Film Accounting Glossary
Overhead
What is overhead?
Also called studio overhead, or corporate overhead.
Overhead is the general cost of running the production company rather than the specific picture: executive salaries, permanent offices, and corporate services.
Studios charge a notional overhead fee to a production's negative cost, commonly a percentage of the budget, which is one of the largest deductions standing between gross receipts and net profits. Independent productions instead budget a producer fee and an explicit office and administration line.
Example
A studio charging 12.5% overhead on an $8.4M budget adds $1.05M to negative cost for services the picture may barely consume. It is one of the largest deductions standing between gross receipts and net profits.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
A studio charge against negative cost. Independent pictures instead budget a producer fee plus an explicit office and administration line.
Common mistake
Reading a studio overhead charge as a service the picture consumed. It is a percentage charge against negative cost, and it is one of the largest barriers to net profits.
Related questions
- What is studio overhead on a film?
- A charge, commonly a percentage of the budget, added to the picture's negative cost for the general cost of running the studio rather than making that film.
- Do independent films carry overhead?
- Not as a studio-style percentage. They budget a producer fee plus an explicit office and administration line for the actual cost of running the production company.