Budgeting

Budgeting

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Budgeting is an important aspect of film production.
During script development, filmmakers produce a rough budget to convince film producers and film studios to give them a greenlight for production. During pre-production, a more detailed film budget is produced. This document, which could be over 150 pages long, is used to secure financing. Multiple drafts of the budget may be required to whittle down costs.

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A budget is typically divided into four sections: above-the-line (creative talent), below-the-line (direct production costs), post-production (editing, visual effects, etc), and other (insurance, completion bond, etc).

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Going over budget

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In the US film production system, producers are not allowed to exceed the budget. Exceptions have of course been made, one of the most notable examples being Titanic. Director James Cameron ran around with the budget and offered his fee to the studio. In other countries, producers who exceed their budget tend to eat the cost by receiving less of their producer's fees. While the US system is profitable and can afford to go over budget, other countries' film industries tend to be financed through government subsidies.

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Here is the estimated budget for Terminator 3: Rise of the Machines
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Story rights (Carolco and Gale Anne Hurd): $14.5 million
Screenplay: $5.2 million
John D. Brancato & Michael Ferris: $1 million
Director (Jonathan Mostow): $5 million
Producers: $10 million
Cast: $35 million
Arnold Schwarzenegger: $29.25 million + 20% gross profits
Arnold's perks: $1.5 million
Rest of principal cast: $3.85 million
Extras: $400,000
Production costs: $58 million
Post-production costs: $4 million
Visual effects: $20 million
Music: $2 million
Other costs: $33.6 million
Total: $187.3 million

As you can see, almost $70 million was spent on the cast. Using unknown actors would save a lot of money, but probably wouldn't generate as much publicity. As this is a Hollywood Blockbuster, they have the budget to use "stars".