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True Cost of Exhibit Ownership – What An Exhibit Purchase Should Be Based On

August 25, 2010

By Jeff McGrath

It doesn’t happen every now and then.  It doesn’t even happen 50% of the time.  As anyone who has ever been in a position to compete for exhibit design and build projects can tell you, it happens almost every time.

Potential customers of ours (and others) continue to ask Exhibit Consultants to compete for their business — but without considering the one criterion their company should be most concerned with.  Unfortunately, not enough attention is paid to the true cost of exhibit ownership and management, even though this is the true barometer to your company’s long term ROI — especially in today’s economy, when budgets weigh heavy in the decision making process, as they should.

Why aren’t we getting the right information to make good trade show exhibit purchasing decisions?

If you have ever been a decision maker for your company’s exhibit purchase I am sure you evaluated many factors in the process.  Overall design, capabilities of the exhibit vendor, responsiveness of the vendor in the bidding process, experience of the vendor in your industry, among other things.

Then, of course, you have the budget.  Most new build design projects have a budget for the exhibit purchase.  In addition, a good percentage of those projects will also ask for some costs on other services such as install and dismantle for the show the booth is needed, and perhaps what it will cost to store it.

Yet, most objections to any of the submittals I have been involved with in my 10+ years in the industry are only related to the cost of purchasing the exhibit.  They love our design, they value our customer service, but then I hear things like, “You were on the high side” or “Everyone was in the same range.”  Buyers seem blind to the true long term impact these decisions can have on an organization’s marketing team.

Research shows that as you move into larger exhibits, companies have full intention of using their new exhibit purchase for events occurring for the 3-5 years following the purchase.  In most all cases, the costs of owning and managing that exhibit will surpass and in many cases far exceed the initial purchase price of that exhibit.  Many people are probably aware of this.  You are likely aware of this.  Yet, I have not seen an opportunity cross my desk once that asks for the potential vendors to estimate the cost of buying and using the exhibit over the course of the next three years, based on the client’s proposed exhibit schedule.

Comparing the true cost of owning a traditional custom exhibit to a custom modular exhibit

If I propose an exhibit that costs $80,000 and you are an exhibitor that goes to 10 shows each year (as the show schedule increases, so does the impact of the cost of ownership and management) and another vendor offers to beat my proposal by $10,000…what good does that do you if round-trip shipping, drayage and the install and dismantle of the exhibit they are proposing costs 30% more?  The promise of cost savings on just the purchase price is a mirage of sorts.  Let’s look a little more closely to clarify the point:

Exhibit A (Custom Modular Exhibit):

$80,000 for the initial purchase
$3,150 average cost per install and dismantle
$3,360 for roundtrip freight on average per show
$2,520 for drayage (based on weight) on average per show

In this example, for a 10-show schedule, the costs (purchase and use) are as follows:

$170,300 through end of the first year
$350,900 through the end of 3 years
$531,500 through the end of 5 years

Exhibit B (Traditional Custom Exhibit):

$70,000 for the initial purchase
$4,500 average cost per install and dismantle
$4,800 for roundtrip freight on average per show
$3,600 for drayage (based on weight) on average per show

In this example, for a 10-show schedule, the costs (purchase and use) are as follows:

$199,000 through end of the first year
$457,000 through the end of 3 years
$715,000 through the end of 5 years

Notice the “cheaper” exhibit’s true cost over a 5 year period!  In fact, it doesn’t even take 1 year for the “more expensive” custom modular exhibit to be less expensive.  Considering the total cost of ownership (purchase AND use costs), the custom modular exhibit saves $28,700 in the first year, $106,100 after 3 years, and $183,500 after 5 years.  And yet it is not uncommon for me to hear “their exhibit was a few thousand dollars cheaper than yours.”

Keep in mind, we have not factored in many other things such as storage, in/outs (process of preparing exhibits in storage for an upcoming event), ability to reconfigure and operate as a different-sized exhibit (say a 20’x20’ can reconfigure and be used in a 10’x20’ event).  These factors add even more savings and value from flexibility that heavier exhibits usually don’t have.

This has gotten much longer than I intended it to but I am very passionate about trying to do what is best for my clients’ long-term business strategy.  ROI is dominating money allocation in business today and the wrong exhibit purchase can handcuff your future face-to-face marketing efforts.  The best advice I can give isn’t necessarily to buy from me but to make sure when you do buy, work on preparing budget requirements and comparisons that will best prepare your business to make a sound and informed decision, not one based on an upfront cost that in many cases does not tell even the smallest bit of the story.


 

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