"Fixed costs", "Variable Costs" ugly step sister

by Pierre Chew | Sep 13, 2012

This article is primary directed to business owners or anyone directly affected by the profitability of providing Event planning services. In this article I am going to talk about the differences between fixed and variable costs. Specifically what they are, why fxied costs are generaly less desirable that their variable counterpart, and some tricks that can be used to try and convert one to the other.

So first what is a fixed cost? Wikipedia defines the fixed cost in the following manner:

"In economics, fixed costs are business expenses that are not dependent on the level of goods or services produced by the business.[1] "

In the event business, examples of fixed costs are rent, utility bills, computer equipment or salaries. The main characteristic being that the size of these costs is irrespective of your sales.

This is as opposed to a variable cost, which Wikipedia defines in the following manner:

"Variable costs are expenses that change in proportion to the activity of a business.[1]"

In the event business, examples of variable costs are per attendee food, lodging or transportation costs.

At the risk of stating the obvious, the main advantage of a variable costs to a fixed cost is that it goes up and down in lines with your sales. This ensures a direct correlation between the amount of business you are doing and your profitability as well as allows you to get really small (without going out of business), should demand for your services temporarily dry up (cirqua 2008 - 2009).

So as a small business owner, one who is very conscious of the natural eb and flow of demand, I am always trying to give mysef the greatest flexiblity and chance of success, and one way I try to do that is to continually look at ways of converting my fixed costs to variable costs. Not only does this ensure my profitability, but it also makes it much easier for me to recognize how to correctly price my services. Fixed costs get baked into your general operating expenses and it is easy to not account for them when pricing one's services.

But I digress. So what is my biggest fixed costs that I am constantly looking at converting to variable cost, salary. Salary and technology. Salary is an obvious one. Man hours are relatively expensive compared to machine hours. Running a machine costs a fraction of the cost an employee does.

As I stated above, The fixed cost. As a small business owner, oh how I hate you. Why? well for those who remember their accounting, a fixed cost is a cost that is incurred regardless of your use of that service. This is as opposed to a variable cost, that is only incured based on your use for that service.

As a business owner, you are constantly trying to position yourself to support demand for your services. The beaty of the variable cost, if you have properly priced your services, theoretically your costs go up and down in line with demand for your services. This (again theoretically), ensures that regardless of how much service you are providing, you are always able to provide it at a profit.

This is different then her ugly step sister, the fixed cost. The fixed cost is sunk regarldess of how much of it is consumed. So regardless of whether you get 5% or 100% utility out of the service, your cost is the same.

That is why as a small business owner, I am constantly looking at my operational processes and trying innefficiencies in them. Since running anyone a 100% utilitization rate is both impossible and imorall, a better (or some would say realistic strategy) is shooting for a 75% utilization rate to give them the ability to shift up during the unavoidable spikes in demand for their services.

Fortunately with the advent of online technology services, more and more support services are priced variably. It is probably this single fact alone that has lowered the barrier to starting small business. Upfront fixed costs are the single largest barrier to starting a business.

Unfortunately the single largest fixed cost out there, and the one that will never go away is labor. Regardless of whether you are paying your employee hourly or by salary, as an employer you must estimate ahead of time how much of that employee's time you are going to purchase, and how to best manage it.

I then have my managers focus on reviewing their operational procedures and identifying those tasks that can be automated.

When I successfully convert a fixed cost to a variable cost, I am often reminded of the old Pac Man game when Pac Man successfully gobles up one of the ghosts.

6029 comments

Leave a comment
  1. Haritha | Apr 21, 2019

    I found this is an informative and interesting post so i think so it is very useful and knowledgeable. I would like to thank you for the efforts you have made in writing this article.


