What are the economics of large scale conferences? How much do they cost? How much do they make?
Hello, and thanks for asking for the economics of large-scale conferences with a specific emphasis on their costs and profits. The short answer is that a large-scale conference can cost anything between $50,000 and $150,000 to host with a potential profit of up to 30%, but with considerable risk. You will find a deep dive of my findings below.
By searching through corporate websites, trusted media sites, and user forums, the first step was to identify the different costs incurred when hosting a conference and how to budget for them. The next step was to find any pre-compiled reports of conference costs and combine that with the individual reported costs of the items one has to budget for. Then the different pricing strategies of conferences were found. Lastly, the income of a conference was analyzed, focusing on reports of where conference income come from and any reports on conference profits.
COST INCURRED FOR A CONFERENCE
When budgeting for a large-scale conference, the costs incurred typically include:
1. Site rental costs: Rental fees for the event venue is probably the biggest cost and include the conference venue, housekeeping, baggage handling and related expenses.
2. Catering: Catering will include all food and beverage costs, including tips and gratuities (can be up to 30%).
3. Speakers: Depending on the speakers, this can also be one of the biggest costs of a conference.
4. Transportation: There might be a necessity for shuttles, coaches, and event transfers.
5. Decor expenses: Easily overlooked, most events include expenses for decor, which can include table decor and tent rentals.
6. Entertainment & equipment fees: The most common expense in this category is the A/V equipment, but you might include honorariums to speakers (if any are willing to speak for free) or potentially entertainers.
7. Printing: To host a successful conference, one must print invitations, name badges, program booklets, event signage, and banners.
8. Gifts: It has become common practice to not allow attendees to leave empty handed, and to provide each attendee with a small gift.
9. Contingency: There are always costs incurred that were not expected. It is recommended that, depending on the size or complexity of the conference, up to 20% of the overall budget can be allocated to contingencies.
Costs may vary significantly, depending on the city, venue, and speakers. Below is a breakdown of examples of reported costs that might be incurred:
1. Venue: The cost of the venue will vary depending on the size, ranging from about $300 to $500 per day for 600 to 800 sq ft up to $3,000 per day for 3,500 sq ft. For example, the Radisson Hotel charges $1,000 per day for 1,800 sq ft. For a large scale conference in a convention center, the venue can cost $90,000 to $100,000, including food and beverage costs between $30,000 and $40,000.
2. Speakers: According to The Content Marketing Academy, based on the conferences they arranged, an international business speaker can cost between $7,000 and $30,000. They reported that their keynote speakers usually cost between $10,000 and $15,000. This is confirmed by Brad Montgomery, stating that entry-level speakers might be somewhere between $2,500 and $3,000, while more professional motivational speakers are between $6,000 and $20,000.
3. Catering: Catering charges vary depending on the number of people at the conference. For example, catering can cost between $12 and $15 per person for a small buffet without any service or between $25 and $40 for a full-service meal.
4. A/V Equipment: Audiovisual equipment can include projection equipment at about $1,800 per day, video equipment at about $2,000 per day, audio equipment at about $1,500 per day and wireless internet access for attendees at between $150 and $300 per day. If need, technical support of the equipment can cost $75 per hour.
HOW MUCH DOES A CONFERENCE COST?
Two examples of directly reported conference costs were found:
1. The Council for Higher Education reports that the cost of their conferences, excluding speakers are:
a. Facility: $100,000 b. Hotel Accommodation: $21,000 c. Equipment: $20,000 d. Honoraria and travel: $10,000
This combines for a total cost of $151,000 excluding the costs of any speakers.
2. The Content Marketing Academy in the UK reported that their 2016 event cost a total of £40000 ($51,545). The breakdown was:
a. Speakers: 55% (£22k – £25k or $28k - $32k)
b. Catering: 20% (£6k – £8k or $7.5k - $10k)
c. Venue 12.5% (£5k – £7k or $6k - $9k)
d. AV equipment 5% (£2k – £3k or $2.5k - $4k)
e. Photography 2.5% (£500 – £1k or $600 - $1.3k)
f. Print, design, website, marketing and misc – 5% (£1k – £2k or $2.5k - $4k)
For most industry conferences, the majority of speakers do not have to pay attendance fees and are only reimbursed for expenses. For smaller, open source conferences, this is more common, while for larger conferences and corporate events, guest speakers often receive a speaking fee.
There are many alternatives to paid, professional speakers at a conference, Examples are:
1. Call for papers: If sufficient time is available, attendees can be invited to present papers at the conference. This provides an exposure opportunity as well as the opportunity to review the paper to confirm that it is topical for the conference.
2. Sponsors: If sponsors are obtained for the conference, they are an ideal source of speakers for the conference. It provides them with additional exposure at the conference as well as the opportunity to increase their return on investment at the conference.
3. Clients: If you have existing corporate clients that might be interested in the conference, it is possible to request them to provide speakers in exchange for the opportunity to showcase their business.
4. Network: By exploring your network, it is possible to find speakers that are willing to speak for free if they, for example, offer consulting or some other service which attendees might be interested in. This gives them the opportunity to get more business out of the conference.
There are three basic pricing models for conferences:
1. Retail Pricing: This is the most basic pricing strategy, based on calculating expenses, adding a profit margin and dividing the sum by the lowest projected attendance figure.
2. Market Pricing: Alternatively, the pricing of the conference can be based on the perceived price attendees will be willing to pay for the conference. This way one can multiply the lowest projected attendance figure by the market price, creating a budget for the conference.
3. Limited Access Pricing: This is a more complex model, with a tiered pricing approach. Based on the features and benefits that an attendee want access to, the price varies.
Other aspects to consider in pricing are:
1. Incentives: In order to encourage early registration, one can include an "early bird" promotion at a reduced price in order to cover all of the fixed costs early.
2. Penalties: Penalties or late registration fees are essential if there are any fees that the conference organizer can incur when changing attendee numbers after a specific date. Most catering contracts include surcharges for orders placed late, so this is used especially in the event of catering.
3. Post-Event Access: Post-event online access to the material used at the conference is very popular. One can limit free online access to attendees only, charging a fee for non-participant access.
INCOME FROM CONFERENCES
According to Premier Meeting Services, successful conference planners can achieve profit margins of up to 30%.
The two main sources of income for a conference are:
1. Ticket Sales: This is the primary source of income for conferences and depending on the pricing model used, can accumulate the majority of income for the conference.
2. Sponsorship's: This can include headline sponsorship, display advertising, advertising on the conference website and even branded goods at the conference.
The most successful example of a professional conference is the TED (which stands for Technology Entertainment and Design) conferences. It includes the recorded “TED Talks,” multiple spin-off sub-conferences such as TED Global or TED Women as well as more than 3,000 “TEDx” events, organized worldwide by unpaid volunteers. In 2012, their overall conference income, including the main TED event as well as smaller spin-off events, was about $27.8 million.
The cost of hosting a large-scale conferences can vary significantly, but can be between $50,000 and $150,000 depending on the cost of the:
7. Attendee gifts.
The main sources of income for a conference are ticket sales and sponsorship, and if successful a conference can have a profit margin of up to 30%.
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