Throughout this article, you’ll learn the basics of how to manage a film budget, what to include, and how to actually get started with a film budget template you can start using right away. Hosting costs should also include all core communication costs, and in the rare instance in which a company owns and maintains the servers used to deliver its product, depreciation on those owned assets. Since the vast majority of SaaS companies today use “cloud” or other off-site hosting, the need to include depreciation in COGS is a practice we rarely encounter.
Expenses considered to be above-the-line typically include those which are directly related to production of a good or service. This varies slightly depending on whether the business is involved with manufacturing or is a service business. You’ve budgeted your film the way you’d like to shoot it, but can you raise the full amount that you’ve budgeted from at much money from foundations or from a television network?
This allows users to work in the comfort of Microsoft Excel with the support of a much more sophisticated data management system at their disposal. In some circumstances, the term above-the-line refers to all income and expenses related to the normal course of business. In this case, any expense above net income would be considered to be above-the-line.
- The companies that produce goods, deduct the above-the-line-costs from sales to estimate the gross profit.
- If any particular above the line crew member, such as a new or popular actor or director, stood out in another film, consider reaching out and hiring them for your own production.
- By taking such an action, the company’s objective is to appear more profitable to investors and regulators than it actually is.
The second should be the “bare bones” budget that you’ll keep hidden in your desk drawer. This will be the absolute minimum amount of money needed to complete the project in a way that is acceptable to you. A good film budget template can help you work smarter, not harder, and ensure your film is as production-ready as possible. There are entire books dedicated to thoughtful film budgeting, as it’s a science and an art all on its own.
Revenue generated above the line reflects the amount of money that is generated by a business, but does not include expenses that do not have a direct impact on the company’s cash flow or financing. For example, cash received from the sale of company stock is not considered above the line. Because above-the-line costs are directly related to the company’s final product, they tend to vary more over the short term than above-the-line costs. All expenses before operating income are considered above-the-line costs for Expedia, including the cost of revenue and selling and marketing expenses, which totaled $8.41 billion in 2021. A total budget, on the other hand, includes these other expenses outside of the production itself, like marketing and distribution.
They are not expected to recur in the future and must, therefore, be separated from the ordinary operating expenses or incomes. Such items must be explained in the notes to the financial statements. Below the Line refers to items in a profit and loss statement that are income or expense items that are not normally incurred in a company’s day-to-day operations. It includes exceptional and extraordinary items that relate to another accounting period or do not apply to the current accounting period. Categorizing certain items in the financial statements below the line helps to separately present results from the normal operations of a company. Above-the-line costs are the costs incurred by a business to make the product it sells or to provide its service.
What Puts Something “Below the Line”?
Sometimes, if the budget is tight, paying fair compensation to the crew of your choice means having to make cuts in other areas. For example, you might have to cut down on other talent or raw material expenses and prioritize the above the line budget. Make sure you’re up-to-date with new releases, actors, and directors in the film industry. Track the success of various movies to understand what worked for them. If any particular above the line crew member, such as a new or popular actor or director, stood out in another film, consider reaching out and hiring them for your own production. The screenplay written by the writer serves as a blueprint for the production.
Gross Profit
This second section will cover all of the working meals, scouting, transportation, reimbursements, per diems, casting, and more related to their pre-production and wrap work. That includes pre-production, post-production, acquiring rights, and everything else that we’ll cover throughout this article. What’s more notable is what it does not include, like marketing and distribution. Above the line costs are anything related to your directors, producers, writers, and main actors. If you’re an indie filmmaker without big resources and are just someone look to start with the basics, it’s important to understand the fundamentals of a film budget and all of its necessary components. These are all direct and primarily variable costs required to deliver the SaaS application.
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Below, you’ll find some of the most common deductions that fall into this category along with some specialized ones. Sign up for the Wrapbook newsletter where we share industry news along with must-know guides for producers. The Wrapbook Team consists of individuals who are thrilled about building modern software tools for creators. We’re a team of compassionate and curious people dedicated to solving complex problems with sophisticated solutions. Above the line crew is one of the largest components of your budget.
If you’re savvy with spreadsheet programs like Microsoft Excel, you can create a budget fairly quickly without any specialized software. But several software packages are available that are designed specifically for film budgeting, including EP Budgeting (formerly Movie Magic), above the line costs Production Pro Budgeting, Axium Budgeting and Showbiz Budgeting. Long tables can quickly become unmanageable, and it’s much harder to work with formulas in Word. Celtx is designed to make every phase of the production process as accessible and seamless as possible.
As an EP, it’s essential to be mindful in real-time about where the money is going. You should have on-demand access to the necessary payroll data to keep yourself in check, with the option to share info with https://business-accounting.net/ investors when and where you need to. Hiring above the line crew on short notice can be incredibly expensive. Make sure you hire well in advance to avoid costly scheduling conflicts and inflated fees.
No matter what project you’re currently working on, keep in mind that how you treat people goes a long way in building your reputation as a producer. Creating a good experience for the people you work with is essential to help you attract and retain top talent and crew. While a line producer is often at the top of the below the line hierarchy, they bridge the gap between above and below the line production. They are one of the positions responsible for transforming creative ideas into production realities. As an EP, you can attest that making a movie can get complicated fast. You’re responsible for raising the funds and staying within the budget, while trying to find and hire the best crew within that budget.
