The costs of a net profit deal

Your latest project is a runaway success, you’ve got billboards all over the Sunset Strip and the money is rolling in. But it’s not all rolling to you, and it’s hard to figure out what money should be yours.

The U.S. media and entertainment industry is a juggernaut, valued at $717 billion. As a participating member of the industry, you just want the slice you’ve earned. Net profit deals are a common way to get there, but sometimes things don’t add up. This is when it’s important to figure out if you’re owed more money from a project.

Doing the math

The math equation may sound simple. The cost of a project subtracted from the money made equals the net profits. The trouble can come from knowing what counts as a cost. While you will see some exceptions, there are a few things that commonly come up as costs that you need to calculate when figuring out your share of the pie.

Cost of doing business

There are practice areas you can usually expect to count as costs for a project:

  • Production: Before you can sell it, you have to make it. Salaries, equipment and venues can all fall into the purview of production.
  • Manufacturing: You’re done making your project, now you must get it to the people. The cost of creating prints or discs and re-editing can ding your profits.
  • Distribution: This can cover a range of costs after you send your project out the door. Product shipping, insurance and taxes can all count against your eventual payment.

What really counts

Remember that your contract may read very differently from other contributors, or change from job to job. You could find some things you assumed weren’t a cost of production or fall into vague language that ends up costing you a large chunk of your pay.

Make sure you go over exceptions, your percentage and additional compensation carefully. Knowing what costs you are responsible for and what your contract spells out can mean the difference when combing for what you have coming.