WEEK 6 PREPARING AND MANAGING THE BUDGET FOR EVENTS

1.0 INTRODUCTION
2.0 Objectives
3.0 Main content
 Ways event planners structure their fees
 Other financial considerations
 Sample budget

4.0Conclusion

1.0 INTRODUCTION
A budget is a crucial part of Event Management. This section will look at different ways of
costing an event as well as other factors to consider when purring up a budget.
2.0 OBJECTIVES
By the end of this lecture session, you should be able to:
 Prepare a Flat rate Budget
 Prepare a budget from Percentage of expenses
 Prepare a budget on Hourly rate
 Prepare a budget on Percentage of expenses plus hourly rate
3.0 MAIN CONTENT
3.1. Introduction
Matthews (2015) defines a budget as a living document that compares anticipated revenue with
actual revenue and anticipated expenses a with actual expenses. It assists the event manager in
keeping control of the event, enabling the shifting of funds when necessary while still
maintaining the integrity of the event.
Whether you’re starting an event planning business for social events, business events or a
combination of both, anyone who is considering their own business should certainly be
concerned about establishing a fair rate for services. It’s important to know how to charge for
services.
Unfortunately, the answer isn’t simple. Several factors go into determining one’s rate,
including event planning operating expenses, salaries, and profits.
The reality is that rates vary based on where you operate your business, types of projects you
take on, and what the market is willing to pay.
It also depends on your target market. That is, your client or prospect will have a target budget in
mind, and your services must be competitive within those parameters.
3.2 WAYS EVENT PLANNERS STRUCTURE THEIR FEES
Nevertheless, if you want to start a part-time or even full-time business, there are roughly
five ways to structure your event fee and quote your fees to your clients:
 Flat project fee
 Percentage of expenses
 Hourly rate
 Percentage of expenses plus hourly rate
 Commissionable rates
For the following explanations and examples, let's  assume you want to earn on average Kshs75
per hour for your services. 
Fees Based on a Flat Project Rate
Many clients prefer to know how much a project will cost, inclusive of all fees. As an event
planner, to offer this, you must determine a flat fee and determine what services will be covered
for that amount.
This puts the responsibility of managing to a budget directly on you, the planner, and requires
anticipating a variety of scenarios in which circumstances may change. In this scenario, the client
may contract directly with the event planner to coordinate all logistics, catering, venue, lodging
expenses, etc.
Flat project fees are typically used for packaged events, such as those found with sports
marketing programs, and may be calculated on a per person basis with many stipulations and
caveats.
For example, assume you are being hired to organize a one-day historic city tour for 15 guests.
Your client wants you to quote a flat fee for transportation, a private guide, lunch and any/all
admission fees to venues; however, she also asks that you provide a high-level breakdown of
each expense item.
In this scenario, you must negotiate/calculate the cost of all services, including your time, and
quote a combined total for expenses. It will be the event planner’s responsibility/risk to identify
required deposits, pay for all services, and hold responsibility for all service agreements.
Fees Based on a Percentage of Expenses
On average, most qualified event planners should feel comfortable with charging between 15-
20% of the total cost of an event as part of their fee. Depending on the complexity of the
program and amount of time it takes to plan and execute an event, sometimes this is enough to
cover a planner’s entire cost and source of profit.
For example, assume you are being hired to organize a private dinner at an exclusive restaurant
for 40 guests with an average of Kshs175 per person.
Let's estimate that it takes you a total of 15 hours to meet with your client, plan, attend and
complete all follow up on this event. If you charge a rate of 18% of total expenses, you will earn
just a little more than your targeted hourly rate of Kshs75/hour:
Kshs175 x 40 guests = Kshs7,000 x 18% = Kshs1,260
15 hours x Kshs75/hr = Kshs1,125
If the client is contracting with you for all services directly, the subtotal event expense charge to
the client would be a total of Kshs8,260.
Fees Based on Hourly Rate
Some clients prefer the event planner to quote an hourly rate for services and to estimate the total
number of hours to manage and execute a given client program. It may seem similar to the flat
project rate, but it allows for more flexibility on the part of both parties to adjust to changes that
may be needed along the way.
Many business event planners will bill hourly for services. It allows a client to know just how
much it will cost to hire your services and allow him/her to calculate a reasonable budget.
Frequently, the reason for this is because the client wants to have a better handle on any
unexpected expenses.
Always remember to define careful parameters around expectations so that both parties are in
agreement as to what services will be provided. As an event planner, you should include a
reference to billing for all reasonable business expenses that may be incurred.
Some event planners may markup operating expenses such as shipping, car rentals, and other
miscellaneous expense items by as much as 15-20% while others do not; if you do, you should
disclose such markups and obtain agreement with your client in advance.
When it comes to hourly event planning rates, it is also important to determine how frequently
you may bill for your time.
For example, let's assume that a client is hiring you in October to organize a one-day seminar in
March. Your services are being contracted to source and negotiate for the venue, catering
services, A/V, and contribute to the content creation for a limited number of communications
items (i.e., invitations, agenda, evaluation forms, etc.).
Your client is also hiring you to provide on-site management. You establish an agreement up
front that you will bill for identified services at different times, and will submit invoices for all
services performed to date on a weekly, biweekly, or monthly basis.
Under this agreement, you and your client should both work out a detailed statement of work that
includes the expected responsibilities of both parties. Then, you may estimate a total budget of so
many hours plus reasonable expenses (be clear on what those details may include).
Fees Based on Percentage of Expenses Plus Flat Fee/Hourly Rate
Sometimes you’re being hired to organize an event, and for whatever reason, the client prefers a
rate based on a percentage of expenses. However, this isn't enough to cover the cost of your total
time and services. In these situations, it is reasonable to present your fees at a combined cost in
two different categories.
For example, a client hires you to organize events associated with a conference. Your assignment
is to organize two private dinners and a golf outing, each with 50 guests. The total cost for these
combined events run approximately Kshs 20,000, but it requires about 60 hours of your time, and
the complexity of this project may justify a higher profit margin. Keeping that in mind, you may
come to your final flat fee + hourly rate with the following calculations:
Percentage of Expenses Estimate:
Kshs20,000 x 18% = Kshs360,000
Hourly Rate Estimate:
60 hours x Kshs75/hr = Kshs4,500
Hourly Deficit: Kshs900
If you come to a deficit, as we did in the example above, you may choose to quote 15 hours to
manage logistics of multiple outside vendors. Your quote then may reflect the following:
Subtotal Event Expenses: Kshs23,600
Flat Fee: Kshs1,125 (based on 15 hours at Kshs75/hr)
In this scenario, you will need to carefully determine that you have estimated your hours
appropriately (an account to cover non-standard operating expenses such as personal travel). As
expected, few clients are pleased to see increases in expenses later on unless justifiable reasons
are provided.
Fees Based on Commissionable Rates
Another way that event planners may collect fees for services is by securing event space through
venues that offer a commissionable rate. These are fees typically provided to travel agents for
booking tickets, hotel rooms and other forms of transportation.
For example, many hotels may extend a commissionable rate up to as much as 10% for
guestrooms and other expenses.
Although some event planners will embrace commissionable rates as a source of income for
themselves, savvier clients may question the event planner’s sense of loyalties when
commissionable rates are involved. For that reason, many seasoned planners will limit any
planning selections that include a commissionable rate or negotiate non-commissionable pricing
for their programs and pass that source of savings directly to their client’s bottom line.
Further, some clients may be aware that commissionable rates exist and do not expect their
outside consultants to bill using any of the other identified billing methods we've outlined and
still pay a commissionable rate.  In general, it isn’t considered good form by many event
planners to essentially “double dip” their revenue stream this way.
If accepting commissioned rates, it's best not to charge your client fees for your services using
alternative billing methods.
There are scenarios when commissionable rates do make the most sense, such as a smaller
nonprofit or association that may be hiring your services for a membership event or meeting and
the bulk of the fees are paid directly by the attendees rather than the organization.
Another scenario may be if your client is purchasing client gifts from you, and you may also
offer promotional items distribution services. In that case, simply negotiate for the promotional
items and do not charge for your services on an hourly basis unless your client is aware of all
charges up front.
3.3 OTHER FINANCIAL CONSIDERATIONS
i) Taxes – Some services and items are taxable and others are not. Ensure these costa are well
factored on the budget
ii) Event Insurance – Depending on the nature of the event, it is important to insure the events
with an insurance company. Once the cost is negotiated, inform the client on the insurance cost
and let the client make the descion whether to take it or not.
iii) Workers compensation – In case of accidents, what will be the compensation amount for
the affected worker? This must be agreed upon in writing before you engage any employee.
iv)Employee/ Contractor Descions- Check before signing the contacts clauses that talk about
dismissal and Termination. Some contactors may not be easily fired because of the cost
implication in the contract

