Paranormal Activity – Learning how to budget your indie film

The new, micro budget horror film, Paranormal Activity continues to rake in the cash, with this weekend pushing it above $60 million at the box office. That’s a Hollywood success story.  The budget to make the film was a whopping $11,000.  Not $111 million.  Not even $11 million.  It was $11,000 — $11K — $11 grand.

Paranormal Activity was purchased by Paramount for $300,000. That’s an amazing RoI (Return on Investment) for the filmmakers. The studio went on to spend $10 million on P&A (Prints and Advertising). If they pull in $100 million at the box office, this will become the most successful Paramount film in modern history.

Sure, it’s an anomaly as far as micro-budget movie successes go, but they did something right.  This success reiterates something I spend a lot of time communicating to first-time filmmakers: you don’t need lots and lots of money to make a successful movie.  You need a good story that’s well told. Production values are important, but thanks to the YouTube generation, we can run around with our camcorder and make a successful movie.

In my new eBook, From Dream to Distribution: A Filmmaker’s Journey, I talked specifically about budgets:

When I meet with first-time filmmakers, most of them dream big. And, I love big dreamers. I really do.  But, there’s a difference between “big dreams” and “unrealistic dreams”. These zealous filmmakers come to me ready to chase $4 or $5 million for their first film. Let me just say, bad idea, especially for first-time filmmakers.

First of all, it’s very hard for a non-established, unproduced filmmaker to successfully pitch their freshman project to a wise investor. Why would an investor take such a risk with millions of dollars?  Of all the indie producers I’ve met, I don’t know of a single one who secured that much money for their first film. It just doesn’t happen.

Secondly, the chances of a first film at that budget level being profitable is less than 1%. Again, what investor would want to take that kind of risk?  It would be nearly impossible to recoup any profits from that level of production.

How much should you try to raise for your first film?  The answer is simple—as little as you absolutely need.

When I worked in corporate America selling consumer electronics, our objective was simple: produce a good product as cheap as possible, so that we could sell it, make a profit and build some more products.  Making movies should be no different:

  • Make a good product.
  • Keep your costs low.
  • Sell it and make a profit, so you can do it again!

Grab your camcorder and go make a successful Hollywood blockbuster!

This entry was posted on Sunday, October 25th, 2009 at 1:28 pm and is filed under general.
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3 Responses to “Paranormal Activity – Learning how to budget your indie film”

  1. mananafilms Says:

    absolutely agree on this. and i would say more; sometimes low budget indie projects are much more exciting to work on. I know some directors who succeed with their small projects and went bigger, but they still miss the times of their low-budget periods.

  2. filmmaker blog Says:

    I love your trailer! Fissure looks like a really professional and interesting project. Great work.

  3. filmmaking resources Says:

    One of the most important aspect of making a film and one of the first things that I feel you must consider once you have a working idea is the budget. The budget more than anything else can be the deciding factor on whether a movie is going to be made or not. I feel that once you have a well developed and through idea for a movie that you need to sit down and start to think about the budget for the film because hurts a film more then being stopped in the middle of production do to lack of funds.