Budgeting is actually one of, if not the most important part of any event planning, but is also the least favorite part for many event planners for an obvious reason: it’s boring.
It’s crucial to estimate an event budget, at least a high-level budget, as early as possible in the event planning stage. An event budget will let you know what’s available for you and what’s not, and without it, you’re basically setting yourself up for disaster.
However, creating an event budget doesn’t need to be too stressful. In this guide, we’ll discuss all you need to know about creating an event budget effectively and easily, and without further ado, let us begin right away.
Why Is an Event Budget Important?
In essence, budgeting for an event provides parameters to your event planning process: you’ll get a clearer picture of how much money you need to spend in order to get an event with acceptable quality, and how much money is available for you.
It’s highly unlikely you can plan an event with unlimited resources, and this is why estimating a budget is important so that your event can stay profitable without sacrificing too much quality.
With an event budget in place, you’ll have a clear roadmap in which vendors you should choose, whether you’ll need additional funding (i.e. sponsorships), and also how to market your event.
Creating Event Budget: Actionable Tips You Can Use
1. Carefully break down your potential expenses
The first thing to consider when creating a budget for an event is to carefully identify what expenses you’ll spend your money on.
Obviously, an event can involve so many different moving parts and potential expenses, so this step can be easier said than done.
There are three main approaches you can try to accomplish this step:
- Strategic: based on your event’s purpose and objectives.
What’s the purpose of hosting the event in the first place, and what are the objectives?
Based on these objectives, you can decide on what type of event you need to make, and what to spend on when planning and executing this specific event.
- Reactive: following the recent trends.
The second approach is to list your potential expenses based on how other events spend their budget.
While this might vary depending on the type of your event, your niche, and your location, here are the common expenses when planning an event:
• Venue: for an in-person/physical event, this is typically the most prominent aspect of the budget, and it’s common for venue rental to take more than 3% of the total budget.
• Catering: also often the top cost for in-person events.
• Technology: virtual event management platform, A/V equipment, and other technology tools and solutions.
• Marketing and promotion: for virtual events, often take the top spot for the biggest expense.
• Staffing: especially for on-site events, including travel and accommodation costs for volunteers.
• Speakers/talents: the event’s talents, very important and often a very significant part of the event budget.
• Swag: gift bags, including virtual gifts (i.e. gift cards, freebies) for virtual events.
• Contingencies: no event will go perfectly according to plan, so it’s important to allocate emergency expenses on your event budget. Around 20% of your total event budget should go to contingencies.
- Historical: check your past expenses.
If you’ve hosted other events in the past, then you can check your historical event budget data to accurately identify your potential expenses.
Identify expenses that you underspend or overspend on in your past events. If you have data from more than one event, then you can check the fluctuations of expenses from different events.
This historical data will make it easier to identify the expenses for your future events so you can avoid past mistakes and optimize your spendings.
2. Consider event ROI
Even if it’s a non-profit event, you’d want to make sure your event doesn’t lose money and can cover its operational costs.
One of the key purposes of having a proper event budget is so that you can accurately calculate your event’s ROI. By sticking to the planned event budget, you can control your event’s total cost and manage the event’s profitability.
A basic formula for calculating an event’s ROI is:
Event ROI=[(Total revenue-Total cost of the event)/ Total cost of the event]x100
Most events aim for an ROI for at least 200 to 300%
3. Planning your emergency fund
As discussed, in an event budget it’s crucial to include contingencies as a part of your event budget, ideally 20% and at least 15% of your total budget.
- The biggest potential variable costs. You should identify the cost of your plan Bs and plan Cs for these variables.
- Cancellation fees for certain items.
- Always prepare for the worst. For example, what will you do if the venue is suddenly unavailable a week before the event?
4. Avoid underpricing
It’s common for event planners to underprice items on the budget to make it look pretty (especially when securing outside fundings). It’s best to focus on making the budget as accurate as possible, since if you focus too much on making the budget “healthy”, you may end up losing money in the end.
5. Spend if you need to
The goal of an event budget is not only to reduce spendings. If you have the money, and if it’s absolutely needed for the quality of your event, you don’t always need to go with the cheapest options.
Remember that it’s about finding the right balance between the quality of your event and the money available, so invest in vendors and talents that you know will help improve your event’s overall experience.
By using the actionable tips you’ve shared above, you can start creating an accurate and effective event budget for your next event.
Without an event budget, you may end up being unprepared when planning and executing your event, so you can’t maximize the event both in quality, performance, and profitability.
Consider the following questions when planning your event budget:
- What is the event budgeting’s focus? Specify the needs of your event carefully.
- What’s your projected event revenue?
- What’s the available money? Do you need to secure more funding?
- Are there any unknown variables to consider?