SAMPLE BUDGET

Event Budget for [African Business Conference]

Estimated Actual
Kshs Kshs
Total Expenses
1,427,000.00 13,900,000.00

Site Estimated Actual

Room and hall fees Kshs 300,000 Kshs 250,000

Site staff Kshs 50,000 Kshs 50,000

Equipment Kshs 80,000 Kshs 120,000

Tables and chairs Kshs 60,000 Kshs 45,000

Total Kshs 490,000 Kshs 465,000

Decorations Estimated Actual

Flowers Kshs 30,000 Kshs 30,000

Candles Kshs 15,000 Kshs 15,000

Lighting Kshs 75,000 Kshs 60,000

Balloons Kshs 20,000 Kshs 20,000

Paper supplies Kshs 25,000 Kshs 25,000

Total Kshs 165,000 Kshs 150,000

Publicity Estimated Actual

Graphics work Kshs 50,000 Kshs 50,000

Photocopying/Printing Kshs 5,000 Kshs 5,000

Postage Kshs 5,000 Kshs 5,000

Total Kshs 60,000 Kshs 60,000

Miscellaneous Estimated Actual

Telephone Kshs 2,500 Kshs 3,000

Transportation kshs65,000 Kshs 65,000

Stationery supplies Kshs 25,000 Kshs 25,000

Fax services Kshs 5,000 Kshs 5,000

Total Kshs 102,000 Kshs 105,000

Refreshments Estimated Actual

Food Kshs 400,000 Kshs 350,000

Drinks Kshs 100,000 Kshs 150,000

Linens Kshs 30,000 Kshs 30,000

Staff and gratuities Kshs 80,000 Kshs 80,000

Total Kshs 610,000 Kshs 610,000

1.0 CONCLUSION
Budgets are very important elements in Event Management and planning. At the end of the
day, every Events Company should make profit, a well worked out budget will ensure
success and survival of the company.