If organizing an event were as simple as swiping a credit card and knowing the money will sort itself out, everyone would be doing it. But no matter how much the event industry changes, a well-thought out budget will always be crucial for a well-run event. In this article, we teach you how to prepare a budget for your next event, from the big picture down to the details.
Before you can get into the nitty gritty, identify what type of event you’re putting on, and what that means for your budget. A large-scale trade show will have a vastly different size and scope than a cocktail reception. Once you know how much money you’re working with - your budget could come from fundraising, or your company’s finance department, for example - use that broad figure to start planning your event within your budget (instead of going all-out and hoping the money will show up!).
Virtual versus in-person or hybrid events will also impact your budget. The cost of virtual events is typically less than in-person, true, but you’ll also have different priorities within your budget with each format; Markletic notes that the biggest expenditures for virtual events are event management and hosting platforms, while you can expect to shell out for food and beverage if you’re planning an in-person event. Getting clear on what you’re willing to splurge on, be it a top-notch tech setup for your live streams or the perfect venue for your in-person event, will provide clarity during the budgeting process.
Research is vital to creating a budget that accounts for industry standards while still getting you the best deal. Doing your research on everything from typical A/V costs to what’s standard in a venue rental contract will equip you with the information needed to negotiate within your budget.
First, identifying trends in event expenditure will give you a ballpark number to bring to vendors, be they caterers or transportation services. You may realize that you’ve been over-budgeting in one area while under-budgeting in another, or you may discover that industry standard rates are rising. Having baseline figures prepares you for the realities of negotiating your budget.
It’s always a good idea to get several quotes for each major piece of your budget, like an event management and ticketing platform, venue(s) and marketing spends. Negotiating doesn’t have to be solely a numbers game; what perks can you add, or how can you help your vendor, to bring prices down? Like with securing sponsors, fostering a mutually beneficial relationship with your vendors can save you money in the long term.
Historical data is another great place to start when creating your event’s budget. What events have you, or others in your industry, put on in the past that have a similar scope and format? Investigating past budgets to identify successes and line items for reevaluation will give you valuable insight into what might work for your upcoming event.
In the age of hybrid events and high-tech event management platforms - let’s face it, in the age of COVID-19 - data from past events is more readily available than ever. Past data can shape your current event strategy; platforms like PheedLoop provide in-depth data on everything from attendance to page clicks, across all event types, be they in-person or online.
Maybe “come up with a plan” is a little vague of us, but a rough budget with high-level budget items will be your guide when getting into the smaller stuff later on. Start with budget categories that are typically allocated the most money. Consider including these major event spends when sketching out your budget:
After identifying your major budget categories, estimate the total cost for each, based on what you know from industry standards, historical data and your budget’s top line. You’ll start here, and get more and more specific as your event organizing gets underway.
Estimating your costs is the culmination of research, high-level budget work and negotiation. You have your top line and you’ve chunked it out in the broad budget we talked about above. Now it’s time to break your budget out into line items and start reaching out to vendors.
Take your high-level budget and break down each major category into its detailed components. For example, your event technology category would consist of line items like an event management platform, ticketing services, check-in kiosks and digital signage, to name a few. Detailed, line item budgets give you a granular look at your event, making sure you don’t miss any necessaries by dealing solely with lump sums.
Line item budgeting is also important for approaching vendors. Here’s where your research on industry standards and past events matters. When comparing estimates and making proposals, come prepared with your in-depth budget estimate for negotiation. Consider collecting quotes from vendors during the budgeting process to save yourself time and appropriately adjust your budget as you go.
Fixed costs for an event are budget items that don’t change based on attendance or event duration. Variable costs are affected by event turnout and duration. For example, venue rental and event management platforms are fixed costs; prices for food and beverage, and event staffing, will change depending on attendance and how many hours staff end up working.
Why account for variable costs during early budgeting stages? Accurately estimating variable costs gives you a cushion to work with for your peace of mind. Knowing how much of your budget is variable will prepare you for any last-minute changes or purchases. Plus, if you can leverage historical data to estimate attendance, accounting for variable costs means you can determine how much your budget could change based on turnout.
You’re wheeling and dealing with vendors, you’re up to date on event organizing standard costs and trends, you have an elaborately built-out line item budget. As you start signing contracts and spending cash, your budget is actualized; how do you stay in the green?
Alongside your line item budget categories and breakdowns, track your actual spend – that is, how much money you have actually spent, once you start making purchases. Having a log of actual money in and out will provide clarity on how well you’re sticking to your budget.
We mentioned “COVID-19 precautions and contingency” as a high-level budget category earlier, but building a contingency category into your final budget is smart whether or not we’re in a global pandemic. Be it COVID cancellations or last-minute venue shakeups, a contingency fund of up to 20% is key for a responsible event budget.
Set yourself up for success by tackling your budget early, doing your research, starting with the big picture and drilling down. Keeping a close eye on your budget throughout all event planning stages - the high-level categories and the line items - and building in contingency ensure you stay in the green.