Charlie Olentine, CEO of Consult NC Inc, has over 25 years experience in B2B publishing and from 2004 to 2016 managed the Top 50 show - International Production & Processing Expo. firstname.lastname@example.org
Focus on Exhibitors’ Costs
“Price is what you pay. Value is what you get.” - Warren Buffett
What is the price of exhibit space for your show? Pricing is both an art and a science, and in the process one has to take into consideration a variety of factors. First and foremost in developing a pricing strategy is to scope out the competition. Then one has to take into consideration all the factors that go into both the budget for the show and also the budgets of the respective exhibitors.
In the past, I have always been weary of dramatic price increases and have chosen a strategy of incremental increases. With this philosophy I now realize that I probably was a bit too conservative in maximizing revenue for space sales. In my discussions with exhibitors on pricing they all want the lowest space price possible, but then they will admit that space rental is just a small portion of their total expenditures for a show.
The Center for Exhibition Industry Research has put out a report entitled “How the Exhibit Dollar is Spent” outlining the costs incurred by exhibitors in 2012. While the data is a few years old, the breakout on a percentage basis probably has not changed much. The figures were as follows:
· Exhibit space: 36%
· Exhibit design including graphics: 11%
· Show services: 17%
· Shipping: 10%
· Exhibit staff training: 1% (editorial observation: This is entirely too low)
· Travel & entertainment: 14%
· Promotion: 6%
· Lead management & measurement: 4%
· Other: 1%
The one area in the above breakout which I feel is most variable is “show services” which includes material handling, installation and dismantling, electrical, furnishing, internet, A/V, floral, F&B, cleaning, etc. A lot depends on the nature of the show. If the show features a lot of heavy equipment, these figures go up dramatically.
From show to show and venue to venue, the various components of exhibit costs are highly variable. For example, a large exhibitor of equipment in the International Production & Processing Expo based in Atlanta related to me that his costs of exhibiting at the IPPE were 1/3 that of another comparable show based in one of the other major trade show cities.
Recognizing the need to keep exhibitors’ costs as low as possible and to provide as much value for the buck, my philosophy for General Service Contractor RFP’s is to give top priority to minimizing the cost of freight and material handling and general show services in conjunction with excellent customer service to the exhibitor. Of course, the show’s direct costs for structures, signage, etc. are given heavy weight, but the value of the show to the exhibitor is paramount, meaning keeping costs as low as possible and providing an audience that yields sales.
Costs to the exhibitor can be contained in a number of ways. Besides negotiating favorable rates for material handling, furniture and shipping, organizers can offer package deals combining space rental with booth furnishings, services and utilities. Also, organizers need to work with exhibitors that traditionally have displayed heavy equipment. While tire-kicking opportunities and displays are essential, we need to remember that with capital items, relationships play a key role in the sales. Perhaps a more networking approach for the large exhibitors is more cost efficient. Providing a relaxing environment for networking incorporating F&B and pleasant seating may lower freight and material handling costs and allow the show environment to be more relationship-centric than looking like a car lot.
There are tools you can provide your potential exhibitors to assist them in evaluating the value of exhibiting. For example, the ROI Toolkit funded by a grant from the PCMA Education Foundation to the Center for Exhibition Industry Research, was developed by Exhibit Surveys, Inc. in conjunction with the ROI Task Force of the International Association of Exhibitions and Events. It is free and can be accessed at http://roitoolkit.exhibitsurveys.net/Home/Welcome.aspx.
So who is the customer for a trade show organizer? There are actually two universes of customers. First is the exhibitor. Provide as low a cost to exhibit as possible while charging a fair rate for space rental. Secondly, provide an experiential environment for customers and prospects of the exhibitors. If you do that, the attendees – the second customer universe - will come.