How to Write a Race Budget

Whether you're about to put together your first 5K race budget or planning ahead to your next marathon race, knowing how to write a good race budget can be critical if you want to avoid costly mistakes and big headaches down the line.

In this detailed article we'll help you understand how to best approach your race budgeting and how to maintain good budgeting discipline throughout the event planning process. 

We'll also show you how to easily put together a professional race budget in just a few minutes with Budget Builder, our powerful free budgeting tool designed specifically for endurance events and race directors. 

Ok - let's get started!

Setting yourself up for success

Before we go into the weeds of actually building your budget, there are some important rules to go over that will set you up for success when writing your budget:

There are some important rules to keep in mind as you prepare to write your race budget:

1. Be honest with yourself. Writing a budget involves making assumptions - and you're going to be making a lot of those. Given that you want to make your race work, you may be tempted to put a "rosy" spin on some of those. That' understandable, but it's also a sure way to derail your budget. Be honest with yourself and realistic with your assumptions. Treat your budget like it's your money on the line (oh, wait, it is!)
2. Aim for transparency. Leaving out items from your budget, however small, is a slippery slope that can end in disaster. You may think some items, like zip ties or safety pins. have too small a value to make a difference and can be safely left out of your budget. You'll be surprised how quickly these items add up in eating up your profit, and how easy it is to even forget to purchase them if they're not clearly listed on your budget. If you have to pay for it, it has to go on the budget.
3. Understand how you will make money. It sounds obvious, but without a clear pricing strategy you may quickly lose sight of how it is you're going to turn a profit from your event. Will your entry fee revenue be sufficient to cover your event costs and leave you with a profit, even if you being nothing in through sponsorships (good idea)? Or are you going to be breaking even, or maybe even losing money, on entry fees in the hope that you can subsidize that through sponsorship or some other means (less good of an idea)? Figure this out before you put pen to paper. 
4. Keep your budget updated regularly. Like your risk assessment, your budget is a living document. To be at its most effective, it needs to be kept up-to-date with actualized costs, registration numbers etc. Keep revisiting your budget to see how well you're doing compared to your initial projections, and try out different scenarios to keep on top of your registration targets and costings.

With all that in mind, let's take a look at the important challenge you are going to face when witing your budget...

Using reasonable assumptions

When you sit down to write your budget - particularly if it's your first race or the first edition of a new race - you'll have to make assumptions about several crucial aspects of the budget - most importantly:

1. How many participants will I end up having in the race?
2. How much are things going to cost me?
3. How much money will I be able to pull in through sponsorships?

Each of these assumptions has the potential to make or break your budget. So, let's look at them in little bit more detail, and understand how you can best navigate them in safety.

Participant numbers 

The number of participants you'll have in your race is the most important assumption in you budget, and the one you probably know the least about.

If this is not your race's first year, you'll have some data from previous years to go on. Use that as a starting point, adjusting up or down depending on annual trends (Is your race growing year on year? By how much?), what's happening in other races in your area (Looking at starter and finisher numbers, are other similar races in your area seeing growth?), and your own spending plans (Are you going to be spending more or less on marketing this year? How do you expect this to affect your participant numbers?)

If it is your race's first year, start by benchmarking your race against other similar races in your area. "Similar" is the key word here. If you're planning a 5K, look at other 5Ks in your county. If there's a large pool of 5Ks to choose from, focus on the ones that look and feel most similar to your race, in terms of the number of years the race has been running for, the types of swag the race is giving out etc.

If you can't find good examples of first-year races to compare you race to, look at how races in their second or third year did in their inaugural year. Ideally you don't want to be looking too far back in time for this (e.g. how 10-year races started out 10 years ago), as the further back you look the less representative numbers will become of what's currently happening in your running market.

As a final step, if it is your inaugural race, adjust your numbers down by a minimum 20% safety margin. Even if you've nailed your benchmarks, it doesn't hurt to be a bit conservative in your first year.

Expenses

Making assumptions about what you expect to pay for your race supplies, insurance and other costs is easier than trying to guesstimate your participant numbers, but it's still an exercise that requires some caution. 

For things like participant swag and other consumable supplies, it's relatively easy to get close to a good ballpark figure by doing a bit of onine research. Many vendors will feature pricing guides on their websites on what items can cost depending on the specs you're after, and we also have several of those answers for you in our shirts, bibs, medals, inflatables and event insurance buyer's guides. 

