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When Donald Sutherland filmed his two days on comedy classic\u00a0Animal House<\/em>, he was offered a flat fee of $50,000 or<\/em> a reduced fee and 15% of the eventual box office takings. He took the guaranteed fee \u2026 and forever regretted not capitalising on one of the biggest comedies of all time. His two days\u2019 work could have netted him close to $20 million. This article is about when and how you can take your slice of the pie as an actor\u2014albeit on a more modest scale than the late great Donny S. Let\u2019s talk about profit share agreements, and what they mean for actors.<\/p>\n Profit share is an compensation agreement between a producer and\/or company and a production member. It guarantees that a participant will receive a percentage of the production\u2019s profits once sales have been recouped. Profit share is predominantly found in independent or community theatre contracts, although on rare occasions it may apply to an independent film.<\/strong><\/p>\n Before we dive in, we need to be very clear about something. This article was written by a producer and industry creative who has been on both sides of a profit share agreement. I am many things, but two things I am not are a lawyer or financial advisor. Here because a contract seems fishy or the numbers don\u2019t add up? Best to seek direct support in the form of legal expertise. However, if a street-smart, crash-course on the topic of profit share is what you\u2019re searching for, then look no further.<\/p>\n Let\u2019s begin with the basics:<\/p>\n Profit share is an agreement made between a producer (or company) and an artist in a production. It stipulates that the artist will receive an agreed-upon percentage of profits, once expenses for the production have been recouped.<\/p>\n Profit share is particularly popular in the independent theatre scene. It can promise some form of monetary compensation (and therefore attract a more professional level of actor.) However, there is usually a tacit understanding that a profit share agreement is more a gesture of good will than it is a guarantee of a handsome payday. To offer profit share to an actor or creative is a mark of respect. It demonstrates a recognition of their investment of time, talent and effort into a show.<\/p>\n Profit share may be offered as the sole compensation for work on a production, or offered up in conjunction with a flat, guaranteed fee. In independent theatre<\/a>, the promise of both is rare, as profit share is a useful tool for keeping production costs low before tickets are sold.<\/p>\n No surprises here: the answer to this question will change from production to production. However, with a few basic figures on hand, you should be able to calculate the rough ballpark of what your cut may be. To do this, we\u2019re going to teach you a quick budgeting tool for independent shows we call\u00a0the 25% rule.\u00a0<\/strong><\/p>\n How does this help you work out your cut? Calculate the maximum sales, subtract the show\u2019s budget (check with the producer on this) and then divide that number by your percentage point. If you were promised 10% of our example show\u2019s profits ($21,000) then you\u2019re looking at a maximum cut of up to $2100. Not a bad pay day at all.<\/p>\n This number can be larger or much<\/em> smaller. For instance, full-price tickets may be almost double the concession, cutting the required number of seats to sell. So any profit share estimate should be exactly that: an estimate. Don\u2019t go spending that money until it\u2019s sitting in your account.<\/p>\n If you are lucky enough to be given an option between profit share and a flat, guaranteed fee, you\u2019ll have an important decision to make. Before you do so, weigh up the pros and cons of each option:<\/p>\n A flat fee, guaranteed by a contract, is the safer bet. It may also be the most profitable in the event that the show doesn\u2019t sell well, or the production budget blows out. If either of these disasters occur, you\u2019re covered completely and the producer is obligated to fulfil the agreement by which you signed on.<\/p>\n However, a profit share arrangement can be extremely valuable. It\u2019s worth weighing up the clout of the company and the other creatives, the marketing budget and the venue\u2014which is to say nothing of the quality of the script itself. If you think the show will be popular and successful, then profit share might net you an exciting chunk of change.<\/p>\n As there is no guarantee of payment in a profit share deal, you should enter into such an agreement carefully. Can you afford to work on a project that may not pay you a dime? There\u2019s no harm if the answer is \u201cno\u201d. In fact, learning when to say \u201cno\u201d to a role<\/a> is a foundational skill for every actor to develop in their career.<\/p>\n Now for a more positive note. If it\u2019s a great project you believe in, and you can afford to work for free, then a profit share agreement is icing on the cake. You could end up with great reviews, a line on your CV, a whole new wing of your creative community, some valuable acting experience and\u00a0<\/em>enough money to shout your castmates a round of drinks at the end of the run. Doesn\u2019t sound so bad when you put it that way.<\/p>\nWhat is Profit Share?<\/h2>\n
How Much Will I Earn in a Profit Share Agreement?<\/h2>\n
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Profit Share vs. Flat Fee<\/h2>\n
When to Agree to Profit Share<\/h2>\n