Money Matters & Negotiations Of Producing Feature Films

Money Matters Of Producing Feature Films and NegotiationsLet’s catch our breath here and talk a little about what actors can do outside of constantly looking for acting jobs, pounding the pavement and auditioning. That other part of the film industry that actors can take a bite of is producing their own projects: short films, web series, comedy sketches, YouTube videos and even feature films.

Learning how to produce your own films is not complicated, but there are many things you need to know if you have never done this before. In order to give actors the most extensive yet concise look at producing their own projects, we’ll break down this subject into several parts.

In this article I will focus solely on the financial details of producing your own projects. We’ll take a look at negotiations in particular, as this is something most actors don’t know how to do effectively, yet it’s one of the main things a producer does.

Creating your own content is the best and quickest way to get exposure in show show business. You can audition for years and never book any major role that would put you into the spotlight, but if you produce your own short or feature film with yourself as the lead, that may complete change the direction of your acting career.

Remember what happened to Vin Diesel when he wrote and produced his own short “Multi-Facial” (1995)? That’s right: Steven Spielberg saw it and cast him in “Saving Private Ryan” (1998).

Before you jump into producing your own short or feature film, or a web series, or a YouTube sketch, I highly recommend getting a job as a producer with an existing film production company. You’ll be able to learn all the ins and outs of the business and film producing without putting up your money upfront. So let’s talk about what you need to know about being an aspiring actor-producer when it comes to budgeting and negotiations.

Money Matters & Negotiations Of Producing Feature Films

Producing Short and Feature Films - Money

Creating and producing your own projects is not only a great way to get exposure as an actor and put yourself out there, but it gets your creative juices flowing and you get to actually work in the film industry instead of hanging around the city jobless all the time. Every actor should know what a producer does and how to behave like one.

Many big household names have found their success through producing their own projects, and it’s the first step you should think about when “supplementing” your acting career. Getting a job as a producer in a company, if you manage to get one, is an achievement in itself – it will teach you some valuable lessons for your future career both as an actor and a producer.

Those of you who are not interested in full employment as a producer for somebody else can simply venture out on your own if you have a little money to invest in your short or feature film. Here are some tips before you even begin considering this path.

1) Budgeting your short or feature film

Budgets are where the power is.

The people who know what everything costs end up running the show. That’s because there are so many ways to get burned on a deal in the film industry. Making deals in major film cities such as Los Angeles, New York or London is like making wishes with evil trolls. You’ll probably get what you want, but all of the other assumptions you make will be exploited in order to screw you.

Let’s do a quick reality check first on what to expect money-wise.

You’d think that if you get very lucky, you find investors interested in financing your project with 30 million, and your finished feature is picked up by a major studio for distribution and your feature film makes, say, 100 million at the box office, that means you’re rich. Right? Maybe not: let’s take a closer look.

RELATED: 12 Tips on How to Choose a DSLR Camera

For example, let’s say you wrote an amazing screenplay for your feature film and either you yourself produced that script, or you outsourced it to a company to do that for you. You’re supposed to get ten percent of the net profits according to your contract. If the movie makes 100 million at the box office, you think that means you’re entitled to ten million. Not really.

Under the basic economics of a feature film, the theater gets 45 percent. So that leaves 55 million. The distributor gets around 30 percent of what’s left, leaving around 40 million. Then, the two stars and the director each get five percent of the gross, a total of 15 million. Now there’s only about 25 million left. But the film cost 30 million to shoot. So that means that the film actually had a net loss of 5 million even though it made 100 million at the box office, and your net profits are worthless.

Just be glad you don’t have to make up the difference.

And if the film makes another 50 million in DVD, VOD and Blu-ray sales, you can hope for another five grand, tops. Welcome to the big time.

Consequently, in an industry as merciless and litigious as entertainment business, people get rightfully paranoid. As a producer, you’re really valuable to a company if you can read a contract and recognize where they try to screw you (in this case the difference between “net” and “gross”). Likewise, you’ll save yourself from financial suicide when you produce your own feature films.

Budgets are just as important as contracts.

There’s a big difference between “price” and “cost.” The price is what they offer. The cost is the amount you actually pay after haggling it down. The flip side of this equation is that people will try to overcharge you as much and as often as they can. So do your research and shop around.

