As any film professional knows by now, visual effects have gradually become cheaper to create. This is due to many factors. Increasing demand from everywhere on the film-production spectrum lead to a rapid rise in numbers of VFX companies around the globe, including countries with low labor-costs. Many other territories offer tax incentives to lure productions in, and technological breakthroughs allow VFX to be created faster and by fewer artists.
Alas, while visual effects have definitely gotten cheaper, producers are quite often presented with bids that far exceed their available budget, and are forced to revise the film or make painful compromises in quality. Meanwhile, more and more VFX vendors are forced to work with shrunk budgets, short deadlines and frustrated clients hit in the face by reality.
The obvious reason for this is poor planning and budgeting. But still, time and time again, producers are thrust hastily into production, with a forced self-conviction that a VFX company will ultimately save the day. A widespread perception of the VFX process as an impenetrable "Black Box" only strengthens this conviction, as well as illusive tales of VFX-heavy productions that were saved last minute, on the cheap!
The fact is, while the process of making VFX can be complicated and convoluted at times, it is not as difficult to comprehend as some professionals lead their clients to believe. One might find some twisted logic in keeping producers misinformed and weary of the VFX process. But in reality, knowledgeable and confident producers are more likely to deliver well-constructed shot elements, making the VFX process more efficient and the final result better AND cheaper.
That said, the best advice for a producer, hoping to keep VFX costs low and enjoy a fruitful collaboration, is to lock-in a VFX company as early in pre-production as possible, and plan ahead together. Having a VFX supervisor on location scouts, looking out for invisible pitfalls and suggesting efficient workarounds is invaluable. Planning sequences, drawing storyboards, pre-visualizing together, are all ways to ensure getting the most bang for a buck - but more importantly, to empower the filmmakers to go bolder and more ambitious than they might have otherwise.
Producers often hold-off on contracting a VFX company until after principal photography, because they'd rather have fewer moving parts to deal with in production. That's backwards thinking: there's nothing more frustrating than learning you could have saved thousands of dollars by turning the camera 15 degrees left, or learning that an element you spent two days and thousands of dollars capturing on camera, could have been added in post in two hours. You'd be surprised by how often mistakes like this happen - and they almost always can be avoided by consulting a VFX supervisor ahead of time, and having one present while shooting.
But there's an even better way to save on VFX cost: hiring a director with hands-on experience in VFX production, who can actually DO some of the VFX him/herself. The advantages here are manifold. As motivated and passionate as the VFX vendor can get, a director will usually be much more likely to go above and beyond for his own project. A "VFX director" will usually require less time to communicate his vision to a VFX crew, and no time, if he is creating the effects himself. Of course, having VFX experience should never be the only qualification in a director, but good directors with VFX experience are becoming easier to find - due to the increased accessibility of VFX tools and technology.
Finally, if I had to put my finger on the number one reason productions spend more than they should on VFX - it would be lack of communication on the VFX company's part, and resistance to new knowledge on the producers' part. I know producing is tedious and stressful, but it also offers constant stimulation, ever-evolving challenges and never-ending opportunities to learn and grow. The same applies to VFX creation. Ironically, the more fun everyone has with it, the cheaper and more efficient it becomes.