Imagine you’re giving a financial review of your last event to your board of directors. If you tell them that they shouldn’t care about revenue, they’ll probably look at you like you’ve 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, or — yes — bringing in revenue. Even if you’ve checked all of those boxes, you could still be losing money by pricing your tickets too low or racking up overhead costs.
Free Download: Executive Strategy: How to Price Your Event
So, to understand how successful your event really 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’ll need to calculate your revenue first, but you shouldn’t stop there.
As you’d imagine, most professionals in the events industry are looking to turn a profit. In fact, a recent Eventbrite survey in the US found the most common primary 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’s your first event, you should expect to suffer a loss — you don’t 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’ll 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’t matter if you brought in $350,000 in revenue if you only sold 70% of your tickets. That means 30% of potential attendees didn’t’ find your event valuable enough to attend — leaving a lot of money on the table.
To increase profit, you need to drive more ticket sales without much more budget. Check out 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’s easier than ever for event-goers to find new, competing events — 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. “It’s your responsibility to provide a unique and memorable experience in a cost-effective way for your attendees,” says Nels Gilbreth, VP of Pricing & Monetisation at Eventbrite.
But the most successful leaders know that the best way to increase profit is to enhance the value to the customer — and deliver at that price. For more help to set the right ticket price, read Executive Strategy: How to Price Your Event.