Hmmm

I try not to offer a percentage or points because it ties me to administering payouts for as long as the film continues to generate revenue (unless you have a cut off date)

Instead, it's kind of standard to offer a set fee, which is defered subject to the film going into profit, with a clause that allows you to pay a percentage of the fee if the income fails to meet the full amount needed to pay of the cast and crew.

If you go down this route, you'll need to set up defered payments for yourself in the roles that you take in the film, otherwise you could find yourself as the only person you doesn't make money.

You also need to set a heirachy of payment, with any investors and loans being paid off in full before deferments to cast and crew. There is also sometimes a heirarchy within cast and crew payments (I try to avoid this where possible, but for instance had to bump the composser up the heirarchy to secure the soundtrack on one of my films)

If you're keen to avoid this, the other way is to have everyone who has a stake in the project take a producer credit and therefore they become the equivalent of shareholders in the film. Everyone with an equal stake.

Truth is deferements are actually legally complex and also 99% bogus, in that they almost never lead to payment of any kind -- these days I'll do almost anything to avoid getting into deferments.

All of my release forms indicate an equal split in any profits made from anything I shoot.

I am setting fixed pay outs when the film hits certain milestones. I hear there are law suits over accounting if you do percentages.

I imagine it would be quite a headache, having to mail out small multiple small cheques periodically for a few years. Heck, even keeping track of changing addresses must be a pita.

I'm in the middle of the first film I actually intend to market - it made much more sense to pay cast & crew up front. It wasn't a lot of money, but I felt a lot better about it knowing that I wouldn't have to manage a huge paper trail for some extended period of time. It's over & done with.

Cast & crew were happy, as well, with cash in hand.

I'm a lo-budget guy, too, so I know it sounds painful to pay peeps right off the bat... but the way I see it, it means I can get on with being a flimmaker (of dubious quality) instead of spending ungodly amounts of time impersonating an accountant.

Just my opinion.

instead of spending ungodly amounts of time impersonating an accountant.

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I am so going to second that statement.

Using a percentage payout is fine for a movie that won't go into profit or for one that makes a huge amount of money. But it can cost you more - much more - if you make a modest profit. If your movie make between $5,000 and $50,000 in profits it can cost you $5.000 to $10,000 in accounting fees unless (as Zensteve says) you want to stop being a filmmaker and become an accountant and do it all yourself.

I do my contracts on the assumption that the movie will not make a profit. I don't offer deferred pay or percentages to anyone. It might be different in other parts of the world, but here in Los Angeles all cast and crew know a deferred pay deal is worthless. It doesn't entice anyone to work on a project. They either work for free because they like me, like the project or need the credit. Or they work for a very low rate because they like me, like the project or need the credit.

That way no one is upset when they think my movie made a profit but still aren't seeing any money. And it's really hard for a low/no budget movie without name talent to make a profit

So what you can do, Mike, is cut your cast and crew a check when you movie makes money. Imagine their surprise when they get a check from you they never expected. I've done that twice because only two of my movies make enough profit to share. It wasn't much and I only cut checks to the lead and supporting actors and the crew heads, but they were sure happy.

Rik, you've hit the nail on the head.

I work exactly the same way.

The problem with deferments is that everyone in the industry knows deferment means "I will never get paid." it is exactly the same in the Uk as it is in LA and my guess is, it is the world over.

It's not an incentive and most pro crew would rather be told right off the bat "Guys, we're doing this one for love."

If you've a good script and a reputation for running a good shoot, where you're not wasting people's time, then people will come out to play.

The other danger of deferments is they pretty much always cause post completion resentment.

Even when an actor "knows" it's only a long shot that they'll see any money from the deferment -- when money is tight and the film isn't turning into the career breakthrough they wanted it to be, they'll bad mouth you all over town.

A producer's reputation can only survive that kind of flack for so long.

My ex business partner carried on making films after we split and never learned this lesson. He now has a dreadful reputation for making financial promises that don't pan out.

I, on the other hand, have had held onto my reputation, because I've always been completely up front with people about money.

There is no percentage in playing the "big shot" in this industry -- it's always better for your mouth to be smaller than your wallet, rather than visa-versa.

Ironically, in an industry that has a reputation for being full of B.S., it's always played to my advantage to be completely straight in all of my business dealing.

Thanks for the advice....I'm only dealing with this mainly because of a couple people who I've talked about being involved but are SAG and I'm 100% not, and I'm thinking about just going with other people who aren't going to worry about such issues and focus on the project like I'm trying too.

Mike,

The SAG rules are spelled out. If you are using one of their agreements you don't have a choice - you stick to the agreement. Each one is a little different. Being a member of SAG doesn't automatically mean the actors will only be focused on money, you'll find a lot of SAG actors who will do it for the project and for their reel. And the new low budget agreements make it easy to bring on SAG actors.

clive said:

There is no percentage in playing the "big shot" in this industry -- it's always better for your mouth to be smaller than your wallet, rather than visa-versa.

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Ain't it the truth.

As a crew member (camera operator, pyrotech, DP, make-up efx) I immediately tune out a producer who tries to attract me with big money on the back end. I gladly work for free when the producer is excited about the project and doesn't promise me a lot of money "Just like the Blair Witch guys." Or even just a simple deferred payment contract.

And I'm just like you when I'm the producer. I know a $25,000 to $80,000 DTV movie with no names isn't likely to make enough profit to actually meet the deferments or a percentage payout so I don't offer them.

It would be interesting to know if any of the crew on Blair Witch were offered percentages or worked on deferments. I'd love to know how much Dana Meeks or Laura Stuart ended up getting.