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Customers often ask why we do not do the trade show circuit around the country.
The trade show is a staple marketing tool that is particularly ubiquitous in the jewelry industry.
I imagine most of our customers have participated in some form of trade show, fair or festival for
their businesses. Many of our customers make their living exclusively by traveling the circuit to
sell goods.
While some shows are profitable and worthwhile, others are not. Through experience, we have found
that many companies continue to show at unprofitable events out of habit and perhaps the allure of
the huge potential customer who could show up at any minute. The trick is analyzing each event
independently to determine when you break even in order to decide whether or not to participate. We
have composed the following analysis form to assist in this effort:
|
Fixed Costs
| Show fee |
= |
$ |
|
| # of Hotel Rooms ( ) x $ ( ) per night x ( ) number of nights |
= |
$ |
|
| Food |
= |
$ |
|
| Transportation – Gas, tickets, truck rental etc. |
= |
$ |
|
# of Wage Hours ( ) x $ ( ) per hour x ( ) number of workers
Do not forget to include your own time as a cost!
Include travel time, set-up, clean-up and show hours
|
= |
$ |
|
Misc: Entertainment, daycare, displays,
time off from another job, dog kennel etc. |
= |
$ |
|
| Fixed Costs Total |
= |
$ |
Variable Costs
If you are not sure what percentages are appropriate here, calculate the percentages of
several items in your collection and take the average.
Materials as a percent of the price of goods
$100 necklace containing $25 of components is 25 /100 = 25% |
--> |
% |
|
Labor as a percent of the price of goods
$100 necklace took 1 hour to make at $15 per hour labor
15 / 100 = 15% |
--> |
% |
|
| Variable Costs Total |
--> |
% |
Calculating Break Even Sales
- Calculate your gross margin percentage by subtracting your variable costs total
percentage from one hundred percent.
100% - =
%
- Convert your gross margin percentage to a decimal number by moving the decimal
two places to the left. Examples: 65% becomes .65, 38% becomes .38 etc
Decimal Number
- Divide your fixed costs total by your decimal number to determine your break-even
sales revenue.
Fixed Costs Total /
Decimal number =
$
This break even sales amount is the total revenue you must earn at the show to exactly
cover your costs. If you want to make money on the show, add the amount of profit you
expect to make to this break even sales figure to get your target sales amount.
Analyzing Trade-offs
There are many costs and benefits that are not so easy to quantify. Generally, people tend
to underestimate hidden costs and overestimate hidden benefits. Hidden costs include the
opportunities you are missing by attending the event. Are you selling less at your store or
home business while you are away? Are you missing valuable time from another job? Are you
missing out on family time? Other costs include the stress of showing, which can be considerable
both physically and mentally.
Hidden benefits include repeat accounts gained at these events that you otherwise would not
have gotten. Be careful here, one-time buyers are not the same as repeat accounts. The benefits
of one-time buyers are already included in your break even sales figure. Only repeat accounts
that buy from you outside the show are an added value. Use experience as a guide here, the number
of repeat accounts you have gained in each past show is your best indicator of what you will gain
in future shows. Other benefits include the fun of travel, meeting new people and seeing colleagues
on the road.
Once you have considered the hard figures and soft issues surrounding your trade show agenda you
are in better position to decide which events to attend.
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