Today, on a Linked-In discussion forum, a member planning an outdoor festival asked a question about how to charge food vendors.

I've been a professional festival and event producer for 20 years and among many smaller events I have produced 16 large scale events of which 9 hosted over 100,000 people, 35 vendors, numerous additional food vendors, 5 beer gardens, multiple stages and jumbotrons, and many hundreds of corporate VIPs in fully catered hospitality. So I decided to help her out with a quick primer. After a moment I realized that it would be a good addition to my event blog.

First, I want to mention how important it is to NOT over populate a festival or event with vendors of any category, as their audience or potential customers' spend will be too diluted to enable them to share in the (hoped for) success. Naturally this will make it very hard to attract them back next year, if you are still around! (Festivals are very difficult to keep fresh, attractive to the audience, and sponsored.)

But to the question at hand: How does one charge vendors for their space?

There are three "standard" payment methodologies:

1) Flat fee
2) Percent of sales
3) Fee plus or vs. percentage

The advantage to a flat fee is that you allocate a number of booths and, if you sell them all, you collect your money up front. Contract it so you keep it rain or shine, unless you cancel the event. This way you can forecast your revenue better. The disadvantage is that if you have an unexpectedly large turnout you may give up some potential revenue.

Using a percentage of sales calculation doesn't have that problem, as the more revenue the vendor collects the larger the festival operator share. However, it is next to impossible to keep track of what your vendors sell. Thus, you are highly vulnerable to fraud. No disrespect meant, but the truth is that food vendors survive longer than the average festival, as so many festivals fail. So some look out for themselves and many fudge their books to the festival's (and the IRS') disadvantage. If you can trust your vendor a percentage arrangement does have the benefit of putting you both in the same boat, and you may be able to benefit from the vendor's marketing prowess, etc., should there be some.

As to the percent you could charge, there is likely some sort of "built in" commission in most vendors' standard pricing. 15 to 20% isn't a bad range. However, if that number results in too little income the festival operator might insist on a higher percentage, understanding that such will drive prices up. If multiple vendors are selling similar or identical items at different prices, that can be trouble, so rules must be in place and pricing monitored. At virtually every sporting or performing arts venue, and exhibition hall or trade center in the country, this problem is solved by exclusive catering arrangements with companies like Aramark. They operate both the catering and the concessions. If there is a suitable vendor in the festival area and the event's integrity will not suffer, using this model can be successful.

There are many permutations included in the combination category but those are for another day.

I'd like to point out one more important set of considerations for pricing. In nearly all cases it is normal for the festival or venue to charge extra for electricity and water, although in some cases it might be bundled into the booth charge. In an increasing number of cases vendors are not allowed by the permitting authority to provide their own tents due to liability and insurance issues. These and other elements will drive the actual prices charged.

Good luck with your event!

Joel A Feingold