ATL Costs

Once you sign a certain star or director, you’re stuck with the cost of that person for the duration of the picture. We designed this FREE Film Business Plan Course to be sent once per week to break the process of writing your business plan into manageable pieces, and to keep you accountable and focused. The best approach depends on your specific business model and category of expenses. When looking to reduce expenses, companies naturally gravitate towards above the line costs. However, current assets/liabilities arise from core operations, while non-current assets/liabilities stem from secondary activities. However, routine legal/professional fees for lawyers or auditors would likely be above the line operating expenses.

What does ‘above the line’ mean in movie production?

Check out 100s of tools, templates, articles, contacts and resources for both new and experienced movie producers. In this comprehensive guide, we’ll demystify these expense categories to help you better understand your company’s finances. They must expect to work long hours, though the role can be financially very rewarding. Where a Line Producer has a creative input to the production, he or she is often credited as a coproducer.

• Once the producer and executive producers have raised the required finance, the film can go into pre-production.
• As such, it’s essential to balance above-the-line costs with other marketing strategies (like social media or email marketing) to ensure you’re reaching your target audience effectively.
• This person is a troubleshooter on set and has the authority to make decisions that will affect the schedule or budget.
• A company has other costs and expenses, but those above-the-line costs are separated out for the purpose of clarity.
• The origin of the “above-the-line” and “below-the-line” terminology has a fascinating connection to mid-20th-century advertising practices.
• BTL expenditures often tie back to your financial and strategic choices, impacting your company’s broader financial health.

benefits of above-the-line deductions for startups

All the expenses that are beyond the line of operating income are considered to be the over-limit costs. It reports sales of $ 20 billion in a quarter and its gross profit in this period is $ 9 billion. So, the company’s above-the-line-costs is this quarter will be calculated as $ 11 billion. It reports revenues of $ 5 billion in a quarter and its operating income is $ 300 million in that quarter. As it is not a manufacturing company there is not COGS or COS involved in the calculation of gross profit.

ATL expenses would include data storage and bandwidth costs, advertising fees, and salaries. In the financial world, these are the costs tallied up before determining the gross profit on an income statement. The line signifying gross profit acts as a divider, and everything counted before it, like those data storage and labor costs. Above-the-line costs typically include just a few line items, but they’re big ones, and account for a significant portion of the film’s budget. Cast salaries, for starters, including those $20 million paychecks earned by the most sought after A-listers, but also the cost of hiring less recognized actors to fill major roles. Also included above the line is money paid to producers and directors, which can be substantial, depending on the film.

Understanding  Above-the-Line Cost

However, discretionary marketing for brand-building may be considered below the line, since it only indirectly supports sales. In economics an isocost line shows all combinations of inputs which cost the same total amount. Although similar to the budget constraint in consumer theory, the use of the isocost line pertains to cost-minimization in production, as opposed to utility-maximization. Regardless of the business budgeting approach your organization adopts, it requires big data to ensure accuracy, timely execution, and of course, monitoring. When considering an acquisition, leaders will often consider whether there are synergies in above-the-line costs that can boost profit margins. Save time, cut costs, and let Filmustage’s AI handle the heavy lifting — all in a single day.

Accounting

• If you’re new to film budgets, we recommend first reading our comprehensive guide, “What is a Film Budget?”, to grasp the essentials of budgeting for movie production.
• For manufacturing-type businesses, above the line costs are any costs deducted to arrive at gross profit, namely cost of goods sold (COGS).
• They work closely with the executive producer of a television show or the director of a film to make sure they are properly executing on the creative vision.
• If a company can’t profitably cover these expenses, its business model is fundamentally flawed.
• Without careful monitoring, they may go unnoticed and result in incorrect financial projections, strained cash flow, or compromised profitability.

Line Producers are usually recruited onto the production team during the later stages of development. From this schedule the Line Producer can accurately estimate the cost of each day’s shooting, and produce a provisional budget estimating the total amount of funding required. Once the producer and executive producers have raised the required finance, the film can go into pre-production. Above-the-line costs are a company’s cost of goods sold, also called cost of revenue or cost of sales. Above-the-line cost is an essential component of any marketing budget – particularly for businesses that are looking to build brand recognition and reach a wide audience. By investing in traditional media advertising and branding efforts, you can create a consistent message that resonates with your target audience and helps establish your brand identity.

In this case, below the line would include only extraordinary or non-recurring income or expenses. Or any transaction that does not impact the company’s ongoing revenue or profits. BTL costs are typically more flexible and can be adjusted throughout the production process to accommodate budget constraints or creative changes. Filmustage offers filmmakers a comprehensive solution to manage both ATL and BTL costs with precision and efficiency. With Filmustage’s Budgeting Tool, you can automate the budgeting process while retaining full control over your project’s financial planning.

Key Takeaways

The service sector, however, COGS are included (if applicable), as well as selling, general, and administrative (SG&A) expenses. For manufacturing-type businesses, above-the-line costs are any costs deducted to arrive at gross profit, namely the cost of goods sold (COGS). For a more in-depth look at film budgets, be sure to read our article “What is a Film Budget?”, which provides a comprehensive guide to budgeting for movie production. If you’re new to film budgets, we recommend first reading our comprehensive guide, “What is a Film Budget?”, to grasp the essentials of budgeting for movie production. When above the line costs it comes to creating a film budget, it’s crucial to understand the difference between above the line (ATL) and below the line (BTL) costs. These terms are used to categorize expenses based on their nature and the people involved.