Perception Shift - Cons Breaking Even

[dalekboy]

thinarthur posted a reply to my post from yesterday about the Discworld con, and queried how they could not have been raking in the cash with their prices. I figured his questions on it would reflect many peoples', so I've decided reply here as a general post because I think most people have no idea about the costs involved in running a convention post S11.

It's a new millennium and things have gotten pricey.

While con prices have risen a little, everything else has gone up substantially. I was talking about this only last night, unless you've actually put together a con in the last 7 years, people really have no idea of how much it costs to run one these days. Insurance is a killer, overseas airfares are terrible, and venue costs in Australia are absolutely criminal now. And the venues that can hold a big convention are few, far between, and very expensive.

Once you are looking at 250+ people, you can usually add around $20,000 to your budget right there, and you're having to fight off the venues wanting to sting you for all sorts of hidden extras. Having C3 at the Hilton made it a $40,000+ (may have even been $50K+, I'm running from memory here) convention. But it was one of the only venues that could hold that many people, and fortunately they were excellent to deal with. Many are not. In the old days when a hotel exploited a loophole in the contract to reneg on something, or charge you more, it was maybe a few hundred dollars - these days it runs into thousands.

Even with Neil Gaiman as a guest we were worried that we wouldn't break-even, so we had to have prices that would lead to us breaking even at lower numbers. We were terrified as our original hope for a 250 person break-even slowly grew to an eventual break-even of something like 350 people. We were lucky, a huge drawcard guest and a good name built on two previous conventions helped a bit, Neil mentioning us on his blog was the greatest help of all. Without that, we may well have been scraping through, if not actually losing money.

Thanks Neil, you rock!

Also, cons can lose money through things that they have no control over. The fourth in a highly successful series of cons in Queensland was virtually destroyed by heavy rain. The guests were there, but the vast majority of the membership couldn't physically get to the con. The people who did had a whale of a time. But there were no more cons thanks to losses incurred by a bit of bad luck.

It doesn't need to be that huge, either. A one-day minicon I ran many years ago lost money due to fan politics of which I had no part. A rumour got around that someone who had burned a lot of bridges was running the event, and even though their name didn't appear on the publicity, only mine and my co-runners, we lost members. For years after I would be talking to people who said they didn't go because they thought such-and-such was running it.

Remembering that cons 15 years ago were costing $100-$150, the fact that well over a decade later people are only paying around $200 is remarkable, and down totally to con committees working exceptionally hard to keep prices down. Not to mention giving themselves the additional hassle and worry about numbers. If you want to be realistic about con prices, cons should be starting off at $150, with an at-the-door price of $300+.

Most conferences in other fields cost $500 minimum. Many cost $1000 or more, and very few have anything on past 6pm. SF related cons have programming well into the evening, and even overnight. There are usually additional fees for this. They are doing more than the business-cons, and costing less.

I mentioned insurance earlier. Hotels won't let you run a con without it. When I was searching for Continuum 1, the cheapest rate I found was $3000-$4000. For a small con, that's a killer. It's an extra $20 per person for a 150 person con. I was lucky enough to be put on to Overton's Insurance, which only charges $790. If we hadn't found them, C1 may not have happened. Or if it had, we would have had to charge substantially more, since we wanted our break-even number to be around 100 people.

Here's a semi made-up example.

Total costs on a small convention these days will be somewhere between $10,000 and $20,000, but let's call it $15,000. That's got to cover guest expenses, publicity, the conbook, insurance, etc. The average con will get between 125 and 175 people. You may be hoping for 150 people, but you can't set your break-even that high, so you set it to 110. If you get more people, that will give you extra money for the inevitable extra costs.

$15,000 / 110 people = $136 per person.

However, you need cheap prices at the start, to help draw in some memberships and give the con some starting cash. So you make your early memberships $80 each, and get 20 people signed up, including committee.

That leaves $13,400 to raise, divided by 90 people - $150 per person.

Except your next price hike is to $100, not $150. And you get another 30 people.

You're still left with $10,400 to get, split amongst your remaining hopeful break even of 60 people - You're now looking at $175 per person.

That feels like too much. You know that people will whinge and bad mouth the con for being too pricey anyway, even though this is what you need to charge, help committee morale, and give you a safety net. What most cons would do in this case is throw safety to the wind and go up to $125. And they'll get say 30 people at that rate, in the last months before the con, and be terrified the whole time that they aren't going to break even.

Now, a month or two out from the con, you've still got around $6.6K to bring in. Gone is your hope of a break-even number of 110 people. You're struggling to pay the guest airfare, and your next hotel deposit is due. Your next price rise is to $150, the at-the-door price is $175. Your minimum break even is now 124 people, and you are going to sweat until you get them.

And people are bitching publically that the con is too expensive.

You get 45 people at $150 - $6750. You've broken even a week out from the con! Do the happy dance!

The guest's publishers decide to take advantage of her being in the country, and line up a signing tour in the city you're having the con. All of a sudden, people don't have to come to your con to see her.

At the con you find out that the cash food nad drink bar that's been arranged since the beginning suddenly has a hidden cost of $2.50 per person per day, and it's on for all three days of the con. It's too late to cancel it, it's a feature of the con because there are no nearby places to eat, so you have to wear it and hope you get the members through the door. Suddenly you're back in the red.

You get 10 members through the door. You've got a total membership less than you'd hoped, but the con has made a total profit of $740, it's not much, but it's seed money for the next one.

This example is without the extra income from conbook advertising of course, or fundraisers, but it also doesn't allow for things like concession memberships and day-members. With those in place, break-even gets much stickier.

Oh, and some people will complain about the committee going off to a private dinner with the guest too, even though they've given up hundreds of hours of their time, have paid to attend just like everyone else, and don't get to relax and enjoy the weekend. Or people will whinge that there was no free coffee. Or that there was no video program when to run one was going to add more money to an already stretched budget, and no video program in the last five years in Melbourne has been well-enough attended to warrant the extra expense (and remember, I like video programs and consider them important).

Now while the example I've given is completely made up, I have enough experience to know that it's also not that far off the mark. And if you think that was sticky and awful, imagine running a $50,000+ convention... and having people complain that it's too expensive, calling it a rip-off, and generally bad-mouthing it...

So if people think cons are too expensive, let them do more than whinge about the price. Come forward and explain all your wonderful money-saving ideas, tell us all how we can get membership prices down, get attendance up, and be ready to actually pitch in and help impliment those ideas.

Do you honestly think conventions are expensive because people want them to be, or are too lazy to find a cheaper way to do things? They are expensive because things cost money.

It's called reality - time more con-goers started living in it.

Comments

[cheshirenoir.livejournal.com]

I just sourced insurance for some smaller cons I am running, and I thought I'd share.

I shopped around and got a good deal. The hotel I am planning on using has confirmed the insurance type is OK.

I'll be paying $500 for $5,000,000 insurance, covering any convention I run for 12 months.

I plan to run 2 conventions on this insurance. Looks like insurance is getting back to more "sane" levels at last.