Pay Less and Get More: A Perspective on the Sponsorship Value Equation

simple mathSponsorship relationships are a valuable asset, so it’s important to manage them skillfully. A smart organization will take a thoughtful look at the value equation from an annual perspective – with emphasis on the events that generate both new customers and opportunities to connect with existing clients. Many non-profits have early bird deadlines that frame the year and its activities. Smart organizations leverage these calendar events to economically market and promote their products and services.

An early bird deadline is often half a year in advance of the event, and sponsorship pricing is discounted accordingly. Organizations that sign up in time for the discounts experience the full slate of benefits, including presence in print material, inclusion on the non-profits web site, better exhibiting locations, web badges, and mailing lists. These benefits have great value for an organization – which can be achieved at a limited cost when organizations sign up early. 

How much does early bird sponsorship cost? How much does it save?

If we do the cost of capital equation we get a look at the cost or savings of signing up early for sponsorship. Let’s use the following example:

Company A takes advantage of the early bird deadline six months in advance of the conference. The early bird sponsorship is $2,500 with the discount, a savings of $300 compared to the normal price of $2,800. However – the company pays six months in advance of the event. So, we need to compare the savings versus what it costs to spend $2,500 six months early. The simple interest equation is:

Present Value at time 0 (amount)  * interest rate * number of annual payments = Interest

Assuming a 8% interest rate (cost of capital, or, the return that that money would otherwise be earning), our example yields the following the interest:

$2500 * .08 * .5 (6/12ths) = $100

In other words, your $2500 could earn $100 over the course of six months – or – it costs $100 to borrow $2,500 for 6 months. Most people would pay $100 to save $300. Wouldn’t you? In this example, signing up early for sponsorship is a net savings of $200.

But if you look at the table below, you can see the impact that the interest rate would have on savings. At a certain point (24%), it no longer makes financial sense to sign up early, because the cost of capital is equivalent to the savings. However, even at that rate, getting all the values of sponsorship is still a good idea!

Amount Rate N Interest
$2500 8% 0.5 $100.00
$2500 9% 0.5 $112.50
$2500 10% 0.5 $125.00
$2500 11% 0.5 $137.50
$2500 12% 0.5 $150.00
$2500 13% 0.5 $162.50
$2500 14% 0.5 $175.00
$2500 15% 0.5 $187.50
$2500 20% 0.5 $250.00
$2500 25% 0.5 $312.50

What early bird sponsorship benefit is most valuable to you and your organization?

  • Early bird discount
  • Inclusion in Web/Print
  • Access to mailing lists
  • Exhibiting locations
  • Web badges
  • Other?

Leave a comment below and/or cast your vote on our poll in the LinkedIn TABS group!

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