Production budgets are reported as single figures and reflect a structure that explains why certain films cost what they do.
Above and below the line
The industry's basic division.
Above the line covers those attached before production — writer, director, producers, principal cast.
Below the line covers everything to physically make the film — crew, equipment, locations, construction, transport, catering.
Post-production and visual effects are generally accounted separately again.
Which means star salaries, the item most discussed publicly, are one component of one category.
Where the money actually goes
Shooting days are the fundamental unit. Every additional day costs the entire crew, equipment, location and support.
Which means anything slowing the shoot — complex setups, weather dependency, difficult locations, child performers with restricted hours — multiplies cost across the whole operation.
Efficient scheduling is therefore worth more than almost any individual saving, and it is why productions shoot out of sequence by location.
Visual effects
The largest line item on many large productions.
Cost scales with shot count, complexity and, critically, with revision.
Effects work continuing after picture lock, or changing following test screenings, is where budgets escalate, since work already completed is discarded.
The industry's working conditions have been a sustained concern, with fixed-bid contracts and unlimited revisions producing unpaid overtime and studio failures.
Locations against stages
Location shooting delivers production value cheaply in one sense and carries costs in another.
Permits, transport, accommodation, weather risk and limited control all add up.
Stage construction is expensive upfront and provides control, repeatability and no weather dependency.
Virtual production using large screens has changed this calculation for some productions, providing location backgrounds on a stage, and it carries substantial setup costs of its own.
Incentives
Tax credits and rebates offered by jurisdictions have become a major determinant of where films are made.
Rates vary considerably and conditions attach — local spend requirements, local hiring, cultural tests.
Which means a production's location is frequently determined by the incentive rather than by where the story is set.
Economic evaluations of these schemes have been mixed, with several finding the returns to the granting jurisdiction lower than claimed.
Marketing
Frequently comparable to the production budget for wide releases and generally not included in reported budgets.
Which means a film described as costing a certain amount may have cost nearly twice that to release.
Marketing spend is largely committed before opening, which makes it a fixed cost that a poor opening cannot recover.
How a film becomes profitable
Theatrical revenue is split with exhibitors, so a film receives roughly half of ticket sales.
Which means the frequently quoted rule that a film must earn multiples of its budget to break even follows directly from the split plus marketing.
Home viewing, licensing and international rights follow and have become proportionally more important as theatrical has contracted.
Accounting
Participation deals paying a share of profit have been litigated repeatedly, because studio accounting practices allocate substantial overhead and interest charges against a production.
Which has produced the well-known situation of enormously successful films reporting no net profit, and has pushed participants toward deals based on gross revenue instead.
Insurance and completion bonds
Requirements that shape how productions are run.
Financiers generally require a completion guarantee, provided by a specialist company that undertakes to deliver the film if the production fails.
Which gives the bond company oversight, and the right to take over a production that is overrunning.
Insurance covers cast unavailability, weather, equipment and negative loss, and premiums rise with the risk profile of the shoot.
Cast insurance in particular can determine whether a performer is castable, since some cannot be covered.
Currency and location
Productions spending in one currency and financed in another carry exchange risk over a period of years.
Which is hedged on larger productions and simply borne on smaller ones.
Reshoots
Additional photography after principal photography is standard on large productions and expensive, since crews and cast must be reassembled.
Coverage of reshoots as evidence of trouble is generally overstated — many are planned from the outset — and unplanned extensive reshoots are genuinely costly and do indicate problems.
Development
The stage before production, where most projects die.
Rights acquisition, script development through multiple writers, and attaching talent all cost money on projects that may never be made.
Those costs are absorbed across the slate, which means successful films fund the development of unmade ones.
Turnaround, where a studio abandons a project and allows it to be taken elsewhere, generally requires the new financier to repay accumulated development costs.
Below-the-line conditions
Crew working hours in film production are long by any standard, and turnaround between days is a recurring dispute in collective agreements.
Safety incidents have driven changes in several jurisdictions, particularly regarding driving after extended shifts and regarding firearms on set.
Which are cost items as well as safety ones, and they are among the few areas where regulation directly affects how productions are scheduled.