Many people are broke. Especially the people who are most likely going to attend an EDM sub-culture event. I estimate the average age of those that consistently go out at least once or twice a week to be between the ages of 18 and 26, and they usually are not in the greatest financial situations. When you add up the amount of money it costs for drugs, alcohol, fashion items, transportation and other expenses, you are left with a certain amount of money that the average young adult is willing to spend on the door cover. You can easily spend $40 at the bar for 4 drinks, $20 on weed, $30 on gas/bridge toll/parking, and god knows what else you may need like cigarettes or a burrito at 3am. Not everyone requires these "extra" items to have a good time, but many do. That means if you are trying to stay under $100, but MUST HAVE your "extras", you probably won't want to spend $30 for a show when you only work part-time in retail, have tuition fees, and pay rent in San Francisco. Seems like you may be in the $10-$15 range, so let's throw our own $10-$15 party and break it down...
Let's say you are hosting an event at a club that holds 1,000 people and has 2 rooms. The venue needs to pay for electricity, water, garbage, rent, security, bartenders, audio engineers, coat check, door staff and many other things. This means that in order for the club to stay in operation, they need money. The party promoting game is literally just that, A GAME. It's essentially just a big poker game. Sometimes you bet big and win a lot of money, and sometimes you fall flat on your ass and your wife beats the shit out of you when you get home. Nightclubs will not take that gamble themselves, and the promoter is solely responsible for making sure the club gets their money.
This means the club will either charge you a rental fee for hosting a show there, take a percentage of your earnings directly from the door money, or they will ask you for a bar guarantee. A bar guarantee is insanely dangerous and I try to avoid it at all costs because if your event fails (financially at least), you are fucked. Sometimes I lose thousands of dollars and you may see me miserable, at a show that seems busy. It's hard to have fun when bills are due, and the gamble didn't pay off. Some people who throw consistent shows have quit their day jobs to focus on doing what they love because it can be insanely time consuming to do it right. These promoters can be destroyed by a failed event. Anyhow, I am drifting off topic a bit. I will get into what exactly a bar guarantee is and how it can bankrupt you, in a future post, but for now I will just say that you want to avoid throwing a show at any venue that asks for a bar guarantee if you can. Especially if you are new to throwing events. You will fuck yourself right into serious financial debt, at best.
So let's say our club's rental fee is $1,000, now we need to think about promotional costs. Depending on how you budget your money, you will be paying for a flier designer, printing costs of fliers and posters, a street team, poster nazi (I will explain who he is in a very angry post in the near future), banner ads on websites and social networks, ads in local publications, and literally dozens of other media outlets, depending on how big your event should be. Let's say for this particular party we are going to be fairly basic. We spend $200 on a flier designer, $200 for printing, $100 for a street team, $100 to the poster nazi, and $300 to promote on sfstation.com. Now you are up to $1,900 in your budget.
Time to book your DJs and entertainment for the night. For this event, we only have DJs since we are on a tight budget. We will not factor in any live acrobatic performances like fire dancers or aerialists. We won't book a photographer or visual/projection artist. We also will assume that the club has all the gear you need, which is not always the case, and you sometimes will need to rent hundreds of dollars worth of sound and lighting gear.
The club has 2 rooms and the party is 5 hours, so that is about 10 DJs total (5 in each room at an hour each). You are probably going to have at least 4 Djs that will play for free and open up the event. These DJs are either new DJs who just want the practice and exposure, or they could be your friends who really want your vision to come to life and want to help support you. They may owe you a favor (or money), or they may be visiting from out of town and just really want to play. They may just really want to be on the same lineup as the headliner who is one of their idols, or maybe they just love the club's sound system and have a ton of new songs. Whatever their reason, give them credit where it is due and never sell them short. They actually play a vital role in shaping your event from the beginning. Think about that whole "first impressions" thing. If they don't do a good job, they could either set a bad tone that can last all night, or people will just leave and try to go somewhere else. I will talk about the dynamic of good opening DJs some other time, but it is very important to choose them wisely.
The next tier of DJs are probably local cats that are slowly building their name, or have established a bit of a draw, but are not quite huge just yet. They may host another local event or be someone who is trying to rebuild their name after taking a couple years off. There is much debate on what defines this level, and how you decide what you would like to pay. Sometimes they have set rates, and sometimes they will work with your budget. It is very hard to determine what someone's talent and art is valued at, and can be a really sensitive subject since technically you shouldn't put a price on art, but hell, this is indeed a business here. Many people get their feelings hurt, so choose your words, and your DJs wisely. Let's say for this event we pay 2 of them $200 each, and now your budget is up to $2,300 with 4 DJs left to book.