    <a href="https://www.hanvijobs.com/govt-jobs-in-delhi/">Govt Jobs in Delhi</a>

    seo services in hyderabad

  2. five5starsuk | Apr 20, 2019
    Great blog post you have shared here. Thank you Buy Instagram Likes UK
  3. mcafee.com/activate | Apr 20, 2019
    Nice blog!! this is quite impressive article..thanks for sharing..regards for mcafee.com/activateif you found any kind of strange moments with your computer security..No need to worry about we here to give 24*7 technical support...We provide optimal support regarding any problem with related to your computer security,attacks,foreign movement ,mcafee set up and compatibility issues.Visit@http://mymcafeeactivate.com or call on our toll free no-18006092780http://msofficesetup.org https://nortonsetup-key.com
  4. juhisharma | Apr 20, 2019
  5. juhisharma | Apr 20, 2019
  6. sweet | Apr 20, 2019
  7. ANJALI | Apr 20, 2019
  8. Johnson Jack | Apr 19, 2019
    Norton.com/Setup: Check out the quickest way to download, install and activate the Norton Setup using the Norton Product Key to the device. For any help norton.com/setup norton.com/nu16 norton.com/myaccount
  9. HP EPRINT EMAIL ADRESS | Apr 19, 2019
    Hey thank you, admin, you did really awesome. I'm really impressed with the info you provide in your articles. We are providing support for hp eprint email address for your printer, if you need the same setup or help you can visit our website.
  10. Independent Delhi Escorts | Apr 19, 2019
    I would like to congratulate you on an amazing blog. Personally, I like your blog very much. I would love to share my business Details here. Kindly Visit.
    Independent Delhi Escorts
    Independent Escorts in Delhi
    Elite Escorts Delhi
    High Profile Model Girl
    Model girls in Delhi
  11. juhisharma | Apr 19, 2019
  12. ethan ivys | Apr 19, 2019

    Very good information. Lucky me I recently found your site by chance

    Regards= office.com/setup

  13. juhisharma | Apr 19, 2019
  14. Comcast email support number | Apr 19, 2019

    I read your article it is very useful for us If you're a current Xfinity/comcat Internet customer, you can check out what other Comcast customers are talking about in the online forum. There you can search for answers to a question or post a new one now you can contact with us follow given link for more information

    Comcast email support number

  15. SWEET | Apr 19, 2019
  16. sweet | Apr 19, 2019
  17. epson printer support number | Apr 19, 2019

    Thanks for all the tips mentioned in this article! it’s always good to read things you have heard before and are implementing, but from a different perspective, always pick up some extra bits of information.

