Budgeting of Events
B A (JMC) (3-YDC), SEMESTER SYSTEM
SEMESTER –IV
SEC III: PUBLIC RELATIONS AND EVENT MANAGEMENT
Unit-2: EVENT MANAGEMENT
LESSON No.34 - BUDGETING OF EVENTS
Objectives
- Know what is about event budgeting.
- Understand the aspects of event budgeting.
- Learn to plan budgeting for events.
- Enumerate essential budget expenses.
- Understand the benefits of event budgeting.
Introduction:
Event
budgeting is the process of estimating the costs of hosting an event. It is an
important part of event planning because it helps ensure that the event is
successful and financially well managed.
Event budgets are projections about the potential event income and
expenses. It helps event planners determine the economic viability of events,
make spending decisions, measure post-event success etc. Without an event
budget in place, it is difficult to determine the return on investment. The
best event planners are all budgeting masters. Budgeting keeps the event
planner and their clients on the same page and it can help stand out from the
crowd in a competitive event industry. An event budget is a financial roadmap
for the event. It helps to organize the projected expenses and revenue for
effectively managing the resources and stay on track to achieve the event
goals.
In this
lesson we discuss about the aspects of budget, importance of budgeting,
budgeting tips, essential budget expenses, planning an event budget, steps to
be followed for making a budget etc
Budget aspects
Planning a budget ahead of time prevents the event management team from overspending and sets realistic expectations for how much money can afford to allocate to different areas of the event. Developing a clear event budget helps to measure the success at the end of the event. Actual revenue and expenses are likely to differ from what is being projected, but these benchmarks help to determine whether generated more or less revenue than expected and adjust the budgeting strategy accordingly for future events. Whether planning an ultimate party or a corporate event, it is all about efficiency. While that is the importance of budgeting, these are the essential aspects of budgeting.
- Fixed costs: Fixed costs are expenses that stay the same regardless of how many attendees join the event. These may include venue rental, entertainment, and event registration software fees.
- Variable costs: Expenses that vary according to the attendee count are called variable costs. Examples include food and beverage and event staff costs.
- Revenue: The money expected to make from the event is the projected revenue. Common sources of event revenue include ticket sales, sponsorships and exhibitor fees.
- Profit and loss: Taking these factors into consideration, the profitability of the event depends on the number of attendees who show up. To determine how many attendees, it may be required to add a section to the budget that summarizes the projected expenses and revenue for different potential attendee counts.
Importance of event budgeting
A thoughtful
budget can mean the difference between a financial flop and a massive success
story. By bringing the financial details into one place, event budgeting makes
it easier. It helps to (1) understand the event cost
breakdown (2) control the event expenses and revenue and (3) measure the ROI of event or conference. So,
although event budgeting might not be the most exciting part of planning an
event, it should be one of the top priorities especially if it is required to
deliver amazing event experiences without going over budget.
According
to Knowland’s 2023 State of the Meetings Industry, increasing event expenses is
one of the biggest concerns for event organizers. In fact, almost half i.e.
46.3% of event professionals said rising costs are their biggest obstacle when
planning events. Another 21% named shrinking client budgets as their top
challenge. The same survey asked event organizers about their predictions on
rising costs and most respondents felt food and audio-visual costs were most
likely to continue increasing. 39.8% of event planners expect A/V costs to
increase 20-50%. 15.6% of organizers think A/V costs will increase by more than
50%. 48.1% of event organizers expect F&B costs to rise by 20-50%. This is
an important lead for future planning.
Event budgeting tips
Before creating the event budget, there is a lot of research to do. Look into similar past event budgets to see whether over or underspent. It will help in finding the right venue, confer with the clients or management, and, of course, nail down the expense list. Few top event planner budgeting tips that can help make the budgeting experience much easier are -
- Staffing: The two largest expenses of any event are usually staffing and venue costs. That is why it makes sense to find and start negotiating with venue options as soon as possible. Recruiting and hiring enough staff for an event can be challenging, especially for larger corporate events or weddings. Need to create job descriptions, input them into job boards, sort through resumes, conduct interviews, and hope to have enough suitable candidates that will show up on event day.
- Venue and equipment: For most events, venue costs make up the single largest expense on the budget. It is important to find a venue with ample space that adds to the experience for the guests. Equipment is often provided by the venue so these two parts of the budget can go hand in hand. Still, staying on budget should always be a priority. Common venue costs include hall rental, climate control, security deposit, insurance coverage. Common A/V equipment and technology costs include event app, speakers, ticketing partner services, event live streaming, generators etc
- Entertainment and catering: Another expense that can make or break an event is entertainment and catering costs. Many event planners find reputable catering, decor, and other vendors in advance and negotiate prices to secure better deals. It is similar with entertainment as well.
