Breaking Down the Budget – Part 1: General Cost Factors
As your event planning training will quickly teach you, every client you work with is going to come with a budget. Sometimes, they’ll already have a set figure in mind when they walk into the initial consultation. Other times, they may need assistance with determining how much money they should be spending on their event. In some cases, it may be a matter of rethinking the budget they’ve proposed, in lieu of one that’s more realistic.
After all, most of your customers aren’t going to know the costs that go organizing an event. Part of your job will be to guide them in the right direction. Luckily, your event planning training will turn you into a budget expert! As the industry pro, you’ll be exactly the right person your clients need!
So, what typically are the most common budget priorities and general cost factors when planning an event? Your training will give you the full breakdown, but in the meantime, this two-part series will provide you with a crash course!
The Budgeting Process: Determining Priorities
As an event planner, you can’t have a proper understanding of how much money a specific event will need, until you fully understand the scope of the event itself. For starters, you’ll need to know what your client wants included as part of their celebration. Once you have this list, you can prioritize these things in terms of their importance to the overall success of the event.
Another critical component to budgeting is staying mindful of current industry costs. This way, you can create cost estimates more accurately, in order for you client to best understand where their money will be going. This will then make it possible for you two to sit down together and revisit the things they want included within the event.
In order to decrease unnecessary spending, it may sometimes be necessarily to adjust certain things within the budget, or cut them out altogether.
Direct vs. Indirect Costs
Every single event you plan will involve both direct and indirect expenses. Direct costs refer to the fees associated with basic event components, such as the service rates chosen for the event’s different vendors and suppliers.
Typically, direct costs are straightforward. If you want Service A, you merely pay the cost and you will have it. Direct costs are also a bit easier to budget, since you have more possible options at your disposal. For instance, if your client wants a venue for their event, the price to rent the venue would be considered a direct cost. However, your client can save money on this direct cost by decreasing the hours the venue will need to be rented, finding a cheaper venue, etc.
Indirect costs, on the other hand, are a bit trickier. Because they aren’t inherently related to any specific element of your client’s event, they can be harder to predict ahead of time. Rather, indirect costs are circumstantial, and can sometimes piggyback on other event services.
For example, say you’re going through a vendor to rent out A/V equipment for the event, and you choose to set everything up the night before the big day. You may wind up having to pay a security fee in order to hang onto that A/V equipment overnight. That security fee would be considered an indirect cost.
Another example would be if your client decided to supply their own food and drinks for their event, taking place in a rented venue. That venue may have mandated policies, wherein there are additional fees for cake-cutting, uncorking, etc. on their premises. These extra fees would also be indirect costs.
Don’t worry, though! The more event planning training and experience you get, the easier it’ll be for you to anticipate potential indirect costs.
The following are common cost factors that will influence the budget for every event you organize over the course of your career…
1. Number of Guests
This is a major one! How many people your client wants to attend their function will affect:
- The total number of seats and tables required
- The size of the venue space required
- The size of the catering team – more people means more food and drinks!
- The number of party favors needed (if applicable)
- The number of parking spaces, washrooms, and coatrooms required
- The amount of decor, centerpieces, and florals the event needs
- The amount of transportation assistance that will need to be provided
- And much more!
Pro Tip: To better plan ahead and give your client more options, research various venues to see what sort of rates they would provide, based on the number of guests. Plus, some venues may cover some of these components as part of their packaged services, while other venues may not.
2. Minimum Spend
Some vendors, suppliers, and venues will require a minimum amount of money to be spent in order to book their services. In layman’s terms, it’s basically the smallest package and rate they’re willing to offer. For instance, say that your client’s budget for florals is strictly set at $1,000 (with no wiggle room), but the florist they want to hire has a minimum spend of $1,500. This likely means that this florist will be out of your client’s price range – full stop.
If you happen to know a vendor/supplier through your networking, and have a strong professional relationship with them, you might be able to negotiate a cheaper price. But don’t go into it with that expectation. It’s better to play it safe and instead refer your clients to alternate vendors who can do just as great of a job, while staying within their allotted budget.
On the other hand, minimum spend can sometimes be leveraged in your client’ s favor! For any vendor, supplier, or venue, check to see what sort of packaged deals they offer. Sometimes, extra services will be provided as part of a bigger package. This means you won’t need to find those particular services elsewhere. In such a case, it may be financially worth it to pay the minimum spend, in order to save money on other needed event services.
Depending on the type of event your client wants, it may be your responsibility to acquire certain permits, in order to run the event legally. These permits will need to be factored into the budget. Common permits you’ll need to get include:
- Public assembly permits
- Electrical permits
- Building permits
- Amplified sound permits
- Fireworks permits, etc.
- Food and beverage permits
- Liquor licenses*
- Intellectual property rights*
*These permits are only necessary if the event is taking place on public property. If the event is being held on personal, private property, copyright and/or liquor laws do not apply.
4. Time and Date
Certain times of the year are more popular for holding events than others. A perfect example would be comparing summer weddings to winter weddings. Typically, there are a lot more personal events (especially outdoor ones) taking place during warmer months than colder ones.
Similarly, people tend to want to book their private celebrations during times when more people are likely to come, such as on the weekend. As such, personal events taking place on weekdays and/or off-seasons (November-May) will likely cost your client less money.
On the other hand, corporate events might not always be affected by the time of year. The day of the week might not necessarily matter, either. Many business meetings, public conferences, etc. take place on weekdays, rather than weekends.
This is why, as an event planner, it’s important that you understand the different types of events within the industry. This way, you’ll know the optimal times to plan for them – and in the same breath, when you can maximize their “off-season” times in order to reduce your client’s spending.
All this – and more – will be covered in your professional event planning training! In the meantime, stay tuned for Part 2 of our series, where we’ll delve into more practical ways you can help your client reduce their budget!
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