10 Must-Know Terms for Budgeting

Whether you are negotiating with your management team for more budget or working with your hotel salesperson on your contract, it’s important to know your budgeting jargon.

Here are 10 must-know budgeting terms:

1. Break-even Point

This is the point in the budget where total expenses and total revenue are equal. The event is not losing money or making it at this point, and expenses are still within budget.  

2. Cash Flow

‘Cash flow’ is the total amount of money being transferred in and out of the event when taking into account revenue and payouts.

3. In the Black

This is where you want to be — the goal of all budgets. When an event is ‘In the Black,’ it makes more than it costs to host.

4. In the Red

The opposite of ‘In the black’ is ‘In the Red,’ which means that the event is costing more than it’s making.

5. Gross Budget

The ‘Gross Budget’ is the total revenue the event is expected to bring in before expenses are deducted. This figure can be used as a tally of expenses, which are also known as ‘Gross Expenditures.’

6. Net Budget

The net budget is what matters most — the measurement of the profitability of the event. It is made after all expenditures are paid out.  

7. Fixed Costs

Every event has overhead, or costs that exist and are not dependent on headcount. For example, if you have a flat rental fee for the venue that is not dependent on the number of guests you have, that’s a fixed cost. Other fixed costs include AV, office space and room set-up fees.

8. Variable Costs

Variable costs are those costs that are not fixed, and fluctuate by headcount. For example, food and beverage and printing are variable costs, because they are based on the number of attendees. A tally of your fixed costs and your variable costs will yield your total event costs.

9. Contribution Margin

The contribution margin is the amount that can go toward the fixed costs after the variable costs have been deducted.

10. Profit Margin

The profit margin measures the total amount by which revenue from event ticket sales, sponsorships, exhibitor sales and other sources of revenue exceeds the cost of the event.