How is the Gross Profit Calculated for Movies?
The gross profit of any industry or business venture is the profit it earns without taking into account the expenses, like salaries, for example. When it comes to movies, given the number of people working on it, the actors demanding either fixed or percentage payment, breaking deadlines, overtime, and other numerous factors, it is clear that calculating the profit can be an arduous task. Furthermore, movies don’t make money only at the box office, but on TV, merchandise, and licenses. The calculations also do not involve the initial budget of the movie. So, how can you calculate the gross profit of a movie?
Box Office Gross
What is a box office gross? It is the money earned by the movie at the box office. The problem arises when we need to calculate how much each venue charges for early shows, 3D projections, and so on, as the prices differ due to supply and demand. 3D projections tend to cost more, whereas early shows don’t expect many customers, which is why the tickets cost less.
On to the calculation. Usually, there is a difference between domestic and foreign gross. This is natural, as the movie in question is usually better received domestically. In 2011, the domestic BO gross of Harry Potter and the Deathly Hallows Part II was estimated at $381 million. That means that this is the money the movie earned at the domestic box office. Interestingly enough, the domestic BO gross is often taken as a measurement of the movie’s success on the market and it is from there that the future plans concerning marketing, TV releases, merchandise, and licenses are planned. If, however, a movie is a part of a bigger brand, the international market is immediately taken into account.
Adjustments
The most important adjustment to the profit comes in the form of adjusting for inflation. To determine whether a movie has earned more than one of its rivals from a different time period, the average ticket price is taken and compared between the two. For example, the average ticket price in the USA in 2019 was $9.01 and $7.89 in 2010. So, even if the movie earned more at the box office, we have to take into account the inflation and change the profit accordingly.
How Can I Learn More?
There are several services online, like IMDbPro, that give information about the gross profits of movies. However, don’t be discouraged if you can’t find any information regarding whether a movie succeeded or bombed. A lot of info is kept secret by the industry for a plethora of reasons. We can often find just the gross and net profit after the movie has been out for a while.