- Keynote speakers: To secure the speakers early, include social promotion in their contract to post about the event on social media. After all, it pays to use every marketing method at disposal. Take advantage of the free promotion.
- Contingency fund: Events are like home renovations. They can go over budget in the blink of an eye. Make sure ready with a contingency fund with as much as 25% of the budget.
The less detailed the budget is, the larger the contingency fund should be. Seek out sponsors. Advertising for events is not just about attracting attendees. It can also bring in new sponsors if the event has the right branding and enough engagement online. Here is an example of an event budget breakdown for an average large-scale event (1) Catering ~ 20% (2) Contingency ~ 25% (3) Decorations ~ 10 % (4) Entertainment ~ 15% (5) Marketing ~ 7 % (6) Transportation ~ 3% and (7) Venue & Equipment ~ 20%
Essential budget expenses:
An event budget template can help track expenses and income. By filling out an event budget template, you can create and then verify profit projections, keeping stakeholders happy. Inside the event budget template, one should include all these expenses.
- Keynote speaker or entertainment: Keynote speakers and entertainment are more important to event success than ever before. In fact, according to a recent survey, 57% of event professionals believe the event industry is trending towards adding more event experiences that require more of the budget. So, it may have to spend more on better keynote speakers or entertainment. Entertainment/ Speaker costs include (1) stage/dance floor (2) appearance fees (3) video production (4) graphics and (5) travel cost.
- Signage & branding: Event branding is incredibly important to build buzz and create brand image for the event and impress potential sponsors. However, creating that brand and securing signage can be more expensive. Some companies charge up for ‘premium event branding’ alone. Include a substantial chunk of change for signage and branding in the event budget. Common signage and branding costs include (1) creation of event brand (2) physical signage and (3) digital signage
- Decoration: Decor costs can get out of hand quickly. For example, up lighting a wedding dance floor alone can cost huge. That does not include flowers, wall decorations, or other touches. May have to pay for the setup and takedown of the decor as well unless want to do it on own. Common decor costs include (1) lighting (2) cleaning (3) balloons (4) table centrepieces
- Gifts for guests: It is necessary to leave guests with a reminder of the amazing time they had at the event by giving them a small gift to take home. We can include branded gifts or several other small items. Gifts for guests are a small line item in the budget expenses, but they can leave a lasting impression on guests. Common gifts for guests include (1) take-home treats (2) branded items (3) gift cards
- Catering Cost: The quality and type of catering we choose can make or break the event budget. For example, if there is a plan to have full catering with an open bar, it could be up to 30% of the total event budget. If made it with just appetizers and a few free glasses of soft drinks, the costs can drop significantly. Catering costs differ based on the number of people in attendance, the type of cuisine, the service style, the city and more. Most catered meals fall between Rs. 500 /- to 700/- range. Certain things to be kept in mind when calculating the event budget for catering: They are (1) plated meals cost more per person than buffet style meals (2) dinners cost more than lunch or brunch meals. Many caterers have minimum order amounts that must be met in order to utilize their services.
- Transportation: The type of transportation chosen will depend on the event and can greatly affect the budget. Common transportation costs include shuttles, rideshare for guest, parking, delivery and valets.
- Marketing Cost: Corporate events need more marketing than regular events. After all, their goal is to make money and build a company’s brand reputation, not just have a great time. Traditional advertising used to be enough for event marketing, but these days, corporations are throwing the full weight of advertising behind many events. Ad spending alone can end up taking a huge portion of the budget and hurt event results. Common marketing costs include, SEO, social media, paid advertising and event budget examples.
Planning Event Budget:
One of the
key challenges for planners is managing expenses and revenue sources to achieve
the financial goals set by the organization. A budget provides a detailed
forecast of event’s finances. It helps manage the spending and expectations by
outlining exactly what is being spent. It
depends upon the predicted revenue and how much revenue needed to earn to meet
the goals. So, when event budget is being planned, focus shall be on
determining which items represent expenses and which are sources of revenue that
can help cover costs. It is also necessary to distinguish between fixed and
variable costs to effectively forecast a budget for the next event.
Steps for planning and
budgeting
Lt us have
a look at the steps to be followed in preparing an event budget
Step 1: Set
financial goals for the event: One of the first steps for every event planner
is preparing an event profit and loss budget and predicting as accurately as
possible if the event will result in a profit, loss or break even. However,
determining what financial success means for the event depends on the type of
event and objectives. It would not be possible to forecast all expenses and
revenue from the beginning. Some of these could even change during the planning
process. It is therefore vital to plan the budget with consideration for the
most common expenses and revenues.