You should already know the drill if you’ve ever bought a new car or anything else for large amounts of money. Ask for a price before you disclose your budget. Then play the competitors off each other. It takes a few phone calls and maybe a little Internet research, but it’s definitely worth it.

If you need your feature film edited, you could pay a professional editor £2000 a week plus £1000 for an avid system and gear, plus overhead/rent costs. It could take a month and you could be out over £20,000.

Or… you might be able to find a talented and eager film school kid with his own Final Cut Pro system and get him to cut it for nothing. In this city, everything’s negotiable, and a good producer needs to know how to find these “deals,” especially when you’re an actor trying to bootstrap your first feature film.

There’s a good book for all first-time filmmakers and producers called “Shooting to Kill“.

2) Negotiations

Beggars can’t be choosers.

Producer NegotiationsIf you choose to work with a film company as a produce to learn the ins and outs of this business, then it will probably be awhile before you ever find yourself in a position to demand a salary, let alone negotiate one. Heck, you’re probably going to be paying someone to let you hang around and be their “intern.”

But at some point, if you are very lucky and very good, you might just get the opportunity to haggle for a few extra coins. The above-the-line “creatives” (directors, writers and actors) will generally have an agent to negotiate for them when they get to this level. But the rest of them, particularly new aspiring film producers, probably won’t.

To ensure a payday for yourself, you’ll have to work for it and employ your smarts. Below are some tips on negotiating pay if you’re ever in that situation.

Make sure you have the job

If you have been unemployed for a while and really need the money, which you probably do, don’t let salary negotiations keep you from working. You’re probably desperate for that assistant job to keep your acting career on track. Get that gig offer, and then negotiate your pay.

Here are some lines you can use for your negotations:

  • Let’s make sure we’re the right fit for each other before we quibble over money. If you decide I’m the right person for the job, then I’m confident we’ll come to an agreement.
  • If I’m the one you want we’ll find a way to make the salary work.
  • There’s no point in arguing over the price of a Ferrari if you know you’re going to buy a BMW. And to further stretch the analogy; I’m no Hyundai. Do you know that you want me? (Get confirmation.) Ok, then. Let’s talk money.

Do your homework

Find out what the going rate is for the job. Know what the network range is. Know what the production company range is. Call friends of friends to get the inside scoop. Many actors who’ve been working in the film industry for a while are aware of the costs of making a feature film, so inquire your fellow thespians for advice.

If worst comes to worst, try cold calling the film production company and asking for a range (mention that you’d do the same for them). You need all this information because you don’t have a minute to waste on poor chosen companies; you have an acting career to pursue.

Once you get an idea of the standard salary range, you’ll have to adjust your target by figuring in the other factors that could affect the rate. For example, if the feature film, short film or web series you wrote/directed/produced is a big hit (network flagship, cover of magazines, and even tons of hits on YouTube), the standard salaries can be doubled or even quintupled.

This is especially true if there aren’t a lot of people at the top.

On the other hand, if your produced project is a joint venture with ten or more people taking some sort of major producer credit, there often isn’t enough money to go around. If the feature is really cheap to produce and/or is being sold around the world and/or is a major hit in syndication, then there’s probably a lot of money that could theoretically be spent on your salary.

After you do your research, rehearse your salary pitch. Say your lines out loud to the mirror or your close friend. Be confident, or practice faking confidence – either one will work. Role-play and improve; you are an actor in the first place, so you know how to do this. Work out the various scenarios so that if you encounter them in real life they won’t feel so foreign and uncomfortable.

Another good book on being a good first time producer is “Producer to Producer“.

Ask to see the budget

Budget for Film ProductionsWhen you’re not producing your own project but rather do it for someone else, you can prepare a list of questions that will serve you will. First, find out where the film production company are planning to spend the money.

See if they are way off on various aspects. Get a read on their savvy. Get a sense of whether you can save them some money that can go to your salary. Get a sense of your salary in relation to the big wigs and your subordinates.

Always make them give the first number

Never give up the leverage of first offer.

