Budgeting can be intimidating. It involves estimating (as best you can) the costs associated with your project and planning your expenses accordingly. It might be the most important pre-production step; following a budget not only helps you manage your resources, but also guides you through to a finished product.
Now there are software tools that use AI to suggest, organize, analyze, and edit production budgets with a few clicks. You may want to start there. We’ve included a few in our list of AI production tools, which you can find here.
Regardless of your program, here are the best steps for creating a realistic and functional budget
1. Understand Your Project: Before you start budgeting, ensure you have a comprehensive understanding of the project's scope, objectives, and deliverables. Identify the key milestones, production phases, and resources needed.
2. Create a Budget Template: Use spreadsheet software (or dedicated program linked above) to create a budget template. If manual, you’ll need to create columns for categories, line items, estimated costs, actual costs, and any other relevant information. Either way, you need to brainstorm all the line items for your production.
3. Identify Categories and Line Items: Categorize your project expenses into logical groups. Common categories include:
Personnel: Salaries, wages, benefits, and freelancers' fees.
Pre-Production: Scriptwriting, storyboarding, location scouting, permits, and initial planning.
Production: Equipment rental, set design, costumes, catering, and transportation.
Post-Production: Editing, visual effects, sound design, and color correction.
Marketing and Distribution: Advertising, promotions, film festivals, and distribution costs.
Contingency: Unforeseen expenses and emergencies. Should be 10-15%.
Under each category, list specific line items with associated costs, such as camera rental, lighting equipment, catering services, etc.
4. Estimate Costs for Line Items: Research and gather quotes or estimates from vendors, suppliers, and potential team members. Use industry standards, previous project experience, and market research to estimate. If possible, obtain multiple quotes to ensure you're getting the best value for your money.
5. Include Contingency: 10-15% of the total budget is standard for contingencies, which will be your safety net. You’ll have unexpected costs. Sh*t happens.
6. Calculate the Total Budget: Sum up all the allocated costs across categories, including the contingency fund, to calculate the total budget for your project. This will give you the clear picture of financial viability—and your funding needs.
7. Review and Adjust: Scrutinize your budget for accuracy and realism. If the total budget exceeds your available funds, consider adjusting allocations, finding cost-effective alternatives, or reevaluating less critical elements. Ensure that your budget aligns with the project's goals and priorities.
8. Seek Approval: If you're working within an organization or with partners or other stakeholders, share your final budget for review and approval. Clearly communicate the rationale behind each line item and the overall budget, highlighting how they support the project's success.
9. Monitor and Update: Throughout the project, closely monitor your expenses against the budget. Keep track of actual costs and compare them to your estimated figures. If there are any deviations, analyze and evaluate and pivot if necessary. Your production accountant can help.
Budgets aren't always fun, and may tell you some hard truths about the vision for your project. But you cannot operate without one, and a solid budget is also the first step to a project plan. Following these steps to create a good one will help you avoid the common mistakes (underestimating costs, not planning for contingency, inadequate funding) that new producers often make.
