# DAY 1 — Premium 101: The Number That Makes Investors Say Yes
*Frame × Frame Academy · 5-Day Producer Course · Day 1 of 5*

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## The Mistake Most New Producers Make

You pitch a film. The investor says "I'm in for $100K." You start mentally spending it. You haven't even talked about the **premium** yet.

Premium is the number on top of the principal that investors get paid **before anyone else touches profit**. It's not negotiable in spirit — it's how investors stay in this game. Skip it in your term sheet and your investor walks. Or worse, they sign anyway and you spend the next four years explaining at every quarterly check-in why you don't have a number for them.

## What the Number Actually Is

**Standard market premium for indie film is 20–25%.**

- $100K invested → first $125K out goes to the investor (at 25%)
- $500K invested → first $625K out goes to the investor (at 25%)
- $50K invested → first $60K out goes to the investor (at 20%)

Some structures use a flat premium (one-time bump). Some use accruing premium (5% per year compounded until recouped). For your first deal, flat 25% is the cleanest sell.

## Why It's Sacred

Premium isn't a tip. It's the difference between investors who put in $100K and **walk away when it doesn't work** versus investors who put in $100K and **never speak to you again** because they feel ripped off.

Build the premium into your numbers from day one. If you can't afford to pay the premium on paper before the profit pool kicks in, your budget is too high or your revenue model is too thin.

## Real Examples from the Playbook

- **Hierarchy (2025)** — Chiderah Uzowulu structured a clean investor premium + recoupment waterfall over a 5-year hold. When the distribution deal closed, the investors got paid first.
- **Paranormal Activity (2007)** — $15K self-financed by Oren Peli. When Paramount acquired and started spending, Peli was structured into back-end participation as a producer.
- **Sound of Freedom (2023)** — Eduardo Verástegui structured the deal so investors recouped through crowdfunded distribution before the producer pool kicked in.

## Tomorrow

Tomorrow: **How investors actually think.** Why a 25% premium isn't expensive — it's the only thing that makes your project competitive against every other place an investor could park $100K.

— Trade Marq IV · Frame × Frame Academy
