Overhead
From ForcaWiki, the simple encyclopedia
| In one sentence | An extra markup, like an added 15 percent, tacked onto a movie's costs when figuring out how much profit is left to share. |
|---|---|
| Category | Finance |
| Related | Costs, Negative Cost, Profits |
Imagine a school bake sale organizer says that on top of whatever the ingredients actually cost, every stand also has to add 15 percent more to cover the general cost of running the whole event, like renting tables and printing signs.
Overhead is that same kind of markup for a movie. It is an arbitrary extra percentage, added on top of either the Negative Cost or the regular distribution expenses, when calculating participations and overages. It is meant to cover a company's general running costs, rather than any one specific, itemized expense.
Fun facts
- Because overhead is an extra markup rather than a real, itemized cost, it directly shrinks how much profit is left over to share with everyone else.
- The exact overhead percentage is a heavily negotiated number in a movie contract, since even a small change can shift a lot of money.
- Overhead is one more reason a movie can earn a lot of money and still show surprisingly little profit once every markup and cost is subtracted.