great films over the years because my estimates didn’t excite a producer, or didn’t coincide with their expectations.

Setting Your Film Up For Success

Even if you are producing a micro budget film with no well-known actors, it is important to get feedback on distribution so you can not only prevent yourself from over-spending, but manage your expectations appropriately. Not to mention, it will help you become more effective in raising funds for your film because the money you will be asking for to fund your project will be backed by real metrics and market intel.

There is a synergy in all of the financial elements of filmmaking. When the numbers are developed right up front, the numbers are more likely to come out favorably on the back end as well. When that happens, it validates you as a savvy producer, ultimately setting you up for longevity as a filmmaker.

If you would like to learn more about Film Distribution and how to give your film the best shot at a good deal, take a look at my free training, 6 Ways to Not Screw Up Your Film Distribution Deal. In it, I share 6 Distribution Deal Killers to avoid so your film can have the best shot at success. Click here to get instant access.