Organising an event requires careful budgeting and financial planning to cover costs and generate profit. In this article, we share our insights as well as the experience of event organisers, such as Dennis Behlau, 6x organiser of Solar festival (30.000+ visitors each edition).
We’ll share how to budget for large and medium events, as well as how to mitigate the risks and avoid pitfalls.
The first step in organising any event should be to create a project plan and a budget. The project plan outlines all the essential aspects of the event, such as location, capacity, music genre or programme, target audience, security, etc. Subsequently, the project plan will be the primary document used to obtain the proper governmental approvals and permits to host the event. The budget is often part of the project plan. It translates your operational plans, outlined in the project plan, into a financial budget and forecast.
In the budget, you generally distinguish between the following cost categories and between fixed or variable costs.
These are mainly the payroll costs of the freelancers hired by the organiser for a specific department. These freelancers have both preparation and on-site responsibilities. Think of this as an extended group of people on top of your fixed employee staff.
Suppose a department, such as the production crew, needs to be hired for specific work during the event (set-up, assisting staff, etc.). In that case, these labour costs are included and budgeted in the relevant sub-budget, which is production.
The rental of the venue and/or location, including all necessary facilities and permits, constitutes a substantial part of the budget. It is essential to make clear agreements in advance about what is and isn't included in the venue and/or location rental. Location costs for large events can also be variable (depending on agreements).
All municipal costs, permits and (if required) flora and fauna research are fixed.
Once the municipality grants you a permit, you can start to assess the total costs for security & health. The location, kind of event, and duration, but mainly the number of visitors, will determine how much security & health you are required to have at the event. This will include security guards, first-aid stations, drinking water supply, etc.
The municipality will have strict guidelines that you’ll need to keep in mind when making plans with security and health providers.
This covers both logistical production elements such as fences and access roads, parking and traffic, as well as stage production, including lighting and sound. The decor of the event site also falls under this category.
The decor is the only part that could be considered partially variable, as in many cases, you can dress up the venue as much as you like.
The costs for booking artists, including their requirements and transport, can be significant and should be included in the budget early on. We consider these costs partially variable because you can launch your event without announcing the full line-up. Based on the success of early ticket sales, you can increase or decrease the costs.
These are the costs of running online and offline marketing advertisements to attract the desired audience to the event. Marketing is key.
As an organiser, you work on the intended concept, content and brand you have in mind. Do you focus on specific music? Is one of your focal points your décor or your creative programme and production? There are so many events, and visitors want unique experiences. So it’s essential that your event stands out and the visitor sees what you have to offer.
When it comes to online marketing, you can easily track the ad spend per sold ticket, so we advise starting with online marketing to test different audience groups and ads.
When your campaigns are tested online and run well, you can add offline marketing to the mix. Offline marketing is typically harder to track and, hence, riskier. We consider these costs variable because you can easily increase or decrease this budget over time.
At large events, you have dozens of bars and, therefore, a lot of expenses. Think of pagoda tents, the bars, the dispensing hardware, etc. These hardware costs are relatively high. Therefore, it might be worthwhile to offer exclusive ‘distribution rights’ to your supplier (if your event is large enough). Think of suppliers such as Swinkels, Heineken, Inbev, etc.
Collaborating with these parties means that they’ll have exclusive rights at the event, both for alcoholic and non-alcoholic drinks. You can always make agreements about exceptions. These deals are made up of the following:
Fee for the organiser
Price per hectolitre (the lower the price, the more attractive it will be for the visitor)
Hardware agreements: The hardware suppliers often absorb the costs themselves.
Often, there are partial budgets, such as variable budgets, that need a margin for unforeseen costs. The rule of thumb is that all variable budgets should have an individual margin: ~10% for variable categories, ~5% for fixed categories, and an overall unforeseen budget of ~5%.
Budgets that are reasonably unpredictable and variable are much more likely to have unforeseen costs. For example, if it's raining a lot, and you need wood chips to get rid of the puddles of water or stop everything from becoming a muddy mess, which can add unforeseen costs to the production costs.
