Anna Keizer
November 18, 2022

Why You Need to Become a Business-Savvy Filmmaker

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Just because you’re a filmmaker doesn’t mean you’re doomed to be a struggling artist. 

Yes, there are arguably more financially stable professions out there. That doesn’t mean a lifetime of instant ramen noodles if a creative profession is your calling.

In fact, as documentarian David Alvarado asserts, moving past the adage of the struggling artist is necessary if you want long-term success in your filmmaking career.

Wrapbook recently spoke with Alvarado, director and producer of multiple docs, including The Immortalists, We Are As Gods, and Bill Nye: Science Guy – not to be confused with the TV show Bill Nye the Science Guy. During our chat, Alvarado detailed why taking control of your financial health – both professionally and personally – is key to a life as a filmmaker.

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Advocating for your worth is a practiced skill

Rarely will you not be negotiating your pay rate for a job. That rate might be for you as an independent contractor or it might be for your production company. Regardless, you need to know your financial bottom-line. 

Many projects – and the people who control their budgets – will try to get you for as little as possible. Which is why you must know what you are worth. What your time is worth, what your expertise is worth, and what this gig on your resume is worth.

David Alvarado states that while he’s never been asked to do a project for free, he has been asked to do jobs for a discounted rate. Sometimes it might be worth taking on that discounted job for the experience it will provide. Or because the contacts you’ll make might lead to future gigs. Sometimes not. 

Be clear with yourself ahead of time regarding what you can say yes to and when you need to walk away.

In some circumstances, you may have the opportunity to negotiate your rate, but those negotiation skills can only be gained and strengthened by practice. You can’t practice if you don’t value your own work. 

Alvarado notes, “It’s nerve-wracking because most people aren’t trained to negotiate. It’s its own skillset. Understanding your value is another skillset, too. What do you weigh that against?”

You must continually assess where you’re at in your career and increase your rate accordingly. Says Alvarado, “So many people get wedded to a certain price range and they get squeezed out of an artistic career because they don’t ask for more money as they go.” 

What about the cases where you’re told the rate and there’s no negotiation to be had? You still have agency. You decide if it’s worth your time, energy, and expertise. Sometimes, that will mean walking away from a gig and trusting that another one will come along that can pay you what you’re worth.

Bills and other financial obligations won’t wait

Knowing what you’re worth – and advocating for it – isn’t some abstract philosophy based on personal pride. It has real-world implications.

What happens if you’re negotiating for a gig as a sole freelancer, and you don’t get what you’re asking for? What will that mean when the rent is due, when groceries must be bought, or when an unforeseen medical event happens? 

This becomes exponentially more important if you’re negotiating for a job where you’ll be hiring a crew. “The for-hire projects I’ve done [have been when] they’ve contracted my business,” states Alvarado. With that budget, he then sets up his own payroll and hires employees for the project. 

But if you undercut your budget bottom-line simply to win the bid, how will you pay your employees? How will you afford to produce the project you’ve been contracted to do? 

How will you pay yourself?

Alvarado notes that part of taking on a project – any kind of project – means budgeting your own income. Many filmmakers overlook this critical part of establishing good financial health.

Especially in the beginning, there will be times where your filmmaking career has nothing to do with how you pay the rent. Alvarado shares that he too lived the instant ramen lifestyle. “All that stuff that a struggling artist knows very well,” he says.

What’s key is moving away from this hand-to-mouth mentality as you grow in experience and expertise. As you build your skillsets and resume of work, you put yourself in a better position to negotiate or raise funds with your own income in mind.

But what if you find the struggling artist lifestyle romantic or even a necessary tradeoff for passionate output? When you’re young and hungry – like, literally hungry – you might sustain yourself temporarily on the belief that you’re suffering for something meaningful. After a while, though, you’re just suffering.

When you are constantly stressing over where your next rent check or meal will come, the ability to generate quality work will diminish. Simply put, having a warm place to sleep, food in the fridge, and the knowledge that you can continue to provide for yourself will actually help you produce better projects. So don’t overlook the importance of paying yourself for your work.