Step 2: Determine fixed and variable costs: As part of the event cost breakdown, it is critical to differentiate between fixed costs and variable expenses. Fixed costs are costs that do not change based on the number of attendees. These costs are calculated as a total amount. Variable costs are event expenses that change based on the number of attendees. These costs are calculated on a per person basis.
Expenses for In-Person Events: According to Professional Convention Management Association (PCMA) survey, 36% of all in-person event expenses are for food and beverages alone. Meetings and events are about the attendee experience. PCMA suggests the spending 55% of the budget on food and beverage, audio-visual and speaker or entertainment, because these items have a direct impact on the overall attendee experience.
Expenses for Virtual Events: For a fully customized and branded virtual event, there are three common expenses that planners should consider budgeting for. They are the (1) virtual event platform to host the event (2) design of virtual event space and (3) streaming service. The costs attributed to each of these line items will vary based on the scale of the event. There are several fixed costs for virtual events like design of virtual event space, event registration/ticketing, streaming service cost, producer cost and professional live stream and video production costs. It will also have some variable costs such as speaker fees and engagement items including swag boxes.
Expenses for Hybrid Events: Unsurprisingly, hybrid event budgets are a mixture of line items typically found in an in person-only and virtual-only budget. However, some additional technical costs need to be budgeted for creating a shared experience between in-person and virtual audiences. Hybrid event planners should budget for two A/V costs. One for onsite A/V equipment and the other for remote A/V equipment. Having two separate A/V teams with the necessary equipment allows to create the best experience possible for the audiences.
Step 3:
Identify sources of revenue: To cover expenses, consider different revenue
avenues like advertising, concession, management fees, registration
and sponsorship. Use budget planning tools such as Excel or Google
Sheets to track these sources of revenue. A critical aspect of budget planning
is forecasting expenses and revenues. This can be done by reviewing past events
or sourcing quotes for new costs. Remember to keep all invoices and receipts to
back up the budget.
Step 4:
Create an event budget proposal: It is a document or presentation to convince
stakeholders at the business. This is halfway through creating a solid budget
proposal for the event. In addition to showing projected revenue and expenses,
include (1) the stated purpose and goals of the event data
about past events hosted, (2) information about similar industry events, (3) contingency
plans for the budget, (4) potential overages for the budget and (5) information
on how to measure and report ROI on the event.
Step 5:
Calculate cash flow for the event: Add up all the revenues and subtract the
uncollected accounts receivables, money that is due to be paid for services or work
performed. This is the cash on hand before expenses. Then subtract all of
accounts payable, money payable for services or work provided. That becomes
actual cash on hand after expenses.
Step 6:
Review and track event budget: Not all expenses can be forecasted, and the
budget will likely to change during the event planning process. This makes it
crucial to review and track the budget. Arrange a meeting with company’s
financial officer to review the format of event budget. As demands for meeting
or event might change, it is also a good idea to confirm in advance who would
have the authority to spend beyond the approved budget. Tracking budget
throughout the event, including the planning stages, is also important.
Step 7:
Analyse event’s financial performance: Using qualitative and quantitative event
data are better able to quantify the performance of the event and show impact. ROI
is a performance measure used to evaluate how successful the event was. One may
also want to compare different budgeting strategies based on their ROI. They
are - social listening, event surveys, event app insights
and engagement, sponsor recognition, attendance numbers, traffic to specific
sections of the platform, attendee interest, engagement, content viewing
duration including sponsored and non-sponsored video views, banner clicks and
more.
Benefits of budgeting:
- Determines staffing costs: When planning an event, it is important to consider personnel. The staff affects the entire experience, so it is important to consider the number of staff required.
- Secures the right venue: Events usually take place in a venue, which necessitates logistics management, food and beverage preparation and decor. The cost of hiring a venue may include renting the space, putting up signage and other expenses.
- Sources the best vendors: It is advisable to contact multiple vendors to ensure that stay within the budget throughout the planning process. Can consult several caterers, DJs, performers and decorators to find the ones that fit the budget while also providing high-quality services.
- Creates effective promotional materials: Marketing materials are an important part of the budget. Digital ads are an effective tool for increasing visibility. Also budget for social media and email marketing, investing in public relations and approaching bloggers and influencers can also help protect the event.
- Utilises available data: Review how much was spent on previously hosted event. Determine what worked and plan the next budget accordingly. If anticipate future events to be bigger, consider this when creating the budget.