Keep in mind that these cost categories more closely relate to festival organisers. Budgets for indoor club nights will look a lot different, especially as you’ll have fewer production costs, and revenue from the bar will often be fully or partially reserved for the venue owner.
For each cost category, you can calculate the cost per visitor by dividing the total cost of that item by the number of visitors. This gives you a specific amount per visitor for each item. If you add up all the cost items and divide the total by the number of (expected) visitors, you get the average cost per visitor.
Calculating the average cost per visitor is essential for determining the ticket price. By comparing the total cost per visitor with the expected revenue from your revenue sources, you can establish a ticket price that covers costs and ensures a profit (or at least a healthy financial balance). This will prevent losses and ensure that the event remains profitable.
Typically, it takes multiple budget iterations to reach a final budget. You and your team should review the project and production plans, prioritising and cutting costs until you have a budget with a reasonable and realistic ticket price, allowing you to ultimately profit.
Download this template to help budget your event.
Note: The template assumes you’re using tokens for your festival. If you’re using cash or cashless payment systems, enter the expected turnover for food and beverages in the ‘Turnover per consumption type’ field instead.
For festivals, we often see that 100% of tickets cover 70-80% of costs. This means that at full capacity, you will still need to cover 30-20% of your costs with margin on F&B. If ticket sales disappoint, this requires downscaling partially variable and variable costs. Think of reducing the decor, light or music costs, and technicians. Being prepared for these scenarios will help you maintain a healthy financial balance.
Once you have a first overview of costs, you can estimate your revenue and determine the desired event revenue.
The desired event revenue is the sum of your costs plus the profit you want. Hence, if your costs are 250.000 EUR and you want to cover 80% with ticket sales, then your desired ticket sales revenue should be 200.000 EUR. The desired event revenue is important to calculate because this, in turn, is needed to determine your ticket prices.
We advise you to prepare multiple scenarios for your ticket revenue (e.g., a bad, medium, and good scenario) and subsequently estimate your food and beverage revenue (e.g., bad, medium, and good) with the expected visitors.
For instance, a bad scenario for your food & beverage would be if the weather is bad. For outdoor events, this typically increases no-shows and sees the ratio of drinks sold decreasing and food sales increasing. Given that the margin on food is lower than that of drinks, your overall food & beverage revenue will be lower. At a festival, the margin on drinks is typically around ~70%, while the margin on food is ~30%.
If you create three scenarios for each revenue stream, you will have nine scenarios for your overall revenue. With these scenarios, you can estimate the impact on your overall profitability. When going through these scenarios, think of early (leading) indicators that may lead you to pinpoint the most likely scenario to occur. This will help you determine what manoeuvrability you have to adjust costs to and ensure an overall profit.
Starting ticket sales earlier, keeping a larger portion of your costs variable, or postponing the confirmation of fixed costs until later all help maintain a certain level of manoeuvrability.
Different sources of revenue:
Ticket sales often cover a significant portion of the total costs (70-80%). This is the most important revenue stream for most events and, hence, requires a lot of focus and expertise.
Ticket shops convert between 5-20% of visitors. Optimising your website and ticket shop for conversion will make it easier to achieve success.
Sponsorships can generate additional and very welcome revenue. Make sure you weigh the value of sponsorship deals against the visibility and benefits sponsors receive.
Turn on promoblocks in your ticket shop to create three advertisement blocks on the Order Status Page of your ticket shop. This page shows up once a ticket buyer completes their order and is visited twice on average before the event. Don't let a premier advertisement space you can sell to sponsors go to waste.
Selling food and beverages at the event can be a major revenue source. However, this revenue is often split between the organiser and the vendors, making strategic negotiation essential for a healthy margin.
Sell tokens in the ticket shop before the event. This generally increases the sales of consumables during the event, given that your visitors feel they're spending less.
Additional products and merchandise are often forgotten. Additional products, such as lockers, accommodation, transportation, and merchandise, can all be sold in an Eventix ticket shop. The average rates at which these products are attached per order are:
Lockers: avg. attach rate of 15,7%*, ranging between 2% - 54%
Transportation or parking: avg. attach rate of 15,0%*, ranging between 2% - 45%
Merchandise: avg. attach rate of 6,3%, ranging between 3% - 25%
VIP, table service or express entrance: attach rate of entrance preference 20-40%, VIP or table service 2-8%
Accommodation: Rates are generally very high for events where relevant.