Keep your mouth shut until they give you a number. Your dream salary might be £1000 less than what their low offer would have been. They might even think you’re a joke if you mention too low a salary. You don’t want them thinking “If she’ll take X then she must really suck as a producer.”

Here are some lines you can use to induce them to give you the first number:

  • I won’t be offended. If your offer is too low I simply won’t take it. But give me a number to work with.
  • Give me a number. I want to work here. Your team seems like cool people. This is an interesting project. If you give me the right number I won’t even haggle. I’ll just take it.
  • C’mon. Give me the number. Let’s stop dancing. We know this is going work out. Give the number and we can start making a great show.

If you don’t get the number

If you can’t get them to give you the first number, it gets tricky. The most important rule is not to lie. You can be somewhat Clinton-esque in your wording, but never say anything that can be proven to be untrue. Deals and contracts can be vitiated (nullified) and you can get prosecuted for fraud. So don’t screw-around and rationalize that everyone does it. Just get clever.

If you must give the first number, aim really high.

Producers often have to negotiate as part of their jobs and employers respect good negotiators. If you’ll fight for your salary, maybe you’ll save them a lot of money on a deal. If you ask for a Ferrari, your interviewer may be able to go to the money people and get a budget increase to a BMW, which isn’t a Ferrari but is better than the Hyundai they were thinking of offering you. So ask for a big salary.

Never say earnestly pathetic drivel like “I’m actually a starving actor. I haven’t worked in months. I just need a producing job. I’m about to give up on the film industry. My unemployment just ran out.” It looks desperate and terribly unattractive.

Attributed Value Theory” makes people think you’re worth less if you would work for less. And if you ask for a Ferrari and ultimately they only pay you a BMW then they think they got a bargain and they’re happy with their own negotiating skills.

Here are some lines to use if you have to give the first number:

  • I want to work here. And I’ll be flexible on salary. But here’s my number X.
  • We’ll make the budget work somehow. And I’ll do it for X.
  • I think we could be friends. And this might be a really fun project. Forgive me but when we talk salary I have to be ‘all-business’. Please don’t be shocked but you can have my talents and diligent work-ethic for X.

Remember that “X” can be whatever you want. It can be triple what you think their top rate might be. (Of course, they might laugh in your face; be prepared for it.) “X” can be simply whatever you think their highest rate might be (which you know through your research).

Never sell yourself short. People respect others who have high self-esteem. And they’re suspicious of people who act like whipped dogs or slaves.

The film production company might put a specific question to you, like: “What is your rate?” or “What did you make on your last job?” But remember that your rate is what you’ll work for now. If you’re not willing to work for less than double your last gig, then that is your new rate. Maybe no one will pay it, but it takes both sides to agree for a price to be defined.

Also, remember that you can say you’re not going to give them that number (your last salary or your “rate”). Make it clear that you want to work there and are a team player once you start. But you have to eat and pay rent. Business is business. And you need to get their perspective.

Here are some more lines you can say if they demand your rate:

  • Producers in the position often get X.
  • I think a fair salary is X.
  • I would work for X.
  • I expect to be paid X.

Notice none of these reveal that you used to work for one tenth of X.

When you pitch your super-high rate for producing your own or their feature film, say it with a straight face and look them in the eye. After you say your number – shut the hell up. Make them say the next words. Count to 30 in your head if you have to. Make them deal with the uncomfortable silence.

They might react quickly with shock and offense. They might say “Whoa! That is way out of our league. We are on different planets. We have no budget.” Let them talk it out. They may give up valuable information.

Once they’re done, you can respond with “Well, I’m willing to work with you. What number were you thinking of?” That way you’ve tossed the grenade from your yard to theirs – now they have to give you a number. (And whatever you do at this point, don’t negotiate against yourself – i.e. don’t lower your number unless and until they have made a counteroffer. It’s a sure sign of weakness. The other side will just sit there waiting for you to keep lowering your number because they know you probably will.)

If they’re weak they’ll give you the highest number in their budget. If they’re savvy they might still lowball you. It’s tough to know what the situation is.

A complicating factor is when they would be happy to hire your competitor instead. Let’s say you would work for 1500, but think they would pay 2000. But you also know they’d prefer your rival for 1700 to you for 1800. In this situation, you have to accept something like 1700 (the highest price at which they still want you).

