What does a commercial cost? A complete guide to film production budgets
Determining the cost of a commercial is not a simple question with a standard answer. The price depends on several factors that are directly linked to your company's specific communication needs. In this guide, we explain how you can calculate an appropriate budget for your film production by focusing on the purpose, objectives and expected return.
The most common question: "What does it cost?"
One of the most common questions we are asked is: "What does it cost to produce a movie?" This is a perfectly valid question, but the answer is always the same - "It depends..."
There are so many factors that influence the cost of a film production that we would risk scaring off the questioner if we started listing all the cost items. Interestingly, it is often the case that the person asking the question actually already has the answer, but doesn't realize it yet.
The real answer lies with you
When someone who has never ordered a movie before contacts us and asks about the cost, our answer "only you know" may seem strange. But what we're really trying to find out is: "How much can the movie cost?" or "What is your budget?"
Many people think then: "Budget? I don't know anything about movies!" But in fact, the budget should be based on the value of the movie to your business, not on production costs per se.
Film as a communication solution
As video has become increasingly popular and accessible, huge quantities of films are produced every year. Not so long ago, many companies commissioned films simply because "everyone else has films".
But if you stop and think about what you're actually ordering, you'll probably come up with something different. We dare say that in 95% of cases, our customers are not ordering a movie - they are ordering a solution to a communication need.
What is a communication need?
In simple terms, a communication need can be described as reaching out with a message to an intended audience through a communication channel. In order for us as film producers to help you with this, we need a brief.
The importance of letters for film production
A brief is a document that describes your communication needs. The structure and content of the brief can vary, but two points that should always be included are "Purpose" and "Objectives".
Purpose - the answer to the question "Why"
The purpose explains why you need to communicate it. Some common purposes can be:
Increase our sales
Inform our staff
Strengthening our brand
Objectives - concrete and measurable results
To ensure that the purpose is not too vague, you also need to set one or more objectives for the communication. When setting objectives, you can use the SMART model, which means that the objective should be:
Specifically
Measurable
Accepted
Realistic
Timed
Example of SMART objectives:
Increase our online product sales by 15% before Christmas
Generate a 30% increase in visitors to our website next year
Shorten the onboarding process of new staff this fall by 2 days
How much can the movie cost?
Once you have clarified the purpose and objectives, the next question becomes: How much is it worth to your company or organization to achieve these goals? This is at the heart of the question of what a movie should cost.
Calculate the value of your movie with ROI
Translating a communication need into a monetary value can be difficult, but without some kind of calculation, you risk being left in the dark. All the quotes you receive will be just empty numbers without context.
The Return On Investment (ROI) is a way of calculating whether an investment is good or bad. Your investment in communication should be justifiable, so set an expected profit against an intended investment sum.
For marketing communications, you want a high ROI - the communication should generate profit through increased sales
For internal communication, the value is often about efficiency, reducing costs or improving the working environment
This explains why it often feels more justified to spend a larger budget on a commercial than on a film that will only be shown internally.
Factors affecting the cost of film production
If you've followed the reasoning so far, you should now have arrived at:
A purpose for your communication
A target that is measurable
An investment sum - how much the movie may cost
But we are not quite there yet. The question is how to allocate the investment sum.
Distribution costs
Depending on the purpose and objectives, the film will need to be distributed in different ways:
For sales purposes, you often need to count on paid exposure (YouTube, Facebook, TV)
For internal information, you may not have any distribution costs at all if the movie is only placed on the intranet
Internal costs
Other items that should be taken into account are your own efforts:
How much time will you spend on the project?
Do you need to engage colleagues in production?
Try to add up all additional costs beyond the film production itself.
Calculate the film production budget
We have now found the answer that many people thought they did not have when they contacted us:
Film production budget = Investment sum - (distribution costs + internal costs)
With information on purpose, objectives and budget, we as film producers can provide you with the best solution proposal based on our experience. You don't need to know everything about film to commission one - it's usually enough to know your purpose, objectives and budget.
Next steps in the film production process
This was a basic overview of how you can reason to arrive at a budget for your production. To give us the absolute best conditions, we may need to look at more aspects such as target audience, message and challenges, but those are topics for future articles.
Article written by Karl-Johan Strandberg, Multiproduktion
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The cost of a commercial in Sweden varies depending on several factors. There is no standard price as each production is unique and based on your company's specific communication needs, desired quality level and scope. To calculate an appropriate budget, you should start from the purpose, objectives and expected return on investment (ROI) of the film.
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To calculate the budget for a film production, you should first define the purpose and objectives of the film. Use the SMART model to set measurable objectives. Then calculate the expected return on investment (ROI) of the film. The film production budget will be your total investment amount minus distribution costs and internal costs.
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A brief is a document that describes your communication needs. It should always include the purpose (why you need to communicate) and objectives (what you want to achieve). The structure of the brief can vary, but for best results, it should also include information about the target audience, the message and any challenges.
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To set SMART objectives for a commercial, the objectives should be Specific, Measurable, Achievable, Realistic and Time-bound. Examples of SMART objectives could be: 'Increase online product sales by 15% before Christmas', 'Generate 30% more website visitors next year', or 'Shorten the onboarding process for new employees by 2 days'.
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To calculate the ROI (Return On Investment) of a commercial, you need to compare the expected profit with the amount invested. For marketing communications, this is about profit through increased sales. For internal communications, the value may instead be about efficiency, reduced costs or improved working environment. A higher ROI indicates a more profitable investment.