Most independent filmmakers do not research and utilize realistic sales projections when developing their business plan, or worse, they do not use sales projections at all. This is a huge mistake. Sales projections for your film project are absolutely necessary so that you can properly budget your project, raise the necessary financing, and ensure your chances of paying your investors back.
When you are developing a set of projections, the following should be considered:
Develop a set of projections starting with detailed revenue. It is important to have a clear idea of where the movie will be released and how it will be released. The type of release will greatly impact the revenue you could receive. You should have a good idea of what you can sell your movie for before you develop your budget. Make sure your production budget is solid and based on the final shooting script. These numbers can change, but it is important that you know they have changed, and why. You should be constantly updating your budget throughout the film project. Do not guess. You should always make every effort to obtain good, hard numbers. Have other producers located in the area you are planning to film take a look at your budget. When developing your projections, be sure you to include all of the available distribution channels. US Theatrical US Broadcast US DVD Foreign (DVD and other rights) Online download and Film website The sales projections should be done for 3 different levels, starting with a low revenue estimate, a high estimate, and a mid range estimate. The high and low extremes are very important as they will form a potential range of possibilities.
Keep in mind that there are many variables which will determine the price distributors will pay for your film at any given time (including, but not limited to: market trends, comparables, genre, subject matter, actors, producers, or directors involved in the project, if it did well at festivals, commercial viability, etc).
Include distribution costs that you expect to incur. These will vary with the level of revenue included in the projections and will be different for each distribution channel. You will also need to develop a cash flow projection, a cash break even, and a net profit break even analysis. These can be included in your business plan.