Movie budget vs sales price

Does the price of making the movie influence on how much a filmmaker could sell the movie for? For example, if I made a movie for 1k, would it have some sort of influence on a price negotiation as the same moie that was made for 100k. same acrtors, same locations, same special effects. The difference is only in budget.


On other words, would it be advisable not to mention to distributor finished movie budget? Could it hurt the negotiation?
 
I've been told (by people who've been through this type of negotiation) that it's best not to discuss your movie's budget, because (a) it could cause them to de-value the movie and (b) it makes them think that they can get it cheaply.

BUT at the same time, I've also been told that the budget is irrelevant, because distributors only care what they think it's worth (driven in large part by the perceived value of the actors who are in it).

You're probably better off avoiding a discussion of your budget. It won't help you, and it could hurt, even if only subconsciously.
 
An experienced distributor should be able to tell approximately how much your movie cost to make once they see it.

Could it hurt the negotiation?

It could if you have never had negotiating training before.

Do you have a distributor interested in your film?

If so, you need to think of some of the following things:
What kind of deal are you expecting?
What kind of deal are you hoping for?
What is the best case scenario?
At what point/figure do you walk away from the deal?

There are a bunch of important questions you may want to consider and ask about:
Release dates.
Minimum guarantees.
Caps on spending.

and so on.
 
Does the price of making the movie influence on how much a filmmaker could sell the movie for? For example, if I made a movie for 1k, would it have some sort of influence on a price negotiation as the same moie that was made for 100k. same acrtors, same locations, same special effects. The difference is only in budget.

If you've only spent the extra 99k on the same actors, locations and special effects then no it probably won't make a difference. However, if you've spent a wedge of that budget on say a professional sound mix, then yes it can make a difference, quite a big difference in fact. Your film can't be distributed without commercial quality sound and the distributor will not know with any degree of accuracy A. How much it will cost to get your film's sound to commercial standards or B. How long it will take. The distributor will have to greatly overestimate the cost (to be safe) and this figure will have to be taken into account and factored into any offer they make. Obviously, this cost and additional hassle is quite likely to cause them not to make an offer for your film in the first place!

G
 
Does the price of making the movie influence on how much a filmmaker could sell the movie for?
Yes, the production budget influences the possible distribution deal.
However, it is not the largest determining factor, which would be "How much money can the distributor make by distributing the film?"


For example, if I made a movie for 1k, would it have some sort of influence on a price negotiation as the same moie that was made for 100k. same acrtors, same locations, same special effects. The difference is only in budget.
Almost inescapably, as long as the difference is seen on screen a $100k feature is going to have greater intrinsic production value than a $1k feature even when using the same actors, locations, and SFX.

Where was the money spent if not on the actors, locations, and SFX?
If everybody got paid more then "No" it's not going to look better.
If cast and crew traveled first class to Fiji then "No" it's not going to look better.
If better costumes, makeup, props & set design, vehicles, video/audio/lighting equipment was used on set, color correction & grading, and the holy post production Dolby 5.1 audio mix :rolleyes: are where that extra $99k was spent then the difference will be seen on screen and heard/experienced in theater seats.

Recognizing this vast improvement, the distributor knows the market for a $100k production film is greater than the market for a $1k film, all things considered.

So, lettuce consider the film itself...
Somehow, a $100k film about Grandma walking her dog to the corner Ace Hardware to buy a pair of gardening gloves probably isn't going to market any better than a $1k film of the same.
In fact, a $100k film about Grandma walking her dog to the corner Ace Hardware to buy a pair of gardening gloves probably has less marketing value than a $1k film about a ninja slut nun vs. zombies from Uranus.

Probably.



On other words, would it be advisable not to mention to distributor finished movie budget? Could it hurt the negotiation?
Depends upon the perceived market value of the film.
If the $1k or $100k feature looks like sh!t then the market is probably the same and the distributor will try to negotiate from the production value side of the argument.
If the $1k or $100k feature looks pretty darn good the distributor is still going to argue from the production value side of the argument but will be more inclined to be influenced by the market side of the argument.

Take some of those wretched films Troma distributes.
A film may cost $50k to make, but Troma may only pay the producers $3k for rights to distribute it for three years. Net loss for the producers. How much does Troma make in cross promotional revenue? Maybe $3k after expenses. Net gain for Troma.
A film may cost $1k to make, and Troma only pays the producers $2k for rights to distribute it for three years. Net gain for the producers. How much does Troma make in cross promotional revenue? Maybe only $1k after expenses. But still a net gain for Troma.
Same for the $100k film.

Bigfoot - $40k http://www.imdb.com/title/tt0834897/?ref_=fn_al_nm_1a
vs.
Yeti: A Love Story - $0.2k http://www.imdb.com/title/tt0765488/?ref_=sr_1

https://www.youtube.com/watch?v=b0wbdyGGsIc

https://www.youtube.com/watch?v=9AHLjjZbIKw

Two wildly different production costs (estimated), but who's to say Troma paid more for the distribution rights for Bigfoot than they did for Yeti: A Love Story JUST BECAUSE THE FORMER COST MORE THAN THE LATTER TO MAKE?!
Five bucks says they both got paid nearly the same for the distribution rights.