    epson printer support number

  18. Quickbook Support | Apr 18, 2019
    I gone through your the article and it was quite informative.I am sharing my article regarding the Quickbook support which help to resolve any issue related to quickbook. https://knowyourmeme.com/users/quickbook-support--3
  19. Office.com/setup | Apr 18, 2019
    office.com/setup – The above-mentioned steps help you in the creation or log in to your Microsoft account, but if still, you face any issues then you can contact Microsoft Office Support or visit us at office.com/setup for the extended support. To download and install your version of Office product you need to follow basic steps given below.Office.com/setup
  20. TomTom Update | Apr 18, 2019
    TomTom Update - TomTom is a well-renowned name in the market of the navigation and mapping devices. They have a variety of products and service that can help one make their journey comfortable. The company originally known as the PalmTop Software which was later in 2015 changed to TomTom. You can purchase the variety of device by visiting the website or the retail store near you. Furthermore, the TomTom is known to offer a very efficient support to their users.TomTom Update
  21. TomTom Update | Apr 18, 2019
    TomTom Update - This is the era of GPS where people just look at their smart device and go out to have an adventure. Well, all this made possible with the help of technology. TomTom is a brand that has marked the name in the world for the navigation device. The TomTom has Fitness Watches, In-Dash Displays, Vehicle Cameras, and similar devices. TomTom Update
  22. MyDrive Connect | Apr 18, 2019
    You need to start by downloading and installation of the software on your Windows and Mac device. Furthermore,in case of any issues. My Drive Connect is a medium to download and install the TomTom Map Updates and more.MyDrive Connect
  23. office.com/setup | Apr 18, 2019
    www.office.com/setup - Microsoft Office enables clients to utilize the Office item online and also disconnected by downloading the Office Setup on your gadget. You can download the Office Setup on your gadgets like Windows, Mac and cell phones by visiting the connection www.office.com/setup on the web. Likewise, you can visit the connection office.com/setup to utilize the item on the web. With the end goal to download and initiate the item, you need an item key. office.com/setup
  24. mcafee.com/activate | Apr 18, 2019
    McAfee.com/Activate - McAfee is a famous worldwide PC security programming organizations that have been working since years for serving the best security projects to the clients. It works best against all the online dangers like infection assaults, spyware, malware and some more, that may hurt the individual just as the expert information of the clients.mcafee.com/activate
  25. Independent Mumbai Escorts | Apr 18, 2019
    Hi,Actually i like your blog too much. Because which type of escorts related information i want from a long time. Now Finally I got it. Thanks a lot !! And keep updating your blog like this in future also.
    Independent Mumbai Escorts
    Mumbai Escorts
    Escorts Mumbai
    Mumbai Escorts Service
    Mumbai Escorts Agency
  26. www.office.com/setup | Apr 17, 2019
    Microsoft Office includes Access, Excel, PowerPoint, Outlook, Word, Publisher,  Office 365, Office 2016, Office 2013, Office 2010, Office 2007, www.office.com/setup
  27. gate installation dallas | Apr 16, 2019
    Thank you so much Love your blog..gate installation dallas
  28. McAfee Support | Apr 16, 2019
    McAfee is an American global computer security software company located in California. McAfee is a software program designed to prevent, search, detect and remove software issues and other malicious software's like Trojan, Worm, Adware and other cyber threats. Get the best service for any issues to protect your mobiles, laptops and tablets from viruses. Contact our McAfee support team for help. Technicians will be available 24/7.
  29. Yandex Email Customer Support | Apr 16, 2019
    Yandex is widely used email service all over the world. Yandex email offers Internet related products and services. Yandex email is known for providing unlimited online storage, powerful web interface and other exciting features. Whenever you face any technical glitches contact our experienced Yandex email customer support team for help.
  30. Yap Sody | Apr 16, 2019
    Yapsody is a safe, convenient and fair place to buy and sell e-tickets for concerts, festivals, sports events, theatre and day trips. We protect buyers from overpricing from the original sales price. As a buyer, you know you’ll always be paying a fair price for your tickets. Fraud is prevented by user-checks and through partnerships and collaborations with event organizers. Yapsody is the world’s safest place for selling tickets and registering events. We've iterated on this event page design with conversion in mind. Viewers are more likely to buy when they get a little taste of the feeling of the event from the page itself. Ticketleap's template is built to allow your event to express itself, and as a result, maximize attendance. We've been improving the Yapsody product & we made it a full featured ticketing system for publishing a page, easily accepting credit ards online, processing sales in person, issuing tickets and scanning them at the door, and with all the ticketing features you'd expect (and even some you won't!). Sell Festival Tickets Sell Festival Tickets Online sell sports tickets sell sports tickets online sell conference tickets online sell conference tickets sell theater tickets sell theater tickets online
     
  31. hp printer cartridge jam error issues | Apr 15, 2019
    Thanks for this wonderful content and information. I found this website eventually. Really good inoperative, Thanks for the post and effort! Please keep sharing more such blog.we are here to support for hp printer cartridge jam error issues if you need help to regarding this then visit us.https://hp-printer-support-assistant-pvt.blogspot.com/2019/04/how-to-setup-hp-printer-carriage-jam.html
  32. MS Office Customer Support | Apr 15, 2019
    MS Office was introduced in the year 1988 and is used by billions of people all over the world. MS office is a complete package of all applications which is used to create documents, presentation, manage email and calendars with many other advanced features. Designed mainly for students, home and small/large corporations. Many people come across issues while using MS Office. You can contact <a href="https://verified-tollfree.com/computer-softwares/microsoft-office">MS Office customer support</a> team for technical assistance.