Where it can get a bit tricky is when it comes to estimating costs for things like policing and permitting. Particularly if you're planning a race involving road closures, you could potentially be in for a significant policing bill, depending on where you're based and the nature of your course (hint: point-to-point courses are more expensive than out-and-back or looped courses because they use more road that has to be policed). Race permits can also be a significant cost, which in many parts of the world can take the form of a percent cut of your top line revenue. So be extra super careful when estimating those numbers. 

Your best bet for avoiding big mistakes around expenses is to get some help from a more seasoned local race director or recruit the help of an experienced local race timer, who can walk you through all the big items you could potentially have missed, as well as provide more accurate estimates for your most important race expenses.

Sponsorships

Finally, you need to make some assumptions about how much money you'll be able to pull in through sponsorships. And this is where a lot of first-year races go wrong. 

The hard reality about event sponsorships is that they're hard to get, even for seasoned race directors with well-established races. Cash sponsorships, where the sponsor gets to contribute hard cash, are even harder to get. 

So when it comes to your race budget - particularly because big sponsorship numbers can influence your overall budget economics by a lot - it's prudent to be conservative with your projections. Do not assume you'll be able to achieve the results of other races in your area (even races that appear comparable to yours), and definitely do not base your assumptions on what larger, more established events are achieving in sponsorship dollars.

If it's your first race and you want to be conservative, include in your budget in-kind sponsorships that you're confident you'll be able to get, only if they offset actual cost items on your budget (e.g. a sponsorship where a nutrition company has agreed to provide energy drinks or bars you would otherwise have to purchase), and then leave out entirely any additional cash sponsorships. If you manage to secure some of these, it will be a great bonus, but it's best not to rely on any of that coming through in your first year.

Of course, if you're budgeting for an established event or have existing relationships with sponsors you can bring to a new race, you can be more aggressive with your sponsorship assumptions. If not, be really really careful about your assumptions.

Building your budget

Now that you know what to look out for in your budget and how best to navigate the most common pitfalls of the budgeting process, let's build your budget.

We'll do so with the help of Budget Builder, our free budgeting tool for race directors, that simplifies a lot of the hassle of building a budget on a spreadsheet. Just follow the steps, tweaking your budget as you go along.

Step 1: Get your base budget up and running 

Even though races can differ from each other in their economics, many items are common across most events, regardless of the specifics of your race. For example, all races need event insurance, and mostly all races offer participants some combination of a medal, finisher shirt and/or race bib. 

To speed up your budgeting, therefore, Budget Builder starts you off with a base budget that has all these common items on it, so you don't have to manually do it yourself. The minute you launch Budget Builder, you get an oven-baked base budget that will match 80% of your needs. 

To get your base race budget going:

1. Go to the Budget Builder dashboard page (you'll be asked to sign up for free, if you don't already have a Race Directors HQ account)
2. Click to add your race to the dashboard.
3. Import your race using your race registration page (if you have one) or quickly add your race details manually.
4. Click to save your race.

The minute your race is saved, Budget Builder gives you a base budget that best matches your race profile, that looks a bit like this:

Step 2: Set up your registration periods

Next, set up the different pricing periods for your registration, if your event has more that one such periods.

For example, if you have an early-bird price that runs for the first few months of registration, and then increases gradually as you draw nearer to race day, add all those prices on your budget by clicking on any of your events on the event summary table at the top of the page.

When the new window pops up, set your pricing period start and end dates, entry fees and projected participants (i.e. how many people you expect will register in that period). By the end, you will have something looking a bit like this:

In the above example, we've set up three pricing periods for our race: an early-bird registration period running from until May 25 with an entry fee of $35, a mid-registration pricing period running from May 26  to June 15 with an entry fee of $45, and a final registration period running all the way to race day on August 10 with an entry fee of $55.

If you have several event distances in your race (Half marathon, 10K, 5K etc), set the pricing periods for each one by clicking on each of these events at the top of the page.

Step 3: Customize your budget to your needs

As you can see, many of the items you'd likely want to have on your budget (e.g. event insurance, bibs, finisher shirts, race timing, porta potties etc) are already part of your base budget. Many of them will also have a placeholder price associated with them.

Go over these items one by one and, where necessary, click on the item to adjust the placeholder price to match your preferred estimate for that item. If some of these items are not relevant for your race, simply click on each of these items to delete them.

For items that need to be on the budget and are not part of the base budget, click on the "+" button next to the cost and revenue table headers to add a new item.

