# Soft costs

Source: https://storiara.com/glossary/soft-costs
Last updated: 2026-09-14
Author: Charles Hirschhorn, Storiara

> Soft costs are the indirect expenses in a film budget that support production without being part of physically making the picture. They typically include legal and accounting, insurance, completion bond fees, financing fees and interest, overhead fees, development costs, and deferred or producer fees. Loan and investment agreements often limit them.

## What's usually on the soft cost list

These lines are scattered across a budget, so pull them together before a financier asks:

- Legal: production counsel, clearances, financing documents, chain of title
- Accounting and audit, including a tax credit audit if you're claiming an incentive
- [Production insurance](https://storiara.com/glossary/production-insurance) and [errors and omissions insurance](https://storiara.com/glossary/errors-and-omissions-insurance)
- [Completion bond](https://storiara.com/glossary/completion-bond) fee
- Loan interest, origination fees, collection account management fees
- [Overhead fee](https://storiara.com/glossary/overhead-fee) and [producer fees](https://storiara.com/glossary/producer-fee)
- Development costs rolled into the budget
- Deferments

## An example that shows why the split matters

Two $800,000 budgets can buy very different films. Budget A carries $95,000 in soft costs. Budget B has the same legal and insurance but adds a $40,000 overhead fee, $64,000 in producer fees, and $48,000 in bridge loan interest, for $95,000 + $40,000 + $64,000 + $48,000 = $247,000.

| | Budget A | Budget B |
|---|---|---|
| Total budget | $800,000 | $800,000 |
| Soft costs | $95,000 | $247,000 |
| Left for production | $705,000 | $553,000 |
| Soft costs as share of budget | 11.9% | 30.9% |

The math: $95,000 / $800,000 = 0.119, and $247,000 / $800,000 = 0.309. Budget B has $152,000 less for crew, days, and post, which an equity investor will notice.

## How to present them

Insurance and legal fees protect the investors' money, and most investors expect to see them. What makes people nervous is unexplained fees or interest stacked on a small budget. Show them as clearly labeled lines on the [top sheet](https://storiara.com/glossary/top-sheet), give the basis for any percentage fee, and be ready to explain a bridge loan's cost. If fees are going to be deferred, say so, and remember that union low budget agreements count deferred compensation toward total production cost.

## Where it connects

The opposite side of the ledger is [hard costs](https://storiara.com/glossary/hard-costs). Soft costs matter in [financing](https://storiara.com/learn/film-financing) conversations, in cash flow (legal and insurance bills arrive early in prep, before most hard costs), and in recoupment, where some fees are paid before investors and some after. The [film budget template](https://storiara.com/templates/film-budget) keeps these in their own "other" accounts so you can total them in one place.

## Frequently asked questions

### Is insurance a hard cost or a soft cost?

Most financiers treat it as soft, because the premium doesn't buy anything that appears on screen. It is still a real, unavoidable cost, and a guarantor will not bond a film without it.

### Why do lenders cap soft costs?

A lender wants the loan to produce a finished, sellable film. Money spent on fees and interest doesn't do that, so loan agreements often limit how much can go to soft costs.

### Are producer fees soft costs?

Usually, yes, especially when paid as a fee on top of the budget rather than as a salary for time worked. Deferred producer fees are often grouped with soft costs as well.