The Beginner’s Guide to Creating a Development Budget

If you’re equipped with a script and a big dream to bring it to life, now it's time to get started on making your movie! 

What to do first? Before any cameras start rolling, you’ll need to create a development budget. This will help you to account for all of the expenses that lead up to actually making your film.

Creating your development budget

For most projects that are $2M and below, it’s generally going to cost around $30K just to start the process of moviemaking. This includes everything from location scouting, to hiring a casting director, to making those last-minute script polishes.  

Why $30K? Take a look at this example budget for a $500,000 film. There are a variety of important steps and business administration costs to prepare for a successful production. Now that you know you need a development budget, let's dive into what that budget will entail.

Development budgets typically include the following line items:

Rights: First thing’s first. Once you decide on the script, you must be sure that you own the rights. There will be a fee to option the script for a limited amount of time as you begin to attach all the elements during the development stage.

Travel: Deciding where to film is one of the most important decisions you can make in the development stage of your project. Locations can give you access to tax incentives and impact your overall budget, so be sure to gain a comprehensive perspective.

Some questions to keep in mind when scouting locations:

1. Does the location fit the script setting?
2. Is there available studio space?
3. Are crew available in the area?

It also helps to contact the local film commissioner of each location you are considering; film commissioners can be an invaluable resource with knowledge and important connections to the community and local vendors! And be sure to schedule a time and date to visit the area in person. EP's production incentives map is a great place to start on your research!

Line Producer or UPM: Once you finalize the location, hire an LP or UPM (Unit Production Manager) to create a schedule and budget for the film. Note, in some cases you may be able to hire a UPM with an upfront commitment fee, then pay them the rest of their rate once financing is secured.

Legal: Once you have a schedule and budget, it’s time to fundraise! To approach the right investors, set up the correct legal entity for your production, and if you raise equity from two or more individuals, it’s recommended that you also hire a securities lawyer to draft your PPM (Private Placement Memorandum). Making a movie is a risky business and you need to protect your production! As dedicated as you may be to seeing your film streaming around the globe, there is a chance that it might fall through for various reasons. Protect yourself from investor lawsuits in the event that challenges arise during development, production, or post-production.

Printing & Copying: Many people will be reviewing your script and may want a printed copy to make notes on. Allow for a part of your development budget to go toward making copies of scripts, PPMs, and budgets.

Investor Entertainment: Plan on lunch and dinner meetings to garner interest from potential investors. Luckily, if someone is interested in working with you, they will be the one to pay for dinner and drinks, so you can save on those development expenses. It’s part of their investment in your project.

Casting Director: Find a casting director who is dedicated to your project. Similar to the UPM, you may be able to save on development expenses by offering them a retainer once they agree to work with you, and full payment after the project is fully financed.

Research: Research during development shouldn’t cost anything, but it will take some time. This includes exploring things like the types of permits and fees you’ll need once you begin principal photography. But don’t buy permits or pay any fees until you’ve scouted a location and are locked in to film there!

Producer and/or Assistant: Producers are the last people to be paid on a project. They take a risk to make the movie, and are expected to stay committed to it from beginning to end. While an assistant would be great (considering all the details you have to stay on top of!) it may be a non-essential expense early on. Gage your cashflow and plan accordingly.

Phone/Internet/Cloud Storage: You’ll be making a lot of phone calls, researching, and storing photos and documents for everything from scouting locations to meeting with investors to casting talent.

Office Supplies: Paper, highlighters, printers, staples, postage... prepping for a film is a business and it’s important to stay organized and professional every step of the way.

Local Transportation: Traveling for meetings, errands, printing, picking up supplies, scouting locations – you’ll be on the go throughout development!

Script Polish: Make sure your script is the best it can possibly be. Hire a screenwriter to ensure the story, plot, and characters get others excited to be part of your project and even invest!

Bookkeeper: Keep your financing organized from the beginning, especially if you plan to set up a separate legal entity. Hiring a bookkeeper will ultimately make your production run smoothly and reduce headaches down the road, especially when preparing for taxes, hiring crew, and applying for production incentives.

Recouping your expenses

Managing expectations of all the potential line items in the development budget will help you prepare in advance, so money doesn’t run out and stall production. Understanding development costs can also inform you on exploring funding avenues to raise part or potentially all of the development budget.

Recouping these expenses could include:

• Grants, scholarships, and film labs
• In-kind donations 
• Gifts, which could include donations given through crowdfunding
• A business partner 
• Partnering up with organizations, companies, and even film commissions aligned with your film’s mission and story, and who may want to help front development costs and provide marketing 
• Fundraising screenings: These are look books for your film and sometimes referred to as “feel reels” to show potential investors, family, and friends what your project might look like once it’s made. The goal is to get others excited to promote and invest. 
• Non-recourse loans: Non-recourse means that if the film fails to get made, you owe zero dollars to the person giving you the loan. However, if the movie does make money, you must pay it back, and usually with interest. In lieu of repayment, some people may choose to have the loan roll over into part-ownership of the project instead. You will need a lawyer to help draft the agreements for this type of loan. 
• First 10% of Subscription Payments from Investors: If an investor signs on to a project, have your lawyer draft the agreement with the investor, such that 10% of whatever they invest in your project gets to be used for development, regardless of whether the movie ever gets made.

How EP can help

The team at EP is here for you every step of the way! We've got the tools you need to manage your buget, schedule, and more, and experts with years of industry experience to answer questions.

Ready to scout locations? Reach out to our expert Production Incentives team and we can make recommendations to ensure you have the ideal resources for your specific production needs, and inform you on all the best incentive opportunities.

Once you decide where you want to film, be sure to call EP and ask for current rates for the crew in that particular location; a Paymaster will send you the rate sheet.

We look forward to supporting your development journey and seeing your script move from the page to the set and ultimately to the big screen!