Getting a handle on key event metrics

By this stage, you should have your race budget set up, giving you a rough idea of what the economics of your event will look like. So what can you learn from the budget you just built? 

There's several important metrics on your budget that provide insights into your event's profitability and can help you make better financial decisions about your race. These are broken down by event distance on the budget's event summary table at the top of the page:

Let's look at each of these in more detail, and what they can tell you about your race economics.

Participation breakeven (PB)

The participation breakeven number (PB) tells you how many participants you need in each of your event's to break even. 

This is a key metric to keep in mind as you head towards race day. When your registrations cross the participation breakeven point, your event will start turning a profit. 

In the above example, our 5K has a PB of 189 participants. With 178 participants currently signed up for our 5K, our event is not yet breaking even. Our 10K, on the other hand, with a PB of just 74 participants and 221 registered participants is already making a profit.

Projected participants on race day (PPRD)

Projected participants on race day (PPRD) is our estimate of how many participants you can expect for your events on race day, given the number of currently registered participants. 

They way PPRD is calculated is based on your event type and distance, and industry registration data from RunSignup's latest RaceTrends report. 

Although PPRD is just an estimate, it can give you an idea for how well you're doing in hitting your projected participants target on race day. If PPRD is higher than your own projected participants number, it means your registrations are ahead of where they should be at the current stage in the registration cycle, and vice versa.

In our example, our 10K has a PPRD of 693 participants, based on the 221 people who have already registered - way above the 450 participants we have projected on our budget!

Profit per incremental participant (PIP)

Profit per incremental participant represents the net profit you make on each additional participant registration. 

PIP is the profit margin you make on each additional sign-up, so you can use this number as a guide to determining your customer acquisition cost (i.e. how much money you'll willing to spend to acquire an additional participant) and your return on advertising spend (ROAS).

Our events' PIP in the example we are using above are $12 for the 5K and $31 for the 10K. So, in principle, if we run ads on Facebook to attract new participants to our race, we could spend up to $12 for 5K participants and up to $31 for 10K participants and still make a profit.

Profit and loss (P&L)

This is the profit or loss made on a specific event. You can use P&L to understand which events in your race might be making you money and which events in your race might be losing you money. 

In our example race, based on our projected numbers of 450 participants for our 5K and 300 participants for our 10K we are expected to make $3,108 on our 5K and $6,963 on our 10K, respectively, for a total profit of $10,070 across both our events.

Tracking your progress 

Budget Builder provides two separate calculations of your budget: one labelled Registered and one labelled Projected:

The Projected calculation runs on the number of projected participants you set out on the event summary table at the top of the page. This is your initial projection for the number of participants you'll have in your race. 

The Registered calculation gives you a view of your budget based on the number of currently registered participants. This calculation should start out looking worse that your projected numbers and slowly creep up to (or hopefully even exceed) your projected totals.

Tracking your budget variance

Variance is an important concept in budgeting that quantifies how close actual costs and revenues ended up being compared to your budget projections.

Variance is defined as the difference between the amount you expected to earn or pay on an item and the amount you actually ended up earning or paying on that item:

Variance = Quantity * (Actual Item Price - Projected Item Price)

For example, let's assume that you had initially budgeted $7 per participant for medals. You then start getting quotes from vendors and you end paying $8 for your medals. Assuming you had 500 participants, your variance for that budget item comes to 500 * ($8 -$7) = $500. You overspent on medals by $500. 

Tracking your variance as actual prices for items come in is an important aspect of budgeting that can help you understand where you are over- or under-spending (or over- and under-earning) against your initial estimates, and can help improve your future budget estimates.

Budget Builder can help you track your budget variance by recording both the budgeted and actual prices you pay for or earn on items. You can set the actual price for items by clicking on any item on your budget:

After you've set the actual price paid for medals, the variance for medals is updated in the Variance tab like so:

And as more and more actual prices are added to your budget, your total budget variance is calculated as you go along:

Conclusion

Building a robust budget for your race is one of the most important steps in planning your event. It can help you:

• Understand how your event will make money
• Keep track of your event purchases
• Tune your marketing spend to your profit margins
• Better estimate your race-day participant numbers

By being diligent with your key budget assumptions and by keeping your budget updated regularly, you can reduce the chances of a costly surprise and gain more confidence in your financial projections.

Build your race's budget in minutes with Budget Builder