Wedding vendors are required to make money in order to continue to practice their passion. To have a thriving business, vendors need to have a budget and know what they need to spend each month and with each client that they work with.
While making a budget, it’s important to consider the 2 types of costs that vendors have: fixed and variable costs. Here are some things that should be known about each type.
Fixed Costs remain constant regardless of how many weddings one does or clients that they have. In fact, in some cases, vendors may have to continue to pay these costs whether they’re working with clients or not. These costs don’t fluctuate, so the prices are set in the budget.
Examples of fixed costs include rent, equipment rental, website costs, subscription fees and organization dues, insurance, and advertising.
These costs are things that should be factored into the necessary expenditures every month. For example, vendors that have a rental space that they use for their business know how much the rent is every month so they can plan accordingly to cover the cost.
Variable costs are difficult to budget for every month, because they vary. They typically increase at a constant rate over time, and they change depending on the activity and work volume. After a while of working, vendors should have a good idea of how much they should plan to spend for variable costs, but it can be difficult to determine what to plan for when first starting out in the business.
Some of the variable costs that wedding vendors have include wages, utilities, and materials used. For example, a wedding photographer who creates wedding albums for clients won’t know how many albums she needs to purchase each month until the number of clients that she’s working with is known. Therefore, wedding albums is a variable cost.
For variable costs that depend on the number of clients that one is working with, such as wedding albums, these prices can be factored into the price for the client in order to help vendors cover the cost in their budget.
Other variable costs include: Styled shoots, new branding costs, short-term advertisement fees (Bridal expo sponsorships), vendor workshops, conference tickets, etc.
In order to stay out of the red, it’s important to set a budget. Determine which costs are fixed and which ones are variable, so you can create a budget that works for you and will help you turn a profit.
Find out how Menagerie can help you instantly reduce your Fixed and Variable Costs at www.menagerie.me/vendors
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