EDIT: upon further consideration...
Bigfoot - Published on Aug 12, 2012 - 26,666 views - 96 likes - 19 dislikes
Yeti : A Gay Love Story - Published on Jul 20, 2012 - 49,113 views - 425 likes - 55 dislikes
Which do you think was "more" marketable?

What you need to consider is the value a third party can bring to the negotiation: an attorney or agent.
Will the cost of the entertainment attorney be greater or less than the benefit he/she will provide?
If a $2k attorney or agent can negotiate a >$2k increase in your distribution rights contract then you have a gain.
If a $2k attorney or agent cannot negotiate a >$2k increase in your distribution rights contract then you have a loss.

It's the same as using a real estate agent to buy or sell a house.
When buying, if he/she can get the owner to sell for less than his/her % of commission then it's a gain.
When selling, if he/she can get the buyer to pay for more than his/her % of commission then it's a gain.

You could even argue this for the higher cost of a meatball Dolby 5.1 theatrical mix vs. dirt cheap DIY 3.0 home theater DVD mix.
WILLLLLL that extra expense increase your bottom line number?
Yes/No?
Pass/Fail?

Your vantage point is to keep the argument skewed toward the marketability side and NOT the production side.


And to complicate the deal making further, the distributor can do the lottery trick of offering more cash up front now and they retain all the gains above that - or - you can get diddly now and a percentage of whatever the film makes.
Trust me, the house always wins no matter what you decide.
Yes, it's just like a casino.
They just have more practice and experience than you.

GL!
 
Last edited:
What you need to consider is the value a third party can bring to the negotiation: an attorney or agent.
Will the cost of the entertainment attorney be greater or less than the benefit he/she will provide?
If a $2k attorney or agent can negotiate a >$2k increase in your distribution rights contract then you have a gain.
If a $2k attorney or agent cannot negotiate a >$2k increase in your distribution rights contract then you have a loss.

It's the same as using a real estate agent to buy or sell a house.
When buying, if he/she can get the owner to sell for less than his/her % of commission then it's a gain.
When selling, if he/she can get the buyer to pay for more than his/her % of commission then it's a gain.

You could even argue this for the higher cost of a meatball Dolby 5.1 theatrical mix vs. dirt cheap DIY 3.0 home theater DVD mix.
WILLLLLL that extra expense increase your bottom line number?
Yes/No?
Pass/Fail?

Your vantage point is to keep the argument skewed toward the marketability side and NOT the production side.


And to complicate the deal making further, the distributor can do the lottery trick of offering more cash up front now and they retain all the gains above that - or - you can get diddly now and a percentage of whatever the film makes.
Trust me, the house always wins no matter what you decide.
Yes, it's just like a casino.
They just have more practice and experience than you.

GL!

My head is about to explode..

Thats a bit too deep of a detail for me to learn just from one post haha
I think i should try to get an attention first from an agent, before trying to tackle down a distributor..
 
My head is about to explode..

Thats a bit too deep of a detail for me to learn just from one post haha
I think i should try to get an attention first from an agent, before trying to tackle down a distributor..

OMG. And Rayw simplified it for you.

You might be better served to partner with a producer than a sales agent. Just something to consider.
 
You might be better served to partner with a producer than a sales agent.

That's what I'm actually concidering for my next project,to find a co-producer who is experienced in this madness, grab me by my hand, guide me through the land and tell me everything is going to be all right haha
 
If you already have a producer, then you're set. No need to go any further. If your current producer doesn't already know most of this, why do you have him/her?

All that kind of stuff that Rayw mentioned should be done/decided on/budgeted for before Pre-Production (in Development). During production, you do everything necessary to get the result you need. Deciding afterwards it a recipe for trouble and wasted money.
 
Doesn't matter. How much did it cost to make Titanic? I saw that one on sale for $6.00 once. I was once told by a distributor when I wanted to lower the price of an indie CD of mine to not even bother. If people want it they will just buy it.
 
When talking to a distributor or a sales agent it is best to be honest with them about the budget.
Why? Because they can estimate the real budget you had even if you BS them.

The budget should include full salaries for everyone, so even if your DP did your movie for free, you would figure out what the DP's full rate would have been and you put it in the budget.
In other words you count in the sweat equity.

If you have the exact same movie, same actors, same production quality, it will be worth exactly the same to a distributor whether it cost $1,000 or $1 million.

Distributors look for the same things, name actors, sellable genre, exciting plot etc.
High quality HD video and 5.1 audio mix is a given, this is an absolute must.

Allthough with these low budget Direct to Video movies the audio mix these days can be quite poor, this is simply because buyers are paying less and less for the movies and they want bigger names, so producers have to lower the budgets, including post, because most of the money goes to the name actors.

Picture quality wise it's different, since a kid on youtube can basically produce stunning cinema quality footage on a cheap DSLR these days.
 
Back
Top