  33. Roadrunner Email Support | Apr 15, 2019
    Roadrunner email support service is the best email services offered with high-speed internet for all your emailing needs. The Roadrunner email services are suitable for everyone, such as professional, personal, business and many others. While accessing the Roadrunner email services, many users may come across different errors. Thus, to troubleshoot these issues you can contact Roadrunner email support number for the expert assistance. Roadrunner email support is available 24/7 to assist you.
  34. as | Apr 15, 2019
    Thanks for every other informative site. The place else may just I get that kind of information written in such an ideal means? I have a venture that I’m just now operating on, and I have been on the look out for such information.sole exercise bike reviews
  35. 192.168.1.250 | Apr 15, 2019
    Awesome article, it was exceptionally helpful! I simply began in this and I'm becoming more acquainted with it better! Cheers, keep doing awesome! You may check our website also 192.168.1.250
  36. 123.hp.com | Apr 15, 2019
    Its a great pleasure reading your post.Its full of information I am looking for and I love to post a comment that "The content of your post is awesome" Great work. You may check our website also 123.hp.com
  37. 123.hp.com/oj4650 | Apr 15, 2019
    Hello, this is an incredibly wonderful piece of content. Please keep up the great work. You may check our website also Visit: 123.hp.com/oj4650
  38. Lexmark printer support number | Apr 15, 2019

    Thanks for all the tips mentioned in this article! it’s always good to read things you have heard before and are implementing, but from a different perspective, always pick up some extra bits of information.

    lexmark printer support number

  39. Office.com/setup | Apr 14, 2019
    office.com/setup – The above-mentioned steps help you in the creation or log in to your Microsoft account, but if still, you face any issues then you can contact Microsoft Office Support or visit us at office.com/setup for the extended support. To download and install your version of Office product you need to follow basic steps given below.Office.com/setup
  40. TomTom Update | Apr 14, 2019
    TomTom Update - TomTom is a well-renowned name in the market of the navigation and mapping devices. They have a variety of products and service that can help one make their journey comfortable. The company originally known as the PalmTop Software which was later in 2015 changed to TomTom. You can purchase the variety of device by visiting the website or the retail store near you. Furthermore, the TomTom is known to offer a very efficient support to their users.TomTom Update
  41. TomTom Update | Apr 14, 2019
    TomTom Update - This is the era of GPS where people just look at their smart device and go out to have an adventure. Well, all this made possible with the help of technology. TomTom is a brand that has marked the name in the world for the navigation device. The TomTom has Fitness Watches, In-Dash Displays, Vehicle Cameras, and similar devices. TomTom Update
  42. MyDrive Connect | Apr 14, 2019
    You need to start by downloading and installation of the software on your Windows and Mac device. Furthermore,in case of any issues. My Drive Connect is a medium to download and install the TomTom Map Updates and more.MyDrive Connect
  43. www.office.com/setup | Apr 14, 2019
    www.office.com/setup - Microsoft Office enables clients to utilize the Office item online and also disconnected by downloading the Office Setup on your gadget. You can download the Office Setup on your gadgets like Windows, Mac and cell phones by visiting the connection www.office.com/setup on the web. Likewise, you can visit the connection office.com/setup to utilize the item on the web. With the end goal to download and initiate the item, you need an item key. www.office.com/setup
  44. mcafee Install | Apr 14, 2019
    McAfee Install – Just like most antivirus, McAfee has also quit sending CDs for its software installation. Now, you will get a 25 digit alphanumeric key to be used to install McAfee on your device. To install McAfee software you are required to go to a link provided by McAfee and follow the below given step by step instructions.mcafee Install
  45. HP Printer Customer Support | Apr 13, 2019
    HP, one of the oldest brand which is preferred by billions of users all over the world. HP printers are easily available in the market and are known for its performance, cost, quality of print and many other factors. HP printers are designed mainly for home and office, small to large organizations. There are many technical issues which are faced by users. You can reach our HP Printer Customer Support team today to avail 24/7 assistance.HP Printer Customer Support
  46. ProtonMail Customer Support | Apr 13, 2019
    ProtonMail was introduced in 2014 and it has become world's leading email provider. The reason behind its success is ProtonMail offers encrypted email, which makes it virtually impossible for anyone to read the message except the sender and the receiver. Many a times, ProtonMail users encounter technical issues. You can call our ProtonMail customer support team for assistance. Our technicians will be available 24/7.Protonmail Customer Support
  47. Dell printer support number | Apr 13, 2019