- Tracks the latest event trends: Being aware of recent event trends is a great way to budget efficiently. Investing in the best trends can help attract more attendees and get the best results from the event. Doing this during the budgeting process ensures not to overspend.
- Delegates tasks: Consider forming committees to handle various aspects of the event. For example, create a budget committee that reviews spending habits and ensures remain within budget. Can also form a promotions committee to handle advertising.
- Builds network: Connecting with people in this industry means inviting more professionals to the event and gain access to more vendors. Reach out to those contacts and inform them about the theme and itinerary of the event.
- Keeps the sponsors updated: A successful event often depends on how well sponsors support the budget. To maintain good communication, regularly update sponsors on event developments. This can help the budget planning process move along more smoothly.
- Monitors and reviews the budget: Some event expenses may fluctuate due to unforeseen circumstances. So, keep the budget up to date until the end of the event. Closely monitoring budget allows to quickly identify any necessary changes and effectively resolve them.
Event Budgeting is one of the keys to success. Evaluating and analysing event’s financial performance can be complicated, but doing so allows to make smarter choices for future conferences or meetings. Event budgeting tools are just one aspect of how event planners are taking advantage of event. These are the event budgeting tools -
- Research past events: To help create an outline for the budget, research previous ones and current market trends. Consider every aspect of event that may incur a cost. This can ensure that create an accurate budget.
- Make a list: Based on research, list all the items in order of priority to include in the budget.
- Begin calculating the cost of each item.
- Create a plan: A good event plan covers all the objectives and informs how to best manage the finances. Begin the plan by determining all the major expense categories.
- Set a time frame: Having a time frame helps to keep track of how the budget is progressing. Setting a time limit means that makes one understand how long one have to plan the event.
- Create a fund for contingencies: It is advisable to have a contingency fund for any unforeseen expenses that may occur. For example, an emergency fund can be useful if the event requires additional health and safety precautions. Consider what could lead to additional costs and plan for them.
- Approach potential sponsors: It is important to thoroughly research for potential sponsors before involving them. Approach them professionally and encourage them to help the event. Once a sponsor has agreed to support the event, it is important to keep them informed and assure them that the planning is going well.
- Choose vendors: Contacting vendors for quotes is one of the most time-consuming aspects of event budgeting, but it can provide more accurate costing information. Call multiple vendors, detail the requirements and request a quote. Ensure that the vendors provide a comprehensive cost breakdown so that it can be compared to all quotes.
- Calculate advertising expenses: When budgeting, estimate the cost of each form of advertising. Web-based advertising may include social media ads and website banners. Even before beginning to plan, start using marketing and social media to connect with potential sponsors and increase the budget.
- Determine estimated revenue: To estimate the revenue, include all pertinent information about the event. This could include everything from statistics about target market to the number of attendees anticipated.
Summary:
Event
budgeting is the process of estimating the costs of hosting an event. It is an
important part of event planning because it helps ensure that the event is
successful and well-managed. Event
budgets are projections about what potential event income and expenses. They
help event planners determine the economic viability of events, make spending
decisions, measure post-event success and much more. An event budget is a blueprint
for the event. It helps to organize projected expenses and revenue and can
effectively manage resources and stay on track to achieve the event objectives.
Before organising an event, listing out the things will go into event planning.
Knowing the venue, audience, staff requirement, arrangements, catering, marketing,
and logistics are of prime importance in planning the budget. The budget shall
be allocated among the essentials. Once the budget break-up is arrived at, it
must be carefully handled to be within the budget and show 100% value for money
on investment.
Frequently Asked Questions
(FAQs):
- What is event budgeting?
- What are the important aspects of budgeting?
- What are the benefits of Budgeting?
- How to plan a budget?
- How to measure success of budgeting?
Model Answers to FAQs:
- Event budgeting is the process of estimating the costs of hosting an event. It is an important part of event planning because it helps ensure that the event is successful and financially well-managed. Event budgets are projections about what potential event income and expenses may be. They help event planners determine the economic viability of events, make spending decisions, measure post-event success, and much more. Without an event budget, it’s difficult to determine the return on investment.
- Fixed costs are expenses that stay the same regardless of how many attendees join the event. These may include venue rental, entertainment, and event registration software fees. Variable costs are expenses that vary according to the attendee count. It includes food and beverage and event staff costs. Revenue. The money that is expected to make from the event is your projected revenue. Common sources of event revenue include ticket sales, sponsorships, and exhibitor booth fees. Profit and loss. Taking the above factors into consideration, the profitability of event depends on the number of attendees who show up. To determine how many attendees needed, can add a section to the budget that summarizes the projected expenses and revenue for different potential attendee counts.
