From a top line perspective, films in the industry can be broken down into two categories: big-budget films and low budget films. But  where is the threshold? When does a movie shift from being “low budget” and cross over into the realm of “big budget?”

If you have worked on any amount union regulated productions within the film industry you have probably heard the terms "Tier 1, 2, and 3"*  in conjunction with a project, but do you know what it really means? 

What Does Tier 1, Tier 2, and Tier 3 Mean?

Simply put, wage rates for union workers, on union regulated projects, differ from production to production. These wage rates are determined by the total budget of a project. It is a sliding scale. Higher budget films pay higher wages to all union workers, and lower budget projects pay lower wages. 

But not all high budget or low budget films are financed equally. This is where the tier system comes in. To distinguish between low, lower, and lowest budget union films (the keyword here being “union”. There are non-union productions that can fall below - or above - the tier guidelines), IATSE developed the tier system. This allows them to regulate wages and adjust them to a standard level depending on what the budget of the film is without unfairly disadvantaging projects with very small budgets and/or allowing their members to get exploited by a production doing its best to pinch pennies.

How Are The Tiers Determined?

The tiers are determined by the following budget ranges: 

• Tier 1: Below $6.0 million
• Tier 2: $6.0 to $10.0 million
• Tier 3: $10 to $14.2 million 

*There is technically a Tier 0, this is an ULTRA low budget film and more a colloquial term producers use than anything else. 

Don't let the numbers fool you into determining quality. Tier projects can go on to be financial and critical successes. Some examples of tier projects include: "The Wrestler", "Juno", "Boyhood", "Little Miss Sunshine," and "Crash".

Is It The Same For All Unions?

No. Even within IATSE, the locals, which determine the wages and rights for their members, differ slightly in their definition of tier levels. For example, local 600 complies with the rates listed above, but local 728 uses the following budget scale:

• Tier 1 ($1,850,001 - $5,500,000 Million)
• Tier 2 ($5,500,001 - $9,350,000 Million)
• Tier 3 ($9,350,001 - $13,200,000 Million) 

The DGA and SAG thresholds for the low budget are similar: $2.6 and $2.5 million respectively. The writer’s guild draws the line way down at $1.2 million.

The takeaway is that you should always check what the budget of a project is and what the corresponding union rates are. 

Summary

Depending on the budget of a film, it falls into a specific tier, which then dictates which union rates and rules apply. Anything above the top range of Tier 3 ($14.2 million) is full union rates, below that, the rates are adjusted to match the scale of the budget. 

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