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DEALMAKING: Negotiating Your Share. In This Business, A "Fair Price" Is A Moving Target

Posted By Stephen Marinaccio, Monday, January 04, 2016


When we’re hired as producers we commonly make the deals for those on our crew, from the director and cast to the production assistants. However, when it comes to making our own deals, sometimes it can be a bitter and painful experience. How do you go out on your own as a producer? When you start your own project how do you know what’s even in the right ballpark? How much is too greedy and what’s so little that people will think less of you for being suspiciously humble? How one goes about determining this theoretical number is a bit more elusive. What follows are some general guidelines and information upon which to draw a conclusion for your comfortable range. Armed with this insight, you may be better prepared for the next time someone asks you, "What is your rate?”

The crux of our apprehension to make a great deal may be that we have a high opinion of our skills and why would anyone not want to pay us what we feel we are worth, or the opposite that we feel we could simply be lucky to have the job and any money is better than nothing. The real skill in negotiating comes from understanding what a reasonable number is which not only fits within our own needs, but also the paradigm of the project in hand.

KNOW WHO YOU ARE
NEGOTIATING WITH

There is no shortage of value for doing your research. Before approaching a person or company for a job, before focusing on a particular project, before your first meeting with someone—do your research on them. Using your personal contacts, IMDb.com, LinkedIn.com and other online sources to find out peoples’ history and connections will help you. Know a bit more about the project or person’s history and resume. It may be possible there are other people you mutually know.

YOUR WORK and COMING TO
THE TABLE

Knowing your strengths is key to explaining what you can offer to a potential employer. When sitting with a studio or pitching your own project to an investor, be sure to highlight your experiences and how they can relate to the project at hand. Don’t assume they’ve done their homework on you. Have you worked in Europe and this project is all about castles and is looking to shoot there? Have you worked on a lot of VFX-heavy projects, and this new one has three full CG characters?Along with the research you do from the previous section, know a at least a bit about the needs of the project.

Along with your knowledge, a benefit to a project can be the team of crew and vendors you bring to the table.Use opportunities on your current projects to get to know key position crew and vital vendors. You can also seek out key crew you have never worked with and offer them a lunch to get to know them. Let these people and vendors know who you are and what you are doing. When it comes time, bringing the right crew and vendors to the project can help give you an edge.

THE BUDGET, YOUR RATE
AND PAYMENTS

It does nothing for either side to begin a conversation with an idealistic percentage or flat rate when the budget for the project does not fit it. You may be used to making $6K a week for 25 weeks producing films with $3 million budgets. So you might divide $150K by $3 Million and deduce that you "should” be earning 5% of whatever budget film you work on. But if you are doing a project for $100K, which will already be fighting to put as much money on the screen as possible, it might be too burdensome for that budget to handle paying a single producer even 5%. On the other end of the spectrum, let’s say the project is $100M. Now, 5% feels significantly off-base to pay a producer (because virtually nobody makes $5 million as an undeferred producer fee).

Consequently, a locked percentage number regardless of the budget is needlessly inflexible and largely impractical. Options to be considered in light of the difficulty with establishing a percentage is either a flat or weekly rate for the project.

Flat rates would pay you a total sum over the course of the project. Commonly, this pre-negotiated amount would be paid over an agreed-upon period and include all work rendered for a set of agreed duties. That may all sound like a lot of wishy-washy unknowns; however, this is where you need to know what you are expected to do on the project, how long you expect to be involved with the project and then finally, what those are worth to the project. Thinking of all these items and how they all interact, you should be able to come to a mutual agreement.

BENEFITS AND PARI PASSU

Aside from your base rate, you may need to consider (keeping in mind all practicalities of the project) any additional benefits. These include, but are not limited to, your per diem, box rental, paid ad credits, travel class, hotel room and car rental type and/or having a personal assistant to sort away the green M&Ms.

These items might be granted to you in a way that is on-par with other similar crew types—mainly department heads. In my experience, the best way to approach these benefits is to simply ask and be prepared for rejection or a balance against these from your proposed rate. There are general practicalities which should be observed, such as the budget level of the project and your relationship with the investors or other producers.

PROFIT PARTICIPATION

Another aspect of being compensated for your contributions to a project may come in the form of profit participation. There are countless factors that can affect whether your points end up being worthless or worth millions. Having an experienced attorney as a friend can be very helpful here. In general, learn about the entire revenue waterfall and your placement on it. Try to get "most favored nation” status with respect to deal terms (so that you and the big players are sipping from the same pool, even if they have bigger cups). But keep in mind that since most films lose money you should be wary of giving up too much actual payment in favor of "points.” These are therefore a risk to you, but if you believe the project will do very well—especially because of your expertise and what you are bringing to the table—it could be a great way to ride the upside.

ESTABLISHING YOUR BASELINE

Over time, you will establish a bit of normalcy to what you charge for your services. Use this as your baseline. This baseline can serve as the conversation starter for future projects. That said, you will always need to keep in mind the parameters of the project to curtail your desired compensation to what the budget can support.

In closing, there are a lot of factors to think about when considering what you feel you should be paid. With a bit of practicality and forethought, you’ll be prepared to begin a focused negotiation. Good luck.

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