Anyone with the experience of planning or hosting an event should understand how planning an event can be quite challenging but exciting at the same time.
Even planning a misleadingly simple event like a small meeting can be quite challenging with all the different, dynamic moving parts. Obviously planning a large event like a multi-day music festival will only be much more challenging.
With that being said, whether you are planning a small meeting, a relatively simple product launch, or a large, multi-day expo, arguably the most important challenge of planning any event is to ensure it stays within budget.
Establishing a clear event budget is and should be a crucial step of any event planning process, and should be done as early as possible in the event’s lifecycle, and yet, creating a budget for an event can be easier said than done.
Been asked to create your very first event budget and don’t know where to start?
Or are you an experienced event planner looking for better ways to create an accurate and comprehensive event budget?
You’ve come to the right place!
In this guide, we will share all you need to know about creating a budget for an event, and by the end, you’d have learned about:
- What actually is an event budget and why is it important?
- Crucial elements of an event budget in different types of events
- A step-by-step guide to creating an accurate and comprehensive event budget
- Tips on how to stay on budget and save more money
And more.
Without further ado, let us start this guide by discussing the concept of an event budget itself.
What Is an Event Budget?
An event budget, simply put, is the estimation of the expenditures of an event from the planning process until the actual execution and post-event activities.
So, a key aspect of creating an event budget is identifying all probable sources of expenditure of income of the event, and then estimating the costs. All potential expenses should be listed, estimated, and tracked, and all possible sources of income should also be identified to justify how much money we can spend in order to ensure the event stays profitable.
It’s important to understand, however, that creating an event budget is not solely about simple guesswork and estimation but instead should be based on proven best practices and knowledge.
While we can use various different approaches in creating an event budget (with various online templates available, even for free), any effective event budget should include the following elements:
- The items (both expenditure and income)
- Projected expense or income for each item
- Actual expense or income (to be filled as you’ve signed contracts with vendors)
- Deviations between estimation and actual costs/income
- Details about each item and differences between actual cost//income and estimation
As we can see, a comprehensive and well-managed event budget can be challenging and time-consuming to set up, but in the long run, it will not only help you with a roadmap for planning a successful event, but will save you more time, resources, and especially all the hassles and headaches you’d otherwise get in organizing an event without a clear budget.
Why Is Event Budget Important?
No matter what types of event you are planning and regardless of the size; a clear, accurate, and comprehensive event budget will be very important.
Without a functional event budget, you won’t be able to effectively manage your event’s expenses, so you may end up spending more than you need (or can), hurting your event’s profitability.
Creating a solid event budget and sticking to it will provide the following benefits (and more) when planning and organizing your event:
- Reduce unnecessary expenses
- Eliminate inefficiencies and redundancies in the event planning process (i.e. you don’t need to visit a potential venue that’s actually outside your budget)
- Knowing your income sources so you can maximize them
- Improve your overall event planning and event management processes
- Provides a data point for stakeholders and event sponsors so you can prove the event’s value and performance
- Allowing you to more easily calculate event ROI
- Maintain consistency when planning for other events in the future
In short, budgeting provides event planners with a clear roadmap so they can work within clear parameters. It’s highly unlikely you’ll have an unlimited budget to run an event, and so knowing how much you can actually spend on the event can help you plan and track your different expenses to maximize different elements of your event accordingly.
Step-By-Step Guide to Creating an Event Budget
In this section, we’ll show you how to easily but effectively create an event budget in a step-by-step guide, from the beginning of your event planning process through post-event.
Step 1: Identifying your event’s needs
To make sure you can create an accurate and comprehensive budget, you’ll have to first lay the foundations of the event. In general, make your decisions on as many elements of the event that you can decide on without an event budget, including but not limited to:
- The type of the event
- The purpose and objectives of the event (be as clear and specific as possible)
- The target number of attendance
- Speakers/talents you are looking to invite
- Target revenue
- Prospective sponsors to pursue
And so on.
Based on this information, estimate how much money you can spend on this event (after taking account of potential outside funding and sponsors). This number shouldn’t have to be set in stone but will be an important foundation for creating your event budget. It’s best to design the event budget around how much you are sure to be available, and not the other way around (deciding on a number first and looking for funding you might not be able to get).
If you can secure extra funding (i.e. more sponsors) along the way, you can always ‘upgrade’ the event midway.
For example, you may decide that you are going to host a conference with a $100,000 available budget. This is a good place to start, and we’ll polish this event budget on the next steps.
Research the current market
In order to be able to host a successful event, it’s important to check what your competitors are doing with their events.
Research other events that are similar to yours and gather as much information as you can about how they approach their budget. For example, research the going rate of decoration within your area and/or your niche. If, for instance, you’ve found out that the going rate is higher than what you’re planning to spend (or what you’ve spent on a previous event), then it’s a good sign you should lower your decor budget.