Three best books for aspiring actor-producers on negotiating:

You can still negotiate

If their offer is great you can simply take it and be happy.

Feature Film Producing NegotiationsBut don’t leave money on the table if you don’t have to. Get all you can. You deserve it. You have an acting career to support later. And remember that, by definition, they are extracting profit from their employees. The film production company wouldn’t hire you if they didn’t think you were more valuable on the team than off it.

If your good friend is “gifting” you a gig the situation is very different. Maybe nepotism or favor-karma is working for you this time. In which case you have almost no leverage and you should take what you’re offered. Your good friend wouldn’t screw you anyway. But you should know the difference between getting a gig “gifted” to you by a good friend and your good friend hiring you because you’re actually needed and valuable.

As a general rule, negotiations tend to end in the vicinity of the midpoint between the first demand and the first offer – i.e., the “anchors.” So if you get their starting offer first, make your initial demand high enough so that the midpoint between these two anchors is somewhere above the lowest number you would accept.

After that give ground gradually, at about the same rate as the other side (i.e., if they offer another hundred, then you can knock off another hundred, but no more.) If you have to give the first number, be aware of this midpoint rule and take note of their first offer. If the midpoint is too low, you’ll really have to fight to keep the final number high by not giving as much ground on your demands as they are giving on their offers.

Never jump directly to the midpoint unless the numbers are already very close, because such a drastic move will just set a new anchor, and the negotiation will probably end well below the original midpoint.

One of your most potent tools is silence. Silence makes people squirm. They want to fill the void. And sometimes, they’ll fill the void with another number. This gives you the upper hand because you have forced them to negotiate against themselves.

Here are some tricks to use after they give you a number:

  • You can shut the hell up. Count to ten in your head while you read their body language and take in the moment.
  • Say “ I think we can do better than that.” Then shut the hell up.
  • Say “ But what do you have in the budget?” Then shut the hell up.

Say “I’m not saying I’m him but if Mark Burnett wanted this particular job what would you pay him? You can find a couple hundred bucks more a week.

If they continue to lowball you, and you can’t get them to come up appreciably, you may need to jump down to your lowest acceptable salary and pitch it as your final number to see if you can get them to take it. Here are some lines to try in this situation:

  • That is just too low for me. If you can squeeze up to Y I would make it happen.
  • I have expenses. I have to eat. I can’t give up my daily caviar bubble baths. Seriously, you know I’m worth at least Y.
  • I’ve made Z (your highest true salary that is still higher than their offer) in the past. And now I have more experience. I could go as low as Y.
  • I really want to work here. A fair budget would allow me to get at least Y. Do me that favor and let’s start on the right foot.

If this doesn’t work, and their last, best offer is still too low, say you have to think about it. Find out when they need a final answer. Thank them for their consideration and leave. Go home and think about the gig and the salary.

Ask yourself how badly you need the job. How broke are you? Consider other solutions to support your acting career or find other experience for it. Should you take the low offer and know that you’ll leave at the first opportunity? Money buys loyalty.

If they’re going to lowball you and be all-business then they can’t reasonably expect you to forego any better opportunity that comes along. It’s probably not a long-term gig anyway, because you have to go back to pursuing acting full-time.

Is it a “prestige” project? Would you want to work with them in the future? Hopefully in the meantime they’ll call back with a higher offer. If not, wait a while (maybe until a couple hours before their deadline) and call them back. Attempt to re-employ the above counter-offer tactics. Then wait in the silence and give them your final decision.

Write a thank you letter either way; never burn a bridge if you don’t have to. Maybe they’ll pay a good rate on the next gig and think of you.

Finally, remember that tough negotiating helps us all. If you get an extra couple hundred bucks then it’s easier for the next person to get a hundred more than that. We need higher salaries when producing, directing, writing or just being assistants, and they can afford to pay us. Let’s all stick together to achieve that success in this so-called acting business.

Last book I’d like to recommend for aspiring producers deals with all the legal stuff in the film industry. It’s called “The Pocket Lawyer for Filmmakers: A Legal Toolkit for Independent Producers“.