Budgeting and controlling costs

Den Lennie

Author: Den Lennie

Published 1st November 2015

by Den Lennie Issue 106 - October 2015

This is a very important aspect of running a production, and one you have to keep a close eye on. Its very simple; you have your actual hard costs in one budget and you have what youre charging the client in another. Lets say you charge the client £450 per day for the camera package, but the rental house is only charging you £350. Having those figures in separate budgets allows you to calculate your overall gross margin for the project.
If you want to make a good profit in production, you have to be firm in making a margin on every aspect of the production you can. Remember, there is nothing wrong with being friendly to your clients, but you are delivering them a service and you should be making a profit for that. Continually referring to your working budget will keep you in a safe position for maintaining your margin. If you dont keep an eye on this, costs can quickly spiral out of control. Also, certain aspects of production can come in under or over what was budgeted for, and so having an overall tally on a spreadsheet will often mean that if you go over in some segments and under in another, youll maintain a positive position overall.
I recall one project, where I had estimated the cost for a location higher at nearly £500, purely down to unforeseen costs on location. I had budgeted £400 per day for the client budget, thinking it was costing me £350, but in actual fact I was a £100 out of pocket per day on that line item. However, Id made some economies on other aspects of the production, plus the hotels had not come in quite as expensive as Id estimated, so I was able to offset the loss against these, which balanced my production budget. Parking and incidentals are other sneaky expenses that can really mount up, so make sure you factor in a generous amounts to cover them. Clients will understand if you explain this to them. In some parts of London, parking can be as much as £20 per hour, which can be £160 per day for an eight hour shooting day. Be careful not to get caught out.
So, have two budgets. Just make sure the client doesnt see the hard cost budget not that its any of their business - but you dont want them seeing where youre making your profit margins!

Write everything down
To manage production effectively, its important that you document everything. I use a variety of tools to do this. I use Google Drive and do my budgeting using the spreadsheet function, and it stores everything on the cloud. I also like the fact that I can share documents with other members of the production team and we can work on them simultaneously. This is particularly useful at the planning stage. Its not uncommon these days to have production meetings on Skype.
By using Google docs, remote members of a project can work on the same physical document, spreadsheet or presentation simultaneously as its hosted in the cloud.
Google Drive also has a number of other very useful features including Google
Calendar which can be set up as a production-based calendar where you can invite key stakeholders in, and they can update and manage that calendar as well. For me, the shared workspace that Google Drive offers is absolutely fantastic. You can even use Google hangouts to hold production meetings.
Another tool I use religiously is Evernote (evernote.com). I manage all of my productions and details within Evernote. In fact, I manage most of my life in Evernote. Evernote is like a virtual filing cabinet where I have a notebook for each client job, and I store all of the information for that project within it. This is particularly useful in pre-production where sometimes projects can take a while to materialise, and rather than relying on searching for email trails, I simply cut and paste conversations and developments into notebooks in Evernote.
The final key resource that I use is Dropbox (dropbox.com). Dropbox is simply cloud-based file storage where I can share project assets with clients and stakeholders alike. I use these three cloud-based services predominantly to run most of my productions. Google Drive is free with a Gmail account, Dropbox and Evernote are a subscription-based service and are very affordable.
Managing cash during production
I mentioned earlier that you should have two budgets, a client budget and a working budget, but I also advise having a cash flow management spreadsheet for every production. Now on smaller productions you may not feel this is necessary.
We made a film a couple of years ago for Sony and we had a cast and crew of 12, with five vehicles and 12 people to feed for three days. This also included various people during pre-production, production and post, and petty cash was being spent on parking, fuel, travel, subsistence and other incidentals which soon added up. I actually created a daily cash spend spreadsheet on that production and kept a close eye on all the petty cash that was being spent. You would be surprised how quickly it all mounts up: parking, transportation and feeding people. You just need to be keeping an accurate track of where money is being spent, otherwise it can be eating into your own margin. Den has just launched a new business mentoring program for specifically helping corporate video producers run more profitable businesses. hes offering a launch special at the moment check out the details at www.worldsballsiestfilmmaker.com

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