Now that you have a good grasp of your anticipated revenue and expenses, you may be asking, “What does it all mean?” The answer is: It depends. Depending on where you are in the meeting planning process and whether any crucial decisions were made before you created your budget, you will now use your projected revenue and expense figures to make one of three very important calculations – Registration Fee, Breakeven Number of Attendees or Bottom Line.
Ideally, you have itemized your likely revenue (except registration income) and expenses before setting your Registration Fee. If not, the world won’t end. However, using these figures to set your Registration Fee will increase your odds of making a profit, or at least breaking even, on your meeting. These calculations can seem daunting, but they’re really not as complicated as they may appear. Once you’ve done them a few times, they become second nature.
So, you know, at least roughly, what your expenses and revenue (excluding registration income) will be. Your first step is to calculate your Breakeven Number. As its name implies, this is the amount of registration revenue you will need to breakeven. Simply take your fixed costs and subtract any income from sponsorships, tradeshow booth sales, donations, etc. The amount of expense that remains is your Breakeven Number. This is the amount of revenue you need to recoup in registrations in order to break even on fixed costs. The formula looks like this:
Breakeven Number = Fixed Costs – Non-Registration Revenue
Now that you have your Breakeven Number, you are ready to calculate your Registration Fee, which will reflect each attendee’s portion of the meeting’s fixed costs plus his or her individual Variable Costs. To find the Registration Fee when you know the number of attendees, simply take your Breakeven Number and divide by the Number of Attendees and add any Variable Costs (per person). The formula for calculating your registration fee looks like this:
Registration Fee (per person) = ———————————— + Variable Costs (per person)
Number of Attendees
If you determine your Registration Fee using this method, you can help to ensure that you set it high enough to cover all of your costs. Additionally, you can add in an amount for profit if you’d like.
After reading the above section, you may be thinking something like, “We already set the Registration Fee. It’s too late to change it.” You may not be able to change your Registration Fee to a breakeven fee, but you can at least determine how many attendees you need at your meeting to keep from losing money.
To calculate your breakeven number of attendees, you will need your Breakeven Number from above, your Registration Fee and any Variable Costs. This calculation is basically the registration fee calculation in reverse, sort of. You need to subtract your Variable Costs (per person) from your Registration Fee. This will give you the breakeven portion of your registration fee – the portion that will need to cover your fixed expenses. Next, divide your Breakeven Number (see above) by this number. The formula looks like this:
Breakeven # of Attendees = ————————————————————–
Registration Fee – Variable Costs (per person)
Though this calculation doesn’t give you any direct control over revenue, it does give you valuable insight into how many attendees your meeting needs in order to breakeven. This information, coupled with the number of registrations you are receiving and historical registration numbers, can help you know whether or not you need to step-up your marketing efforts.
Simply put, the Bottom Line is your meeting’s profit or loss. You won’t know your actual Bottom Line until after your meeting wraps, but keeping an eye on your projected Bottom Line throughout the planning process will help you know when you need to make adjustments to your budget. The Bottom Line is an extremely simple calculation. Simply subtract your Expenses from your Revenue. A positive number indicates you’re making a profit. A negative number means you’re losing money. The formula looks like this:
Profit = Total Revenue – Total Expenses
Keep in mind that both your total revenue and total expenses could vary based on your number of attendees. Make sure that you are accounting for that in your budget spreadsheet.