Independent filmmakers dream of making that indie darling that premieres at Sundance, sells for a hefty figure and garners critical acclaim, earning Oscar nominations and launching careers. But Winter’s Bone, Beasts of the Southern Wild and Whiplash are exceptions to the rule.

The real key to surviving in the independent film world is recouping your investor’s money on the first project so you can survive to make another. And if you’re going to make that money back, you need to know up front how much your film is capable of earning.

At last month’s Film Independent Forum a quintet of financiers and producers sat down for a conversation entitled Viable Films: Your Budget vs. The Market. The group included Jessica Lacy, Head of International and Independent Film at ICM Partners; Mette-Marie Katz, Director of Sales at XYZ Films; Nina Yang Bongiovi, producer of the films Dope and Fruitvale Station; and Miranda Bailey, producer of The Diary of a Teenage Girl. Moderating the conversation was Paula Manzanedo-Schmit, Vice President of Film Finances, Inc.

Determining Your Budget Tier
The first step in producing any film is choosing a feasible budget. Lacy said when she and her team at ICM are packaging a film and raising financing, the project inevitably fits into one of three budget ranges.

The largest of them is the over-$10-million range. “It’s going to have to be a high-concept, commercial movie, there’s going to have to be a real reason why we’re making it for over $10 million,” said Lacy. “You’re going to have to have significant, A-list actors and it’s going to have to have an A-list director.” Lacy said that usually to make a film at this budget level you’ll need domestic distribution in place, which is difficult to guarantee outside of a studio.

On the other end of the spectrum is the smallest budget tier, the under $2 million dollar films. Lacy said directors and producers working at this budget level have a lot of creative freedom and, best of all, have more opportunities for distribution than ever before. “With the emergence of Netflix and Amazon and Hulu—and Vimeo even—all of these companies now provide an outlet for independent films and they’re paying handsomely for those films,” said Lacy.

But not every story can be told for under $2 million. And for films that require budgets in the middle range—the 2 to 10 million-dollar movie—things get a little trickier.

Pre-Selling to Foreign Territories
Foreign pre-sales allow you guaranteed money with which to make your film, but in order to pre-sell to foreign territories, your film is going to need to have elements that foreign buyers are looking for.

Lacy said the first step in determining foreign value is calling a foreign sales company, like Katz’ XYZ Films, and assessing the market for the project.

Katz said that the foreign market for independent films is currently experiencing a recession. “It’s getting harder for foreign buyers to exploit independent films because there are so many and the physical media of Blu-ray, DVD and that whole home entertainment revenue stream has practically disappeared. In the US and Canada, and a few select territories, we’ve been able to fill that vacuum with the digital platforms. In a lot of foreign territories, that’s not the case yet.”

So Katz said foreign distributors are relying on high profile actors that they can use to bring attention to their project. “We’ve seen—certainly at XYZ and when I speak to my colleagues industry-wide—that it’s getting trickier, unless you have that name cast, to figure out how to place an independent movie in a foreign marketplace.”

Attaching Big-Name Actors
The good news: that cast is gettable.

Bailey, whose The Diary of a Teenage Girl starred Kristen Wiig and Alexander Skarsgaard, said that while she misses the days of seeing prestige independent films from first-time directors playing art house theaters, “the good news is that you can get name talent to work for very little if you have a great project.”

Bailey said the hardest part is getting those actors to read the script. Bailey recommends making a list of actors you have connections to and making those in-roads before reaching out through their representation. “The agents and managers always want a bigger payday for their client,” Bailey said.

And according to Katz there are a lot of factors that go into determining which cast will have value for your movie. “It depends so heavily on what kind of project it is,” she said, “Because, strangely, certain cast works better for certain genres for foreign buyers and then they don’t work for other genres…and people that are no-brainers for a release in North America…in Malaysia, they’re like, if it’s not Johnny Depp, who cares.”

Bailey raised the question of whether it was worth expanding your budget to add a bankable star and both Lacy and Katz advised against it. “Unless it’s one of six actors, to me it’s not worth it,” said Lacy. “In part, your movie is worth what your movie is worth. So I can read a script and it’s a family drama that’s only worth a certain amount.”

“I’m not saying that you don’t pay that actor a little more than you were planning to,” she added. “But I think that opening the wallet for an actor to do an indie goes against everything and it will probably backfire.”

Deciding on Your Asks and Takes
After cast is attached, further conversations with foreign sales companies will help determine the asking price for your movie.

“You do need to have somebody like Mette-Marie or another sales company give you estimates,” said Lacy. “Then you understand: ‘Okay, she says in a best case scenario I could sell it for five million dollars. In a worst-case scenario, I can sell it for three million dollars. So I’m going to work on the worst-case scenario.”

Katz explained that that the best-case scenario is called the “ask,” and the low end, the “take.”

Lacy said that even if you are unable to pre-sell the movie, if you can make your film for the take (factoring in soft money like tax incentives), most of the time you will break even.

Trying to Make It for Even Less
But what if that take is lower than the budget you need to make the film? Bailey and Bongiovi both said: get creative and make it for less.

In the case of Bongiovi’s Dope, the project had an established studio director in Rick Famuyiwa, (The Wood, Brown Sugar), but the studios weren’t interested. So Bongiovi and her team looked at the worst case scenario and made the film independently for one third of what they were asking from the studios.

“And it was hell,” Bongiovi said. “But that’s the conviction that’s necessary for a filmmaker. You have to get in the mindset that we’re all going to rollup our sleeves and we’re going to do this.”

Bailey recommended minimizing locations and cutting days as means of trimming the budget. She gave the example of Colin Trevorrow’s Safety Not Guaranteed which was originally brought to her with a $20 million ask. Bailey told the future Jurassic World director that she would help him make it for less than $1 million.

“Figuring out the sweet spot for your movie is really challenging,” said Katz. “This is the problem that we’re trying to figure out in our daily lives every single day. It’s about what genre it is. It’s about what script you have. It’s about what cast you do or don’t have. It’s about the director. It’s about the producer. How do you market it? Where is it going to land? How is it going to be received? So it is really challenging. But I would say what you need to do is surround yourself with collaborators that are very informed about the marketplace.”

“These ladies,” she gestured to her fellow panelists, “Are very informed in how to make movies smart.”

Tom Sveen / Film Independent Blogger