Imagine you鈥檙e giving a financial review of your last event to your board of directors. If you tell them that they shouldn鈥檛 care about revenue, they鈥檒l probably look at you like you鈥檝e lost your mind. But ask them to hear you out.
Building a lucrative, long-lasting event goes beyond booking the right entertainment, picking the right venue,听or听鈥� yes听鈥� bringing in revenue. Even if you鈥檝e checked all of those boxes, you could still be losing money by pricing your tickets too low or racking up overhead costs.
Free Download:听Executive Strategy: How to Price Your Event
So, to understand how successful your event听really听is, you should focus on two things instead: gross profit and ticket sales.
Why gross profit is your most important metric
Ultimately, if you want to find out the financial strength of your event, you need to zero in on gross profit. Yes, you鈥檒l need to calculate your revenue first, but you shouldn鈥檛 stop there.
As you鈥檇 imagine, most professionals in the events industry are looking to turn a profit. In fact, a听听in the US found the most common听primary听reason to host an event was to make money.
To determine gross profit, you should deduct any costs of your event (entertainment, venue, food and drink, etc.) from your revenue. What you have left is the money you walk away with.
Did you come out ahead? How much? Or did you end up in the red?
If it鈥檚 your first event, you should expect to suffer a loss 鈥� you don鈥檛 have a loyal fan base yet, and your brand is still new to the public eye. But once you have a few years under your belt, your gross profit should be growing. This growth tells you whether your event is successful or whether you need to re-evaluate your strategy.
Focus on ticket sales, not revenue
Beyond gross profit, you鈥檒l get the most complete story about your event from the number of tickets you sell. What was your sell out rate? 75%? 90% 100%?
It doesn鈥檛 matter if you brought in $350,000 in revenue if you only sold 70% of your tickets. That means 30% of potential attendees didn鈥檛鈥� find your event valuable enough to attend 鈥� leaving a lot of money on the table.
To increase profit, you need to drive more ticket sales without much more budget. Check out听this tipsheet for the 10 best ways to sell out your event.
Improve these metrics by focusing on perceived value
The event space is increasingly crowded across genres, and it鈥檚 easier than ever for event-goers to find new, competing events 鈥� at a competitive price.
If you want to drive ticket sales, your event needs to be perceived as high value for your attendees, but also affordable. 鈥淚t鈥檚 your responsibility to provide a unique and memorable experience in a cost-effective way for your attendees,鈥� says Nels Gilbreth, VP of Pricing & Monetisation at 91制片厂.
But the most successful leaders know that the best way to increase profit is to enhance the value to the customer 鈥� and deliver at that price. For more help to set the right ticket price, read听Executive Strategy: How to Price Your Event.
