How to Estimate the Cost of Sponsorships?

This post was originally published by the good people over at Eventbrite. You can check out the original article here.

How much should you charge an event sponsor for a logo placement? What about a mention on social media or a speaking opportunity? Are you charging too much? Or too little?

Deciding how much to charge for sponsorship — commonly referred to as sponsorship valuation — can be an elusive step in the process of selling event sponsorship. The good news is that estimating the cost of sponsorships is less complicated than you might think.

Sponsors will spend money on anything that improves their business. If you can prove a return on their investment, the only thing that will keep them from sponsoring your event is their budget.

To maximize revenues, you’ll need to find the sweet spot between the cost of each opportunity and the sponsor’s perceived value of it.

Follow these steps to determine the value of your sponsorship assets and get the most bang for your sponsorship buck.

Determine the Market Rate

The majority of event organizers have no idea what the market rate is for their sponsorship. So, they tend to guess their value and adjust the cost of sponsorships to this estimate.

If you’re using this method, you may win a handful of sponsors, but in reality could be leaving money on the table — or worse, scaring potential sponsors away before you can negotiate.

Instead of blindly assigning value to your sponsorship opportunities, conduct research to find the market rate for your assets. Start by looking at what your competitors charge sponsors. How much do they charge for a trade show booth or logo placement? This information is usually included in your competitor’s sponsorship prospectus or public promotional materials.

Gather as many reference points as possible, analyze the trends and predictions for the current year, and take detailed notes about their value proposition — it’ll come in handy later. Locating the price of your competitors’ sponsorship assets can be time-consuming, but an accurate assessment of your sponsorship’s market value will ultimately help you unlock more revenue from sponsors.

Keep in mind that you’re also competing with other methods of advertising. Potential sponsors are investing money in advertising and marketing on a daily basis. They know exactly how much an email blast or logo placement is worth — you should, too.

Find the Perceived Value

Once you have enough data to determine the market rate for your sponsorship assets, put yourself in your sponsor’s shoes. What will they get out of this opportunity? Sponsorship is a business investment, and sponsors need to see a tangible outcome before they’ll meet with you, much less commit.

If your sponsor’s perceived value is higher than your activation price, then they’ll decide to sponsor. And if your activation cost is lower than that price, you’ll make money.

Not only is this method the best long-run economic model for your event, but value-based pricing also helps you approach event sponsorship more like a partnership. Instead of being concerned about your profit margin, you’ll be focused on delivering on the perceived value.

Think about your event attendees and the problems they’re experiencing in their professional lives. Now, look back at your market research and analyze how competitors position their sponsorships. Are there ways to promise more value?

For instance, if your attendee survey revealed that an overwhelming majority of them are the final decision makers on budgeting decisions in their organization, your assets may be more valuable to sponsors.

At this point, you’ll set the initial price of your sponsorship assets.
If you’re worried about getting it wrong, don’t be! Setting the initial price for your assets can be tricky.

No one guesses the “perfect” price on their first go. Even with all of the best research in the world, you will be much better served if you treat pricing as a “test-and-then-iterate” exercise — an exercise of constant learning and adaptation.

Don’t Send Your Proposal (Yet)

That’s right, you’re not sending a proposal to sponsors and hoping they reply with an emphatic “yes!” Instead, your next step is to contact your prospects and ask for a meeting.

Everything you’ve done so far has prepared you for this.

Thanks to all of your research, you have an idea of how much your sponsorship is worth — now it’s time to test your assumptions. As you sit down with the sponsor and listen to their objectives and goals, the last and final step in the valuation process is to ask them how much the opportunity is worth to them.

Remember: sponsorship is a partnership between your event and your sponsors. It’s a two-way street that requires a sincere interest in your sponsor’s objectives and how you can help them achieve goals.

Get Our Professional Help With Calculating The Cost Of Sponsorships

Here are the most significant ways our expert team can help you in calculating the cost of sponsorships accurately:

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Want to learn how to find the right point of contact and create custom sponsorship packages that mutually benefit you, the sponsor, and — most importantly — your attendees?

You can learn that and much more from our comprehensive sponsorship guide. We included lots of useful information and templates, including a simple valuation calculator template.

It will help you to estimate the right cost of sponsorships that will not scare off the sponsors but at the same time, offer you excellent revenue.Apart from the calculator template, you will find there also, for example:

• Sponsorship proposal templates
• A prospecting tracker
• Objection handling scripts
• A sample fulfillment report
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Book a Call With a Sponsorship Expert

Apart from our guide, we also offer professional consultation services concerning the cost of sponsorships and sponsorship applications in general.

During just 45 minutes of conversation, we are able to provide you with lots of amazingly useful information based on our first-hand experience that will facilitate the preparation process and increase your chances of succeeding.