While it might be impossible to know the industry-standard cost of every item, you should try to do your best so you can ensure your event remains cost-effective.
Evaluate your past events (if any)
If you’ve hosted other events in the past (even if it’s just one event), then you may be able to use past data to better estimate your event budget. Evaluate the decisions you’ve made on previous events, and identify areas you’ve overspent and/or underspent on. For example, if you think you’ve spent too much on decoration, then you may reduce the allocated budget for this event or negotiate with other vendors.
Step 2: List your high-level items
Based on the information you’ve gathered in the previous step, here we’ll start listing the items you are going to include in your event budget. If you can, you should list all items, but at least you can begin by listing the must-haves and high-priority items.
While these must-have items can vary depending on the type of your event and other factors, most events will include these items as high-priority:
- Venue rental (including additional costs like insurance required, etc.)
- A/V equipment (speakers, mics, etc. )
- Staffing, including volunteers’ accommodations
- Catering
- Signage, branding, marketing collaterals
- Stage, decoration
- Event marketing and promotions
- Event technology (registration software, event management solution, virtual event platform, etc. )
- Equipment and furniture rental
You can also start estimating the costs for each of these items and start sharing this high-level budget with internal stakeholders (and relevant external stakeholders). It’s important to get important stakeholders on board with the overall budget as early as you can to prevent potential surprises in the future.
Step 3: Estimating your expenses
Once you’ve drafted a high-level budget for your must-have items and get approval on the overall budget, the next step is to expand this budget and start estimating (or if possible, finalize your expenditure on these items).
Here are what you should do in this step:
Getting quotes and negotiating with potential vendors
Research potential vendors for the must-have items, and create a shortlist of 2-3 prospective vendors for each item to ensure you can make the most of your valuable time evaluating and negotiating with only the most ideal vendors.
Based on this shortlist, you should’ve been able to have a clearer estimation of each item’s expenditure, or even lock-in vendors when possible.
Expanding your budget
Now, we’d want to expand the budget to include mid-level and low-level items. The actual process may vary depending on the type of your event and the items you’re including in your budget, but here is an example:
- Total venue rental costs. Finalize all projected expenditures related to venue rental: housekeeping, security, insurance, etc.
- Catering costs. Some venues might require you to use their catering and may also require minimum spending, get as much information as you can. If you are allowed and are planning to bring your own caterer/chef, keep in mind that you’ll need to take into account tips and other add-ons (which can add up to 30% to the initial cost).
- Decor expenses. List all costs related to decoration.
- Transportation and logistics. Trailers if they are needed, shuttles, event transfers, and other expenses related to transportation. You may also need to take fuel, insurance, and toll fares into account.
- A/V equipment cost. Pretty self-explanatory.
- Talents/speakers/entertainments. Don’t forget to include travel and accommodation costs.
- Marketing collateral. Including signage printing/production costs, swag bag costs, etc.
- Activity costs. All costs related to the activities performed in the event that don’t fall into any of the above should be posted here.
- Contingency fund. No event will go 100% according to plan, so it’s important to allocate at least 15%-20% of the event’s overall budget as a contingency fund.
Continue locking in vendors
As you continue creating a more detailed list of your budget items, continue reaching out to vendors to get quotes and negotiate prices (remember, everything is negotiable even if they don’t say so initially). Doing this will give you more time to narrow down your list of potential vendors as you build out your budget, rather than having to do all the vendor outreach at once.
Try your best to identify and lock in the ideal vendors for each item of your budget. Don’t forget to carefully evaluate contracts and agreements to prevent surprises.
At the end of this step, you should have got a finalized list of your expected items, and we can move on to the next step.
Step 3: Finalizing Your Budget
In the previous steps, you’ve basically made all the important decisions, and congratulations! The hard parts have passed. At this point, you may also have signed at least some of your vendor contracts.
This step is about finalizing your budget and ensuring your event can stay on budget.
Updating actual expenses
As you lock in vendors and sign your agreements/contracts, you should record your actual spending in your event budget spreadsheet (or if you use an event management program to keep track of your budget).
Evaluate your actual expenses against the projected expenses. It’s perfectly okay if you have differences here and there, but what’s important is to keep track and record everything. We’ll evaluate the cost discrepancies post-event.
Keep track of your contingency fund
In the previous step, we’ve stated the importance of allocating at least 15% and up to 20% of your event budget as a contingency fund. We can use this contingency fund, for example, in situations when we need to spend more than what has been estimated on certain items, and also for emergencies.
The purpose of this contingency fund is so that you can stay in the greens and not go over budget. However, it’s still important to keep track of your contingency fund usage and not to use too much of it.
Step 4: Hosting the event and ensuring it stays on budget
Congratulations! In this step, you should’ve finished not only your initial event budget but also the overall preparation for your event, and it’s finally time for D-Day.