The next 2 DJs are bigger names that are either local, on tour, have a big promo list and are helping you throw the event, or willing to travel to play the event for an "all in" fee. Let's give these dudes $500 each, bringing the total up to $3,300 with our headliner and sub-headliner still to come.
YOU'RE IN LUCK!!! The sub-headliner is on tour and is only charging $1,000 for a booking fee, plus $250 for the flight from their Denver show last night, $150 for a hotel, $30 for dinner, and $30 for the cab ride from hotel to venue, and back later. What a steal!!! He is huge in London and you got a great deal. Your total is now $4,760. Now on to the main attraction.
You waited all night, and here he is ladies and gentleman... Please welcome your $3,000 DJ! (plus $550 for their flight from New York, $150 for a hotel, $55 for the bottle of liquor that is in their contract, $30 for dinner, and $30 for the cab ride from hotel to venue, and back later). Your grand total for this monthly event comes out to $8,575. Nope, sorry. Still some money needed...
The promoter who busted his ass all month, and needs money to eat, pay rent, and basically survive on the bare basics, needs at least $1,000 (since this is his only job and he is taxed 20%, leaving him with about $800). Plus you have to pay the door person $125. Bringing the final count to $9,700, as long as the club does not have a bar guarantee. Now, who is going to attend your party? More importantly, who is going to pay money to go to your party?
Most clubs do not hit capacity. I'd say you have a really successful event if you hit 75% capacity, which in this case would be 750 people, which may or may not happen since nothing is guaranteed here. Remember you are gambling. Your glass may be half full, but your wallet may be fully empty by the end of the night. On the flip side, you may actually hit capacity and cash out, but that is a rare jackpot.
Out of those 750 guests, 40 of them were on your personal guest list because they helped you out in some way, or you need to hook them up because they are big players in the scene and you are networking. Maybe they are part of your crew or won a contest. Maybe they put you on the guest list to all of their own parties. They could just be people that you want to thank for always coming to your event or gave you head in a mini van once. Then, each DJ has 4 people on their personal list. The club owners and staff have a 20 person list. That's 40 + 40 + 20 = 100. Leaving you with about 650 paying attendees.
Let's assume the party is not free before a certain time, and there are no discounted pre-sale tickets (so you won't need to pay service fees for online ticketing systems such as paypal or eventbrite). Your early bird tickets are $10 and the general admission is $15, so here is how your night turned out.
150 people paid $10 = $1,500
500 people paid $15 = $7,500
Looks like you made $9,000. That means you were $700 under your projected budget. So that $1000 you spent an entire month working on earning, is only $300. That's less than you'd be getting on unemployment. Look on the bright side though, you didn't lose money right? If you realize promoting is a gamble, and have money saved in the bank, maybe you can shake it off. But maybe you are a bit gloomy even though you are surrounded by 750 raging people having a blast, since you are worried about the rent due on Monday.
Obviously if you estimate your attendance will only reach about 400-500 you will either need to cut costs on your lineup, raise your admission price, or both. These numbers have many variables and every party has different budgets and factors, but this is just a basic breakdown of one example. Some expensive DJs will give you deals if your event is cheap, or mid-week. Some venues won't charge you, if you have worked with them before. Sometimes you can save money on hotels if a DJ doesn't mind staying with a friend. There are always ways to cut corners, but be very careful not to cut the wrong ones. If your party is a big success and you actually exceed your expected budget, you should save that money like it's the last dollar you will ever earn. That way you can either use it towards your next event, or have it as backup if your next event fails.
For me personally, it is less about the lost dollar, and more about the heartbreak of failure after spending so much time and emotion into a project that you were so passionate about, (although losing money is not easy either). When you are constantly aiming higher and higher, and trying to up your standards, even 750 people can be hard on someone. It's like going to the olympics, but not earning a medal. You are still proud and enjoy your experience and contribution, but deep down inside you know you need to keep pushing, or hang up your towel.
It sucks that money is such a factor in the way these things go, but some people really want to chase their dreams and it is a very risky investment. So I urge you to have compassion when someone throws a show you think is a bit pricey, and don't slander them because you think they are ripping you off. Try not to assume that all promoters are assholes if one of them is snippy at the end of a hard night. It is not easy to fail, then have to humor a drunk person that is spitting in your eye when they talk.