How do venues make money?

Event Venue

Event venues come in all shapes and sizes, but often there are common income sources across each. Understanding what these are and how to maximize them is key to turning a profit with your events.

Venues make money through the sale of event tickets, food, drink, merchandise and venue hire. Additional sources of income include sponsorship or VIP experiences

I was a venue manager for over ten years, there is plenty to be said for the profession, it can be extremely rewarding, but you have to have your wits about you to make sure that your venue can make money and a profit. 

Venues can host many different types of events such as music concerts, weddings, conferences, art exhibitions and many more. Broadly a venue will fall into one of these groups:

Music / Arts Venues – The kind who host live music, arts or cultural shoes

Business Venues – Those specifically tailored to conferences or exhibitions

Personal Event Venues – Those tailored to personal events, mainly things like weddings. 

Multifunctional Venues – Those with the capacity to host a mix of the above using highly configurable set ups.

Generally the income and profit is likely to be lowest for music and arts venues. There is little margin in the business model of short events (like music shows) where there may only be a few hours to sell some drinks. 

On the other side, high standard business or personal event venues can command significant venue rentals and these events benefit from a much longer dwell time. Dwell time is the time you have to sell attendees additional products like food, drink or merchandise. 

How do venues make money

Each of those different groups will have various sources of incomes, some of which will be more lucrative than others. Here are the most common forms of income for event venues:

Income from event tickets

Many venues who promote their own events or shows will sell tickets for them. This can be a small or very large fee depending on the show or entertainment. In the case of live music, the price is defined by the popularity of the headline artist. See our post on how to price event tickets here for more information. 

Income from food

Food is a great source of incomes for many event venues, particularly those who host dinners, weddings or parties. Food can also be a good source of income for business events which often span several days and so must provide food to their delegates. The price of the food will depend on the quality of the food and of the venue. It is likely many venues will offer food menus in a variety of different price ranges to suit different clients. 

Income from drinks

As with food, selling drinks can be highly lucrative. For business events, this will mainly be refreshment, but can involve some alcohol sales. For those music / arts venues or wedding venues, selling drinks is an essential part of the experience for attendees. As with food, the price will largely depend on the quality of the drink and the service style (bar or table service for example). Some venues often bring in mobile bars if they don’t have an in-house service. 

Income from merchandise

Merchandise can be another great source of income for certain venues. This is typically music / arts venues and forms part of things like live music concerts where  people wish to take home a memento of the event. It’s unlikely (but not impossible) that business or wedding venues might sell some merchandise.

Income from VIP experiences

Those event venues who operate their own events, particularly music events, can upsell VIP packages such as booth or drinks in order to raise additional income. Typicall these have a very high margin and can be very lucrative.

Income from venue hire

For many venues, this will be the biggest source of income and the basis of their business model. In essence venues will charge people to use the space. Venues often offer different packages for different event styles and budgets in order to appeal to the widest possible audience. There are commonly two types of venue hire: 

Dry Hire – The venue is hired as an empty shell and the hirer must provide all content and decorations themselves.

Wet Hire – The venue provides additional services such as food, drink and decorations.

How much does it cost to run a music venue?

There are numerous costs associated with running a venue, and while there are some nuisances with different styles of venue, there are often common overheads. 

Venues are expensive to run, with operating costs ranging from anything from $100,000 to multiple-millions of dollars. The size, type and location of the venue play a large role in how high these costs will be.

Let’s look at some of the major overheads you would face running a music venue right now. 

Rent, mortgage or loan repayment – This is often one of the biggest costs and depends on the venues circumstances. Often venues are leased and so regular rent is due and this is set by the landlord at the start of any agreement. This should stay reasonably constant whether the venue is trading well or badly. 

Staffing – This is another major cost and venues often rely on a high number of temporary or part time staff due to the nature of the business. Some weeks can be be very busy and others not, some using part time or flexible staff is key to keeping on top of costs. 

Entertainment – This will depend largely on the kind of venue in question. Some venues do not take the risk of promoting their own events and so leave this to any hirer or promoter. A small music venue may choose to do this and so will incur the costs of booking things like bands and the associated costs (sound and lighting) needed to put on the show. On the other hand, business events can be largely dry hire, where the venue is hired as an empty canvas. 

How can I make money with a small venue?

There are three main ways to make money with a small venue: dry hire, wet hire or promoting events. Each carries a different level of requirement and risk for a venue owner.

As mentioned above, dry hire means hiring the venue as a blank canvas to someone, wet hire is the same, but you are able to sell add-ons such as food and drink. Promoting events means taking all of the risk of getting attendees to the venue yourself and then selling them add-ons like food and drink.

Mark Norman

Mark has over 20 years of experience in the events industry from working in live music venues through to major outdoor events like the Olympic Torch Relay and the Tour de France. He now works as a feelancer, consultant and Senior Lecturer in Events Management.

Recent Posts