The Best Formula to Calculate the Sponsorship Fee for Your Next Event

event sponsorship, sponsorship fees, Bruce Erley, halo effect, Corporate Support, marketing

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Guest post by Bruce Erley, APR, CFEE

Most likely, part of your job as an event manager for your station is to sell sponsorship. Most people don’t mind calling people and telling them about their events, but many have absolutely no idea if the fee they are asking for is worth it!

Determining the correct value for a sponsorship proposal is essential. Not only will the sponsorship decision-maker see through a wild guess, but you will be more confident knowing that you have a fairly-priced sponsorship opportunity that you can defend.

The first thing to know is that the price you set for a sponsorship package is not based upon how much you need to raise, nor what something costs you. Many event managers make the mistake of determining a sponsor fee by adding up the cost of an event asset - say, a children’s stage - and setting the sponsor fee to recoup those costs.

Instead, the fee of a sponsorship should be based upon:

  • The opportunity you are providing the sponsor

  • The package of accompanying rights and benefits

The good news is that by determining a value of sponsorship in this manner, the appropriate fee is almost always far greater than the cost of the asset or activation.

There are three factors that go into setting a sponsorship fee.

1. The Tangible Value

This is the quantifiable value of any and all measurable benefits that you are providing to the sponsor. Typical quantifiable benefits include hospitality, (sponsor receives 20 tickets with a face value of $10 each is worth $200); sponsor recognition in advertising (generally 10% of the retail value of the ad rate); exhibit space (what is the fee you charge for a commercial exhibitor?); signage, program ads, etc.

2. The Intangible Value

This reflects the qualitative value of being associated with the event. Sometimes known as the “halo effect,” this valuation factor looks at the benefit the sponsor receives by being linked to your event and is based upon such factors as the prestige of the property, your reputation, public recognition and perception of the event’s brand, the historic media coverage or “buzz” your event will likely garner, the display of community involvement their sponsorship will create, and a number of other factors.

3. The Market Value

This takes into account what companies are willing to pay you in your specific community to be a sponsor of an event. This will vary widely from market to market and unfortunately is impacted by how sophisticated other events are in your community in their production and in their pricing.

To determine the fee for a sponsorship, I add together the dollar value of all the tangible benefits a company will receive at a given level of sponsorship, magnify that by the intangible value of association with my event and then factor in any local market pressures either up or down in setting the fee.

I know that this is a rather simplistic description of setting a sponsor fee, but now you at least have a general idea of what to consider and what not to consider in setting your fee. Happy hunting!

Bruce Erley is the president and CEO of Creative Strategies Group, a full-service sponsorship and event marketing agency based in Denver, Co, which he founded in 1995. Erley has served as the world chairman of the International Festivals Events Association and is accredited in public relations by the Public Relations Society of America. His trainings have been given around the world.

In this guest series, Bruce focuses on event sponsorship strategy for public media. Other articles in this series:

Five Secrets to Marketing Events to Millennials

Five Ways to Wow Your Event Sponsors With First-Rate Execution

Download Underwriting ROI research slides >>>

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