Consider pulling as much of your revenue forward (before the event) to improve your cash flow, as some of your suppliers or artists will want to be paid before the event.
Moreover, the earlier you lock in the revenue, the lower the risk of disappointing revenue. For example, if you've sold credit tokens in the ticket shop 2 months before the event, and the weather turns bad during the event, at least you have already generated some profit.
If you have an idea of the cost of your event and the capacity/amount of tickets you want to sell, then you can determine the price of your tickets.
The right pricing for your event will allow you to reach different customer segments. Following the VAT increase in The Netherlands for the cultural sector (festivals, museums, concerts, etc.), expert Rene Goudriaan has estimated that a +1% higher price for podium arts (including festivals) will lead to -0,5% fewer ticket sales. Pricing is more important than ever because consumers are still under pressure after the high inflation over recent years.
For most events, we recommend offering a variety of ticket types, such as early bird, regular, and late tickets, or regular and VIP tickets. This strategy will help you attract different customer segments and expand your event's reach. If you would like to know more about different ticket sales strategies, you can check out our webinar or Knowledge Base article.
There are two common ways to determine the price of your tickets.
Firstly, you can set your ticket prices based on what you think your audience is willing to pay. Secondly, you can set your ticket prices based on the cost of your event, which includes the money and effort you put into creating the experience.
You could start with the latter and double-check your price against the competition later.
To price the tickets for your event, you need to determine i) the different ticket types you want to offer, ii) the allocation of your capacity over the different ticket types, and iii) the safety margin you want to have.
It's important to reiterate that we advise against basing your ticket price and/or budget on selling 100% of your capacity. Instead, consider a safety margin of 20%. This strategy not only provides a buffer for any unexpected changes but also allows you to confidently base your budget and ticket price on selling 80% of your capacity.
Below is an example of an event that needs 200.000,- EUR in ticket revenue:
Event capacity: 10.000
Safety margin: 20%
Ticket types:
Early bird, with 25% allocation of capacity
Regular bird, with 45% allocation of capacity
Late bird, with a 30% allocation of capacity
First, you start by calculating the average ticket price for all ticket types. You do this by dividing the ticket revenue needed (200.000,- EUR) by the capacity (10.000) - the safety margin (20% * 10.000 = 2.000). Thus, the average ticket price = 200.000 EUR / 8.000 tickets = 25,00 EUR per ticket.
We recently did an in-depth study on the % of tickets to allocate to different ticket types. On average, event organisers that have allocated ~20% of tickets to early birds have a much greater chance of selling out their event. Early bird ticket buyers will act as ambassadors to your event, trying to convince friends and family to purchase a ticket. Therefore, we advise assigning 20% or more to early bird tickets and selling these tickets with a 20-30% discount over regular tickets.
The second step is to calculate the different ticket prices. Generally, the average ticket price is the price for the regular bird ticket. Hence, in our case, the regular bird ticket = 25,- EUR.
Early bird tickets should be discounted from the regular ticket. The larger the discount you offer, the higher the likelihood that you'll sell out the early bird tickets. Moreover, the larger the allocation to early bird tickets, the larger the group of ambassadors your event will have.
Let's assume the discount on early bird tickets will be 30%. The price for the early bird ticket is calculated using the formula: regular ticket price / (1 + early bird discount) = 25,- / 1,3 = 19,23 EUR.
What should be my price for the late tickets? Use the following formula:
(Average ticket price - early bird ticket price * capacity early bird - regular ticket price * capacity regular ticket) / capacity late ticket
By continuing to follow the example case above, our formula will end up looking like this:
(25,00 EUR - 19,23 * 25% - 25,00 * 45%) / 30% = 29,80 EUR price for a late ticket.
