Tuesday, March 25, 2014

Let's Talk Numbers

We received a comment on Facebook recently about charging an application fee - especially a non-refundable fee - and how we must make so much money from people that we reject from our shows.

One of the most important items to note is that the RCM is a non-profit business league. Every one of our members is a volunteer, and we don't receive a payment for the work that we do, nor is the organization racking up money from producing shows.

To quickly recap our answer on app fees, we charge a fee for two primary reasons:
  • Yes, we absolutely consider this revenue for the show.
  • From the point of view of an applicant, charging a nominal fee is important as a checkpoint. Only serious businesses, with serious intent to join our show, will consider paying the fee. If we opened up the apps without a fee, we could be flooded with applicants who aren't taking the process of making and selling as seriously as we are. It already takes us hours upon hours to choose vendors for the show, and this is a good way of letting people self-select into the consideration process.
In the last main defense of charging a fee, our $10 app fee is the lowest among what we consider to be our peer shows. Other indie craft shows actually charge you the entire booth fee upon application - many hundreds of dollars - and refund you a portion of it if you're not juried in.

Behind-the-scenes, this comment led to an interesting conversation amongst the RCM members. One thing we've not seen posted in other places is a realistic breakdown of what it takes, financially speaking, to run a craft show. So in the interest of transparency, that's what this blog post is really about.

This post isn't exactly what we're spending for Spring Bada-Bing, but it's very much in the ballpark. We hope that by laying out our budget, everyone can gain a better understanding of what's happening in the background leading up to the show.

We start every craft show with a budget of what we expect to bring in and what we expect to spend, based on our previous experiences and whatever new research we've done. Makes sense, right?


First up: the revenue we expect to generate. We generally expect to get roughly three applications per spot in our show (give or take), since that's the pattern we've seen in the past. For our budget, we estimate that we will have 140 applicants. For this show in particular, we have 53 booths, some of which are standard "inside" tables, some are larger "outside" booths (for which we charge more), and some vendors are paying for electricity. And finally, we get sponsors for our show, some of whom donate in-kind trades, and some of whom write checks.

For this example, here's our expected revenue:

$1400 - application fees
$4300 - booth fees
$1350 - sponsorships
$7050 - income for the show


Now it gets fun. $7000 and change sounds like a fair bit of moolah, right?

First up, we need a rental space. The price for this can vary WILDLY depending on where we're going, what day of the week we book (which is why we used to do Sunday shows - to catch the price break),  and whether we need to rent out a parking lot for our customers. We try to keep this show free to attend, so that our customers will spend their money at our vendors' tables, so ample free parking is a pretty big deal for us. We pick event spaces that aren't too big or too small, that are easy to find and travel to, and make sense for our craft shows. For this example, we're going to say that the space costs $750, although for some shows we've spent double that.

Since this particular show includes an outdoor component, we need to rent a tent to cover the parking lot at Hardywood. It's a heck of an expense, but we need the tent for shade, protection from wind and rain, and remember: this is early April. With the winter we've had so far, it'll be worth every penny. Add in the cost of renting tables and chairs for our vendors, delivery, etc... and this is a considerable expense for our show.

The single biggest expense is advertising and marketing the show. Every spare penny (and then some) is spent on getting the word out that the show is happening. There are a few places we always advertise, and then every show we try a few new things to see if we can make a bigger impact. We print flyers to post around town, postcards to distribute, handbills - whatever collateral we can to get the word out. Budget depending, we also try to afford swag bags to give away to the first "x" number of customers. It's a nice gesture, and gives our sponsors a bit more for their money too, since they'll be promoted on the bag, and can provide goodies for our customers.

We also buy insurance for the show, since you know, duh.

As not only craft-show-throwers, but also frequent craft-show-vendors, we know how nice it is to feel loved when you get to a show. Especially since we were probably up late the night before, and up early that morning, and then looking forward to a long day of standing and being "on." So we try to treat our vendors right, and one way we do that is to provide breakfast and coffee while everyone gets set up, plus a snack for the middle of the show. It is a small thing that provides a pretty big perk for everyone involved, so it's important to us.

Finally, since we collect our fees via Paypal, there's the very real expense of the transaction costs for all of the fees we take in. It doesn't seem like much per transaction, but it adds up real fast over the cost of the show.

So, here's where we are for our hypothetical-but-realistic example:

$750 - event space rental fee
$2700 - equipment rental fee
$3000 - marketing and advertising
$400 - insurance
$500 - food for vendors
$230 - Paypal fees
$7580 - budgeted expenses for the show

Making it all add up

There's sort of an obvious problem here already, isn't there? Based on these initial budgets, we are $530 in the hole to put on this show. So now we start getting creative. The easiest solution is to find more sponsors for the show, which we are still accepting for SBB if you're interested! (Just contact us, and we'll send you the sponsorship package.) If it's early enough that the app is still open, maybe we try and drum up more applicants. Besides that, we start whittling away at the numbers, primarily in the marketing and advertising. Maybe we buy a smaller ad in a couple of places. Maybe we can get a better deal on the rental space if we pay early and in full. Maybe we buy a little less food than we did last time for the vendors. Maybe the RCM folks chip in to cover the difference. Maybe there was a surplus from the last show that we dip into for this one. These are all solutions we've employed in the past. In the end, we make it work.

The bottom line

We are always trying to make our show the absolute best we can for our vendors and our customers, so that everyone wants to come back again next time. We run as much as we can on volunteer hours, freebies, and our fantastic looks to put together an amazing show. But, when it comes down to the end, in the legendary words of the erstwhile-Puff Daddy, "it's all about the Benjamins."

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