Analyze and Understand Film Costs and Calculations in the Blink of an Eye

How to analyze film costs and calculations
Film budget: Not a book with seven seals | © Pixabay

In Part 2 on Voodoo Accounting and Cost Truthfulness, we dive deeper into film costs and calculations.

Part 1 of the series of articles on film budgeting and the presentation of handling costs (HU) and profit has looked at the way costs are presented in budgets and film costings. Guidelines with concrete film costs can be found at Filmpuls in the article What does a film cost? We ask ourselves how to understand a budget effortlessly. And how to correctly handle numbers when making adjustments to quality.

You need to know

  • An analysis of film costs does not begin with a cost analysis. First of all, it is necessary to create a catalog of the main specifications that the future video must meet. These include impact targets, production values, but also technical specifications.
  • As part of the cost analysis, it is important to remember that deadlines, quality and budget form a triad. If one of these factors is changed, this has an effect on the remaining two components.
  • In addition to the costs for infrastructure and profit, the film costs may also include premiums for possible risks (weather, insurance, etc.).
  • It is important to note whether the cost of a film is shown as a lump sum, or plus action costs / profit, or as a markup. Depending on the type of presentation, the analysis is more or less complex.

The analysis of film costs

The price for a marketing measure with moving pictures is easy to determine in the total of the video calculation, as long as you have one. It becomes more challenging when you understand a budget not as a necessary evil and a simple cost factor, but as a construction plan – and as a builder you want to look behind the scenes.

How much do films cost? Proper analysis of a film cost estimate doesn’t start with picking up the costing sheet and studying it.

The analysis starts with the question which points are relevant for the planned film. To do that, you have to know the movie concept. If you don’t know what you’re looking for, you’ll either come across random finds (or worse: fragments) or you won’t find anything at all.

That’s why the reader of a film budget, regardless of whether it’s for an image film, a CEO video or any other type of film, should ask himself the following questions in advance and work out the corresponding answers independently – either on his own or with the help of an expert. Ideally, this is not a lot of work because the film costs can already be extracted from the client’s brief and the contractor’s re-brief or quote.

Moving image content

As amazing as it is, we see cases time and time again where a budget is judged in isolation from the content to be produced. Anyone who does not know the message to be conveyed by cinematic means or the storyboard to be filmed is confusing the production of a film with the production of screws. Admittedly, these can be manufactured according to the German Industrial Standard (DIN for short). Movies and videos don’t.

Budget allocation

The so-called production values in film are one of the biggest mysteries in commissioned films. As little as they follow a uniform definition in film productions , they are often used as an argument in budget discussions and misused as film costs. We use the term in this article and in the context of film costing as part of product quality:

Production values are the drivers with which the desired quality goal of a moving image communication measure is achieved with optimal use of resources.
Kristian Widmer

In other words, it’s about budget allocation.

  • Where do we use which means and to what effect (always with a view to the given film concept)?
  • Does it make sense to invest in the performers?
  • Or in digital effects? Or better into the soundtrack?

Ideally, there are sufficient resources for all important positions.

Unfortunately, the ideal case only exists in movies, not film. Anyone who has been in the film business long enough knows what even exponents in the feature film industry have been saying: No budget is high enough to fulfill all the director’s wishes.

If you know your content to be communicated, you should think about the allocation of resources. What are the focal points to be set in the costing in order to achieve the quality targets?

Quality specifications usually result from benchmarking. What quality level does the competitor use and what estimated or known effect does it achieve? Unlike the allocation of resources within a budget, the quality specification affects the cost estimate as a whole. It determines at which level a video is placed. It says whether high end or low budget.

Dates

The production of moving image content is not only guided by quality specifications and budget values, but also by deadlines. Sporting deadlines are compensated with lower quality or, if the quality target is sacrosanct, with higher film costs. That is why a deadline layout is always part of the budget analysis.

Risks

Films are projects. All types, whether CEO videos, image films, advertising videos or product films. Projects have a different potential for generating risks than standardized products that can be mass-produced by industry. Before studying the numbers, the risks must be put into words and figures. This is the only way to determine whether critical success factors have been considered at all and how and where they have been fed into the calculation. One thing must be clear: if a risk materializes, someone has to bear it. Budgeted or not.

Für die Filmkosten ist die Drehzeit ein wesentlicher Faktor | Probe im Studio Bellerive. Dreharbeiten Werbefilm, (c) Condor Films
Shooting rehearsal at Studio Bellerive. The preparation time with the director and actors is also reflected in the film costs. | Shooting commercial, © Photo: zVg

What must be included in the cost of film

The answer to the question of what level of detail a budget should show is as varied as the nature of film projects. The only correct answer is: it depends.

It is not only the size and genre of the film project and the specifications already communicated in the briefing that are characteristic, but also the type of commission. If you work with a lump-sum budget, you do not necessarily expect the same information as when you work with a project in markup mode.

How to read music

Budget analysis is like reading a musical score for a classical orchestral piece. You have the intended audience in mind, you know about the abilities of a professional orchestra and its soloists, you recognize the theme, the variations and you are happy about ingenious solutions. But what does the person do who can’t even draw a clef from memory? This is similar to the recipient of a film budget, who cannot benefit from any experience!

Two tricks will still get you there:

Use the above under pt. 1 to formulate appropriate questions and let the supplier guide you through the calculation.

Or ask the creator of the cost estimate not for information on individual values, but for an explanation and presentation of the interdependencies of the individual budget items. You will also quickly recognize the competence that lies in the calculation and behind the calculation.

Determine film costs online

With the online calculator from Filmpuls, it is easy to determine guideline values for the price of a video. Enter length and genre and the calculator will show both a ballpark cost and the time frame required for production. This is calculated backwards from the date on which the cinematic work must be completed.

Every budget and every budget item must be explainable. Creating the inexpressible does not belong to the field of activity of the production manager and production supervisor, but is the privilege of the director, whose artistic endeavour may be, or even must be, to use his talent to create more than the sum of the individual parts.

Target Cost Budgeting

The “backward calculation” (known as reverse budgeting) mentioned earlier in this forum elegantly avoids the above three effects in the budget analysis. At the same time, and almost more importantly, this way of dealing with a film budget (and likewise when discussing film calculations for moving images) directs the focus to quality and the corresponding allocation of production resources.

Film costs: Summarized

Finally, we should return to the conclusion of Part 1 of this series on the subject of cost of action, profit and markup: There, the opinion was expressed that those who put their budgets through the meat grinder should logically expect sausages. While this does not change anything in principle, it should be added for the sake of good order that sausages of the highest quality can also be produced, and a mincer is absolutely necessary for this.

In this respect, sausages and film calculations have a great deal in common in an almost philosophical dimension: where the expectations are openly communicated from the outset (by the customer) together with the film costs (here the producer has a duty), (almost) anything is possible.

The series on budgeting is concluded with part 3 and practical examples on three easily avoidable stumbling blocks in the adaptation of calculations. For the definition “what is a video?” there is a separate article at Filmpuls. This explains the differences and history behind these two terms.

This article was automatically translated into English using AI. If you would like to help us improve the quality, we would be happy to hear from you.

Maurus Eugster
About Maurus Eugster 7 Articles
Maurus Eugster is Head of Finance and Member of the Executive Board of Condor Films Ltd.

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