In relation to the event budget, what’s important during the actual execution of the event is to keep track and record all additional expenses made during this time due to emergencies and other issues. Again, this is where the importance of having a contingency fund comes in.
Step 5: Post-event budget evaluation
You’ve successfully hosted your event, and again, congratulations!
If you’ve recorded every spending and income properly, then this last (but not least) step should be a breeze for you.
The main focuses of this step are:
- To make sure every single expenditure and income is reflected in your final budget
- Evaluate the budget and ensure you’ve settled all financial obligations
Finalize all expenses and make sure all payments are made, update your budget accordingly.
Calculate total spend
Once you’ve finalized all payments and recorded all the expenses/income, calculate the total expenditure of your event. If you are using an event management solution like Eventtia to keep track of your budget, this should be a breeze, but even if you are using a manual spreadsheet, as long as you’ve recorded everything, this step should be fairly easy.
You may need to share the final number with your stakeholders (and sponsors) during the post-event evaluation. This number will also be useful when planning future events whether for creating another event budget or securing sponsorships.
Analyze your budget
Once you’ve finalized everything, analyze your budget and especially the differences between actual spending and your estimation:
- Savings
Yes, there may be areas where you’ve spent less than what you’ve expected, for example when you’ve successfully negotiated a good deal with a vendor. Savings are mostly a good thing, but make sure you are not sacrificing your event’s overall quality and guest experience.
Identify any major savings (if any). You can point out these savings when presenting the event’s evaluation to stakeholders and sponsors, and may also help you plan your future events more effectively.
- Surplus
There may also be areas where you’ve gone over the estimated budget. Identify and evaluate the reason: have you simply underestimated the item’s cost? A vendor suddenly becomes unavailable so you need to settle with the next best option? Any surprise expenses you haven’t estimated?
Identifying the reason behind these overages will provide you with valuable insights into how effectively you’ve created your event budget, and will help you make adjustments when planning another budget for future events.
Bonus: Tips For Creating an Effective Budget
- The earlier, the better
Start creating your budget as early as possible. If you’ve already overspent on an item before you’ve created a budget, then the event budget will essentially be useless no matter how well you’ll be creating the budget later.
Estimating your budget early, even if it’s just a high-level budget, will essentially provide you with more vendor options, so you can get access to more competitive quotes. In the end, this may translate to saving more money and time.
- Define your event’s focus and priorities
What do you want your guests to feel when they attend your event? Do you want them to remember how good the amenities are? Do you want them to remember your state-of-the-art stage? Decide on your event’s focus, and based on this, allocate your funds according to your priorities.
- The cost of one item might affect another item’s cost
For example, the rental cost for venue A may be cheaper than venue B, but you may need more decoration costs if you decide to go with venue A. Also, the bigger the venue is, you may need more staffing. Assess these factors carefully when planning your budget.
- The more details, the better
Accuracy and comprehensiveness are keys to successful event budgeting. Don’t ignore any expenses or income sources, no matter how small. Even the smallest details can literally make the difference between being over budget or not.
- Accuracy is key
That is, don’t underprice an item just to make your budget seem better to stakeholders. If you are not careful, it may lead to losing more money (and time) as you plan and host the event.
- Be extra careful when choosing your venue
For an in-person event, venue rental is often the biggest expense in the event budget, so make sure to carefully weigh your options before committing to a venue. Also, don’t be afraid to ask the venue manager whether there’ll be any extra costs involved like whether you’ll need to pay extra for insurance or whether you’ll need to use the venue’s catering service. This is also why it’s important to research your venue options as early as possible.
- Don’t be afraid to spend
No, you shouldn’t always try to find the cheapest option for every possible item. If you do have the budget and if certain items will help you in hosting a better event, then by all means go for it as long as you can justify this investment. Remember that the end goal is to host a successful event. Yes, you may be rewarded for showing your stakeholders that you can stay under budget, but it doesn’t mean you should settle for a mediocre event.
- Secure buy-in from stakeholders as early as possible
Once you’ve created the budget, make sure to share it with your internal stakeholders and every relevant party involved in the event. You need the entire team on the same page as early as possible, and the rest of your stakeholders might have a different idea of how much you should spend. Make sure everyone is on the same page before proceeding, which will be crucial in ensuring your event’s success.
Wrapping Up
While creating an event budget can indeed be stressful if you don’t know where to start, it’s actually not that bad once you’ve got the hang of it. Creating a comprehensive and accurate budget can help alleviate your stress and ensure your hard-earned money is used as effectively as possible.
It’s very important to get ahead of your budget as early as possible, which will provide you with more time and more options in negotiating the best deal possible with your vendors, as well as helping you stick to your budget throughout the event planning process.