Projects can provide different types of financial compensation

They do call it show business after all.

Unless you are independently wealthy (congrats if you are) you likely would like to see some financial compensation for your projects. Nowadays, that can and often does mean different revenue streams. 

For-hire payment

Perhaps the most cut-and-dry type of compensation is a for-hire payment. You have been brought on board a project for X amount of money regardless of whether that project is ever distributed or financially successful. 

As a documentary filmmaker, the most sizable part of Alvarado’s income is from what he is paid for a contracted gig. And when the onus is on him to raise the funds for a project, that income comes from what he has budgeted for it.

Royalties

If you’re the producer of a project, you’re likely brokering agreements with distribution companies. So you make the deal, the film is released, and then what? If the film generates any revenue, the first to be paid will be the distribution company. Should there be any leftover revenue – and that’s not a given – you may receive a portion of it. Those would be the royalties of a film.

Residuals

Do you belong to a union? If so, you may also earn residuals from a project. 

Residuals potentially come into play when the distributor provides the royalty statements to the production company behind the project. That production company – or whoever would be responsible for residual payments – then must notify the residual departments of all applicable unions. From there, those departments calculate what their union members are owed in residuals.

Backend

Let’s say there’s a project that can’t meet your rate, but the potential for it to be a hit is good. In such cases, you might be asked to take backend or profit participation. In such cases, only after a film breaks even can you then earn a percentage of the profits. It’s a risk to be sure, but it might quite literally pay off.

For instance, though Alec Guinness famously spoke poorly of the Star Wars franchise, he made a significant chunk of money off it with a 2.25% backend deal.

These are some of the more common compensation channels for filmmakers. Because they may or may not be part of your participation in a project, it becomes all the more important to familiarize yourself with them. When that next production arrives, you may be undercutting your earning potential during the negotiation process if you don’t know what to ask for.

Because what Alvarado earns in backend and residuals is not a substantial part of his overall income, documentary filmmakers generally don’t get asked to work for free. “In my experience, the backend is a very small amount. There’s no way to think that’s a good part of my income,” he adds. So if you plan to make documentary work your focus, make sure you get paid at the outset of a project!

And while the story of Alec Guiness may not be so common among actors, Alvarado points out that on-camera talent can make substantial income through residuals. Bill Nye, the subject of one of Alvarado’s documentaries, noted that the residual SAG earnings from his many projects and shows was quite regular.

In short, it’s on you as a filmmaker to know what kind of income these modes of payment can provide and ensure that you receive it if mandated by contract, union rules, or your own negotiations.

Secure different funding streams for your productions

If you have a project you want to make, odds are you’ll be the one finding funding for it. As Alvarado states, “The general idea is that every film wants to be funded in a certain way.” Which is to say, the nature of the project can provide guidance on how you should fund it. 

For instance, a project centered on the medical world might mean looking to healthcare entities for funding. Likewise, a project focused on rescued animals lends itself to funding opportunities through rescue groups and animal rights advocates. 

Yes, going out and pursuing these funding resources requires yet more time and energy that many filmmakers rarely have. It also demands a whole other set of skills outside knowing how to shoot a film or direct the crew on it. But often the scope of a project necessitates the investment of outside sources to ensure that you can get to the finish line with it. 

“Most of it is us imagining a project we want to work on… We want to pursue things that we’re really driven about and can invest two to three years of our lives into. It’s a huge commitment. It has to be something we care about.” 

Two to three years of your life! That’s why it is essential that you learn how to both fund such a project and ensure you stay financially afloat during it. Often you’ll have to find multiple funding streams to get your dream made. 

Here’s a non-exhaustive list of how you can fund your film. Figure out what path makes sense for your project!

Grants

For documentary filmmakers, the go-to funding option is often grants. Especially when you’re circling a project that has some social awareness aspect to it, sourcing grants makes a lot of sense.

Grants are so integral to some projects that filmmakers may hire professional grant writers to help them make a compelling case for their movie. Because just like pretty much every other part of making a film, the process of applying for a grant takes considerable time and energy. 

