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Tips to Determine an Event's Money Metrics
Both composer Beethoven and Sally Bowles in Cabaret
agree that even with the gift of creation of fine arts, money
seems to be a key element to state those gifts. Even
though money isn't the only metric, your event will still
have to meet or exceed certain financial performance objectives.
Sometimes those objectives will be tangible, such as sales
revenue or profit, - and other times they will be intangible,
such as increased goodwill, exposure, or some other future
benefit. Below are five tips to determine an event's core
money metrics.
1. Determine your financial goals for the meeting or event.
Is it a host event? Are you looking to breakeven? Do you want
to make a profit? If so how much or what percentage?
2. Calculate all of your "hard costs" expenses.
That is, costs that are stable, that you are sure of, that
will not change. If this is unclear, you can utilize the figures
from the historical costs of this meeting or event or similar
events that you have produced in the past.
3. Estimate your variable costs expenses. These are the costs
that rise or fall depending on the amount of guests you will
be having. There may be circumstances out of your control
that could influence these expenses. For instance, dates (some
dates that are during peak seasons will incur higher travel,
venue, and accommodation costs), locations (some locations
cost more than others), number of attendees, speaker expenses,
food and beverage events, promotional requirements, and sources
of funds (e.g. sponsors, donors, or attendees).
4. Forecast the total income items for your meeting or event.
These can include: advertising revenues, concession sales,
donations, exhibit/exposition booth rental fees, gifts in
kind (fair market value), grants and contracts, interest income
from investments, merchandise sales, registration fees, special
event ticket sales, sponsorship fees, and vendor commissions.
5. Take the total of #4 (income) and subtract #3 (variable
costs) and #2 (hard or fixed costs). Relate this number to
your answer for #1 (your financial goal). This number represents
your potential income for your event. If the number you obtain
for your answer is negative, then you need to review your
costs and determine where you can make changes. This is not
about "cutting corners," it is about providing the
best service and results for your client, based on their budget
and objectives. Take a look at your established financial
goal, item number 1. From a critical perspective, is it attainable
and reasonable? What is the client's opinion? If, from your
professional and expert opinion, you are not comfortable with
the financial objective and do not think that it can be met,
you must tell your client. This adds another risk factor to
your event and you must work with the client to ensure that
they have reasonable expectations that will come close to
the actual outcome.
An example of how to find the breakeven point
All fixed entertainment costs (FC):
$6,000 - lighting
1,500 - sound
6,000 - talent fees
2,000 - labor (stage hands)
2,000 - musicians
200 - ASCAP fees
20,000 - administration
500 - signs
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$39,200 = Total FC
All variable costs (VC) are per person:
$10 - lunches for musicians, talent, and crew
3 - coffee breaks for musicians, talent, and crew
5 - printed programs for audience
30 - backstage passes
15 - radio rental
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$63 = Total VC
Substitute the event numbers provided into the following
breakeven formula to determine the registration fee required
to meet the breakeven point for this event:
(number of registrants) x (registration fee) = $39,200 (fixed
costs) + ( number of registrants) x ($63/ registrant)
Assume 600 people
600 x registration fee = $39,200 + (600) ($63)
registration fee = ($39,200 + $37,800)/600
registration fee = $77,000/600 registrants
registration fee = $128.33
It is a good idea to perform this calculation assuming a
variety of attendance levels, for example, assume 200, 300,
400, 500 people to determine the best registration fee. There
is an inverse relationship between the number of attendees
and the registration fee--the more well-attended the entertainment
event, the lower the registration fee. However, you should
err on the side of caution. If actual registration is estimated
to be between 300 and 400, you may want to use the 300-attendee
figure to determine the registration fee, to account for no-shows
and to ensure that you can meet your costs.
See Industry News: "Money
Makes The World Go 'Round"
See Eddie Money,
this month's featured Artist.
 Mark
Sonder, CSEP is the Chief Entertainment Officer of Mark Sonder
Productions, a leading national entertainment agency providing
headline talent and production services for large venues,
corporations and associations. In addition, Sonder sits on
the faculty of The George Washington University, Stratford
University and Northern Virginia Community College. Event
Entertainment and Production is the book published by
Wiley authored by Sonder.
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