- Budgeting helps to determine staffing costs, the cost of hiring a venue may include renting the space, putting up signage and other expenses, creating effective promotional materials are important part of budget. Utilise available data can help how much is spent earlier. Tracking the latest event trends is a great way to budget efficiently. Networking helps to have more contacts for the future events. A successful event often depends on how well sponsors support the budget.
- First and foremost is to understand the purpose of the event, strength of audience, venue to accommodate the target audience, recruiting required staff, spends on marketing, PR and Branding etc, transportation, other logistics. It is important to analyse the previous expenses and data before planning for a budget. If the budget does not match the expenses, think of good sponsors who can be part of the event and involve in designing the event.
- Event Budgeting is one of the keys to success. Evaluating and analysing event’s financial performance can be complicated, but doing so allows to make smarter choices for future conferences or meetings. Event budgeting tools are just one aspect of how event planners today are taking advantage of event. A proper research, time frame to deliver, proper budgeting, identifying sponsors, staffing, keeping contingency funds ready to meet with any unexpected expenses, enough of Ad spend, Marketing and PR can all bring success to the event.
Multiple choice questions
MCQs:
1.
Budgeting an event, negotiating contracts, arranging the speaker are part of _________
a)
Research
b)
Design
c)
Planning
d)
Coordination
2.
What is a contingency fund in
event planning?
a)
Money that
can be used to pay for unforeseen or emergency expenses.
b)
A soft
budget for an event
c)
A hard
budget for an event
d) The amount of money paid to vendors for rental equipment.
3. What is
the difference between projected costs and actual costs?
a)
Projected
costs are real and actual costs are not.
b)
Projected
costs are estimated costs and actual costs are the final prices paid for an
event.
c)
Projected
costs are what a client thinks and actual costs are what an event planner
thinks.
d)
There is no
difference.
4. What are
the two important aspect of event budgeting
a)
Staffing
and venue
b)
Transport
and catering
c)
Marketing
and PR
d)
Fixed cost
and Variable cost
5.
What is the major role of
Account planner?
a)
Analysing
the feed back
b)
Planning
the event
c)
Creating
long term relationship with sponsors
d) None of the above
Keys for MCQs: 1 (c) 2 (a) 3 (b) 4 (a) 5 (d)
Glossary:
Event
budgeting: It is a financial plan that outlines the expected expenses and
potential revenue for an event. It helps event organizers manage resources
and make informed decisions.
Event planning: It involves planning, budgeting, site selection, arranging all the necessities associated with decor, and coordinating transport.
Fixed costs: Fixed costs are expenses that stay the same regardless of how many attendees join the event. These may include venue rental, entertainment, and event registration fees, Marketing, PR, Branding etc.
Variable costs: Expenses that vary according to attendee count are called variable costs. Examples include food and beverage and event staff costs. Gifts and novelties also a variable cost depending on attendee.
Revenue: The money expected to make from the event is the projected revenue. Common sources of event revenue include ticket sales, sponsorships, and exhibitor booth fees, Attendee registration fee etc.
Profit & Loss: This is an account that shows a company's revenue and expenses over a particular period of time, typically either one month or consolidated months over a year. These figures show whether your business has made a profit or a loss over that time period.
Contingency fund: It is the fund kept ready for any unforeseen expenses that may occur. For example, an emergency fund can be useful if the event requires additional health and safety precautions. Consider what could lead to additional costs and plan for them.
Return on Investment (ROI): It is a performance measure used to evaluate how successful the event was. It helps in comparing different budgeting strategies based on the ROI. It is the sponsors interest to earn back the money invested in the event.
Staffing: Recruiting and hiring enough staff for an event can be challenging, especially for larger corporate events or weddings. Creating job descriptions, input them into job boards, sort through resumes, conduct interviews, and understand enough qualified candidates that will show up on event day.
Hybrid event: A hybrid event is an event that combines both in-person and virtual participation. Hybrid events can be conferences, meetings, webinars, seminars, trade shows, concerts, or sporting events.
Swag box: It is a custom box filled with promotional products and branded merchandise that companies give to employees, clients, and prospects. Swag boxes are a creative way to promote a brand, show appreciation, and build a sense of community
Key words: Event,
Budgeting, ROI, Contingency, Staffing, Fixed cost, Variable cost, In-Person, Hybrid,
Virtual, Décor, Revenue,
Y. Babji,
Editor,
Public Relations Voice
Academic Counsellor,
Public Relations (since 1989)
AP Open
University/Dr.BR Ambedkar Open University