Dear Friend,
To the mere mortals who live in what is commonly referred to as the real world…
To be paid $50 Million dollars seems like a very silly amount for someone to earn just for making a movie. (it’s all just lights and glamour anyway, right)
Until you look at what is happening behind the scenes. And I don’t mean at the characters – I mean at the big business which is Hollywood.
Let’s take The Avengers for example.
The lead role, Robert Downey Jr earned $50 million dollars for playing his part. For a consumer living in the world of $10s of thousands, this might seem a little bit silly. (in fact ridiculously silly)
But in business it’s not, and let’s have a quick look at why $50 million could be considered pocket change.
The producers, business owners who put up the money to begin with are doing so expecting a profit at the end.
To ensure they get the profit at the end, they make sure they have the right people in place to ensure the money they invest gets a healthy return.
The right people are often expensive – but they get the returns.
And they did get the returns.
The Avengers series is said to have grossed $4,000 million dollars, that’s $4 Billion. Not bad hey.
So when you look at the $50 million paid to Robert Downey Jr, it’s a paltry 1.25%. (hence my little pocket change quibble)
Just to keep it real, let’s put it in figures we use day in day out (or more to the point, ones you and I can understand).
If you paid someone $2,000 and in return you made $160,000 dollars – what would you do next…
That’s right – you’d pay another $2,000… (and you’d do it over and over again, until you ran out of $2,000 or you stopped getting a return on your investment).
The point I am trying to make here, is you need to understand the return you are buying (investing in) for your business is.
Ie how much will your business increase? Will it be by 1% 2% or 15%…
Now, does the return justify the expense? Are you going to make a lot more money than you are going to spend?
James Hill
PS. For arguments sake – lets say the movies were a flop and only pulled in $500 million – the $50 million dollar salary is still only 10%
PSS. Just one final though to leave you with, to put value in perspective. If someone made 80 times the amount they paid you on the work you’d completed – would you be underpaid, overpaid or happy? Understand your value, and your value in the market place and charge accordingly.