To achieve an average ticket price of 25,00 EUR and make 200.000 EUR ticket revenue with 80% of your tickets sold, then the pricing of your tickets would be:
Early bird tickets: 19,23 EUR
Regular tickets: 25,00 EUR
Late tickets: 29,80 EUR
You can play with the numbers in this spreadsheet to find the perfect allocation. The safety margin, allocation over different ticket types and the discount given for certain ticket types all impact the final pricing.
Differentiate ticket prices based on the target audience. Offer early bird discounts to attract initial sales and gauge interest. Use different price points for various categories, such as VIP experiences or group discounts, to maximise revenue. Enjoy playing around.
Now that you've set the prices for your tickets based on the cost of your event, it's time to consider whether these prices are marketable. Analyse the pricing of similar events in your area or industry to understand what the market can bear and set a competitive price. Remember to factor in your event's unique features and value proposition. Check the prices (and performance) of similar events and events during the same period, week or weekend.
Ensure the ticket price reflects the value provided to attendees. Consider the quality of performers, the venue's ambience, and any additional amenities offered. If the experience is deemed exceptional, the perceived value can justify a higher ticket price.
Based on your analysis of the competition, you should judge whether you can sell the tickets (with the safety margin as calculated) for the calculated prices. If not, review your budget, lower the cost of your event, reduce the expected ticket revenue, and lower the ticket prices you calculate.
It is important to realise that the benefits of some of your expenditures might not immediately be apparent to ticket buyers. For example, spending more on a high-quality line-up will directly impact ticket sales. However, spending more on the decor will only become clear to ticket buyers once they've attended the event, not when they buy the ticket. This may positively impact ticket sales for your next event but won't help ticket sales for the current event.
Pre-registration is a valuable tool for gauging interest and adjusting marketing strategies. It provides insight into expected ticket sales and helps plan the necessary capacity limits and resources required to run your event.
The marketing budget is essential to your overall budget, as it will help drive your ticket sales. But how much should you budget?
There is no fixed number when it comes to your marketing budget. It's a variable figure that depends on several factors. Let's first establish what is typically included in a marketing budget:
Budget to create marketing assets: the design, artwork, and personnel costs needed to develop assets for marketing your event. Marketing assets include, for instance, an event website, brand, videos, pictures, flyers, and posters.
Media budget: the budget for exposure via external platforms and partners. Think of the costs of running online social media advertisements and remarketing campaigns, mailing campaigns, booking billboards and hiring PR help.
The media budget varies widely. Established brands typically allocate 2-3 EUR per visitor, while some events may require 3-12 EUR per visitor. The specific media budget needed depends on factors such as the type, location, ticket price, and age of the event. For instance, a well-established event with a long history may require a different marketing approach than a new event.
Established event brands spend most of their marketing budget on their existing community with mailing and remarketing campaigns. They use a much smaller portion to attract new customers with targeted campaigns. Targeted campaigns typically are more expensive. Therefore, if you don't have an existing customer base, you'll need to spend more on the media budget to market the event to new customers.
The best way to determine your budget is to run a few small online marketing campaigns and track your spending per conversion. Once you have a couple of conversions, you can check your campaigns to see what budget you'll need to sell out the entire event.
It can be challenging to determine when to spend your media budget. Many successful organisers spend most of the media budget early in the ticket sales campaign because customers who have bought into your event will also market your event via word-of-mouth. So, the earlier you can get a sizeable group of people to buy into the event, the earlier you get word-of-mouth going, and you'll see organic sales take off.
If you would like to read more about how to reach your target audience, check out our partner Boest’s article in our Knowledge Base.
Organising an event involves much more than creative vision and execution. It requires detailed financial planning to cover costs, manage risks, and achieve profitability. In this article, we have outlined essential aspects of financial planning for event organisers, with a particular focus on budgeting, revenue generation, and the crucial role of strategic decision-making in maximising success.
Creating a detailed and flexible financial plan can significantly increase the likelihood of a successful and profitable event. Continuously monitoring financial results and making adjustments as necessary will ensure optimal resource utilisation and maximum revenue.
If you have any further questions, please do not hesitate to reach out to us via info@eventix.io.
