While I firmly believe in "real world experience/credit" in lieu of payment (for inexperienced crew and/or film students who will receive school credit), for cast and crew with some experience, they should be getting paid. The profit sharing model is appealing but ultimately, without a good accountant (like Shian said) and a lawyer, you're going to run into problems, and may ending having spent a good portion of your budget paying people to help you figure out how to pay people... You can't say you don't have money to pay people, and then turn around and say you have money ($40k) for the film. The people are the film - payroll, catering, these are generally a film's biggest expenses. I would suggest you pay people upfront and save yourself the future hassle, put together a budget for your cast/crew and then budget for the rest of your film with what's left. If it's not enough to make your ideal version of the film, get creative or get more money.

This is roughly the budget of Sick Boy which is now in distribution in worldwide home video markets. For that money we had SAG actors that were paid the minimum allowed and a paid crew, with catering. What it didn't allow was for us to pay ourselves, but that was the decision we made given we stood the most to gain by the film being completed and successful.

As @vicharris says, you pay your crew, something, and you feed them. This is very important. Being willing to pay even a token daily rate that helps with gas and some pocket money, plus making sure they're fed, gets you their respect and you can get good, hard working folks that will make a huge impact on how well things run versus asking people to work for free. Even if they're good and agree to no money, they won't respect you. We've made two independent features and both times had zero crew turn-over because even though we couldn't pay the crew a whole lot we made sure they knew we weren't asking them to apply their craft and trade for free. Knowing they would turn right around and do it again with us is a point of pride.

Actors or certain key crew asking for deferrals is pretty normal. If it's not their first trip to the rodeo they know, like you may not know, this is money nobody is ever likely to see. Profit participation on a movie this level, with the kind of options for sales you're going to have, is easy enough to give away. There will likely never be any profits. That's just a simple fact.

There are the occasional exception but know that once you get to distribution (and most filmmakers, if they've completed the shoot, if they've completed post, still don't make it this far) the system is such that it's practically engineered to never pay the filmmaker. You don't want to highlight this with your backers but they'd have to be living under a rock by now to not know that independent film is a horrible "investment". They'll be lucky to break even in a few years even on a film with this little to pay back. True story. An independent feature has the chance of paying itself back, or making a profit, unlike the short film, which is a complete write-off, but this is very slim and it doesn't happen fast. Hope is almost cruel in this case.

So, realistically, if the actor or crew is integral to your vision of the film it's not really a difficult concession to make, given there will likely never be the funds for them to collect from later on. If you're incredibly lucky and there are actual profits, well, what's the harm in giving them a portion, given they helped make it happen? Nobody is losing here. But don't feel like you need to make or even offer the same deal to everyone.

@goanna

I'm going to plays devils advocate here but if he has $40,000 to shoot the thing but not going to pay anyone anything, do you think that is right?

I think paying someone for distribution is not the best way to spend the money. As Rhoades said, getting anything back from distributors is pretty much a lost cause now. They will make all profits disappear, it's what they do. This is simply money thrown away in these times.

Pay your crew, feed them well and hope for the best.

/\ What he said :)

...I think paying someone for distribution is not the best way to spend the money...

Yeah, that's kinda bassackwards. You shouldn't be paying out-of-pocket to have your film distributed, unless you're self-distributing and having to front your own material and duplication costs. You'll likely have to lay out some cash for some of the deliverables but not for the actual distribution, if you're working with a reputable sales agent who's sold a region to a legitimate distributor. They recoup their costs right off the top.

But now, we have an actor (supporting role) wanting payment in "profit share' form.

... And so now you're going to sit everybody down to negotiate everything again? Just when you've secured their agreement? For this supporting actor? Really?

I'm curious now what that $40K is going to if not to pay cast and crew. I seriously hope this isn't just a payday in the form of producer's fees, rights fees and script fees. I've seen budgets for $4M low budget where nearly a half-million went to writer/producer/director types of no consequence while name actors worked for minimal rate.

I mean, it's legal and good work if you can get it. I just don't know how those charlatans sleep at night. Oh wait, Akira Kurasawa made a film about that called The Bad Sleep Well.

Hold on guys, sorry but i was caught up with other things... Thanks for everyone's input. With the budget, we factored in new equipment - camera, lights etc, locations, catering, sound editing (I be doing the editing/grading myself, none of the budget money is going to myself) costumes and the like. I would say 80% of the people helping us have worked with us over the years, we are a fairly tight crew/cast. This is my first feature, i totally new to this level of filming making. I've done various types of short films etc (with the same people). We still have to cast a couple of roles also. I wasn't saying that this actor asking for some type of payment was a negative or a bad thing. I just wanted to find out the correct steps and/or other peoples experiences. And from what I gather, I'll have to look into more and work out a way that everyone gets covered.

Cheers

I think sharing is a great idea, I'm not sure how practical it is.

@azza_act

I think that people want to tell you is that investing in your crew is best thing you can do.

In most films share promises don't work as no one who are promised money get's them, none at all. Even if film will make some money more smart guys, in distribution as people told you, will make it so for you it'll be in minus or even.

I think for most people the best idea with this kind of budget is definitely going to be to pay a crew and find acting talent that wants a chance to shine and hopefully even pay them something.

Personally I kind of like the Edward Burns model, where his crew is 3 people including himself who share in the profits of the movies, and uses his minuscule budgets (Nice Guy Johnny was 25 grand, Newlyweds was 9) to pay pretty good actors who are also fairly fresh faces and want to work with him. The locations are borrowed. The reason this all works, however, is with his name and track record, Burns knows he'll make a profit on films with these kind of budgets, and I imagine he and his crew do quite well.

Obviously that won't work for all of us. I'm poking away at my first super indie feature, which is dominated by the lead actor screen-time wise and being handled technically almost entirely by myself. Both my lead and my producer are older established people with a great deal more money than I have, so nobody is getting paid but the three of us are taking percentages even though I do not expect this film to turn a profit. (It's important to me and my producer and a spring board to bigger things.) I am shooting a lot of stuff documentary style but I have a few scenes that require staging and possibly a more elaborate crew. In this case I will be hiring locals and paying them out of my pocket and possibly flying someone in for sound and putting them up and feeding them and giving them a few days at a resort as a kind of trade for vacation arrangement. I could bullshit my way to some free work with local crews but that feels wrong maybe unless I'm getting them some commercial work on the side.

Point is I guess different strokes for different folks but at this level of budget I really think the money has to be for the things that you need to make a successful film and can't do yourself and percentages should be what you and one or two other key people get. Otherwise it becomes complicated to track as noted above and kind of meaningless anyways. If you do get people willing to work for future credit or future maybe money you're probably just screwing them, anyways.

I'm seeing talk above of '20 cast and crew being a pretty barebones feature'...just want to throw out also that such a thing doesn't sound like a $40,000 movie to me. Yes films are collaborative, no we're not all Robert Rodriguez on some half cocked solo mission, but still, all the financial savings we can get with today's tech starts to get meaningless when you've got 20 people milling around. I'd keep it smaller. Much smaller.

Don't spend a lot of time worrying about this. There will be no profits.