First, you have to find a grant opportunity that fits your needs. The good news is that there’s no shortage of organizations who provide them. From Sundance to Film Independent to Filmmakers Without Borders and beyond, multiple film-centric groups offer this type of project funding.

Second, you must adhere to the grant submission process. These opportunities typically come with a number of submission requirements for filmmakers to even be considered for the grant, which may include documentation of overall budget, attached crew and cast, and other funding streams.

Investors

Both documentary and scripted narrative filmmakers should lean into getting investor interest for their projects, as this is one of the biggest sources of funding. But how exactly do filmmakers find investors?

Those investors could be friends and family who want to support your passion project. They could be angel investors who want nothing more than a tax write-off. Or they could be individuals with some professional or personal connection to the material being produced. 

In the case of funding for We Are As Gods, it was the last one.

Stewart Brand is a man whose initial passion for and interest in ecology and alternation education led him to create the Whole Earth Catalog. Since that undertaking, he has gone on to explore the intersection of cutting-edge science and technology with the hope of rectifying some of humanity’s man-made ecological destruction. Because of Brand’s tech world connections, Alvarado and Sussberg sought investors from that sector.

So again, look to what your project is at its core for inspiration on how to fund it. The subject matter will be of interest to someone or some business or organization. Find investors that make sense for a particular production. Remember that every production is different, and look for the way the film “wants to be funded”. That’s truer with investors than any other place.

Crowdfunding

When significant financial backing from one or a few sources isn’t possible, it may be time to consider crowdfunding. With platforms such as Indiegogo, Kickstarter, Seed&Spark, crowdfunding has become a hugely popular and viable avenue for indie filmmakers. 

Just keep in mind what you promise for those pledges and financial contributions. Some may come with no strings attached. Others may necessitate a nominal gift. Still others might require an on-screen cameo, producer title, or other perk. 

In these cases, make sure to weigh whether the tradeoff for that pledge is worth what you may be paying or giving up for it.

Other sources

Sky’s the limit when it comes to creative ways to fund your production. Maybe you have a pie-making business on the side that you can use as a funding source. Or you cosplay for children’s birthday parties. Or you’ve had a hair-braiding hustle since high school. Whatever channel you decide to explore for funding your films, though, be sure to ask if it makes sense for each project, as well as what you may need to compromise for it.

You need to look out for your future now

If as a filmmaker you don’t establish your financial health now, how do you expect to have any stability in the future?

Regardless of where you are right now in your career, don’t forget about your future. Alvarado acknowledges it can be challenging to start. But he also  emphasizes the importance of securing your future financial health now

“I was so swamped with student loan debt I couldn’t even imagine breaking off a $100, but I probably could,” he notes. Even if it means putting the absolute minimum into your IRA or other savings account, do it and don’t wait. Starting to save as soon as possible can mean a difference of hundreds of thousands of dollars down the road.

It also could mean the difference between having the freedom to spend your older years as you wish or being forced to work when you’d rather not. When it comes down to it, it’s really about choice. Give your future self every option possible by setting up a retirement fund or other type of savings today.

Wrapping up

Having a passion for storytelling is just the start to a career in filmmaking. Today’s filmmakers must also have the business savvy necessary to bankroll that passion. 

That might mean knowing how to negotiate your rates.  Creating a budget that allows for your salary. Or understanding the different modalities that can help you profit from your productions. In truth, it’s likely all of these skills and more.

But as Alvarado’s own career demonstrates, it’s possible. Moreover, you don’t have to do it entirely on your own. So if you're ready, why not look into starting you own production company or negotiating your fee. There's no better time to start than now.

Disclaimer

At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice.  You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.

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About the Author

Anna Keizer

Anna Keizer originally hails from the Chicagoland area. After receiving her B.A. in Film/Video from Columbia College Chicago, she moved to California and finished her M.A. in Film Studies from Chapman University. She has also graduated from UCLA’s Writing for Television Professional Program and is currently in post-production on the short She Had It Coming, which she wrote and is executive producing.

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