    Dell printer customer service handles all problems such as printer setup, installation of drivers, spooler issue, etc. If you are facing any of the aforementioned issue or any other problem, then dial the support phone number.Thanks for all the tips mentioned in this article! it’s always good to read things you have heard before and are implementing, but from a different perspective, always pick up some extra bits of information.

    Follow this link for more information Dell printer support number

  48. Dell printer support number | Apr 13, 2019

    Dell printer customer service handles all problems such as printer setup, installation of drivers, spooler issue, etc. If you are facing any of the aforementioned issue or any other problem, then dial the support phone number.Thanks for all the tips mentioned in this article! it’s always good to read things you have heard before and are implementing, but from a different perspective, always pick up some extra bits of information.

    Dell printer support number

  49. office.com/setup | Apr 12, 2019
    office.com/setupIf you are an old user of Office 365 suite and already have an Office setup product installed on your device, the go to office.com/setup and sign in your account and update your subscription.https://setup--office.com/
  50. Vanessa J James | Apr 12, 2019
    Really appreciate you sharing this wonderful post with great info. This post provides valuable information to us, keep it up. Also, get more information on How to Remove ByteFence (Chrome/Firefox)

    Leave a comment

    • Who should be responsible for your Event's Registration Site?

      by Pierre Chew | Oct 07, 2012
      Since we are in the business of providing Event Registration solutions, this is a question that I have often wrestled with.  I am now posing it to you now, my readers, to chime and let me know who you would like do it?

      Is this a task for the Event Planners?  A task for your IT department?  A task for a consultant or third party specialist?

      We've all seen the slick demos, in fact we have we have one as well.  Three clicks and you have a registration web site.  Except for those of us who have actually had to deliver the site, you quickly realize that yes technically you have a registration web site, but there is a whole bunch of work and thought that needs to be done afterwards to configure it to your Event's specific needs. 

      Once you have the base setup, except for the simplest of events where you are just providing ticketing, you still have to wrestle with:
      • writing the content and laying it out in a professional easy to read manner
      • deciding on a navigation structure
      • setting up payment rules, promo codes
      • detereming the different registration tracts and configuring the system to handle it
      • Importing contact information for event marketing efforts
      • Deciding on reporting requirements and designing and writing the reports
      • Setting up access rules for the various users who will need access to event management data
      • Integrating with third party vendors who may be providing mobile apps for the event
      • and this is only the beginning...
      The solutions of today have gone a long way in handling the tedious details with managing an event, but until everyone decides to offer the exact same event, in exactly the same way, they are not going to be able to eliminate the thought that needs to go into setting up and configuring these systems.  

      So my question is, who do you usually assign this task to on your team?  

      My experience is that the standard Event Planner will attempt it once but will look to off load it after that.  They just don't have the time as they are already spread too thin just planning the event.  This is a task that requires a fixed block of time and a commitment to on going training.

      My second guess is that for those of you lucky enough to have in house IT resources, your IT Department is who you probably turn to.  For those of you who don't have internal IT resources, one of your team may end up developing a specialty in handling this task.  

      For the rest of you, you may rely on an outside organization to handle this for you.

      I have put together a quick poll that can be found here that you can answer and see the results. 

      Take Poll
    • To Outsource or Not? That is the question...

      by Pierre Chew | Sep 13, 2012
      I am not only the CEO of a company that provides services to other companies but I am also a small business owner.  And as a small business owner I am constantly faced with the question of when to develop the expertise to provide a particular service in-house and when to out-source it.  

      The pros of keeping the service in-house is that you have more control over it since the employees providing it report directly to you.  The cons are, that you carry the fixed costs of those salaries regardless of demand for that service.  In addition, the skills required to provide that service may not be compatible with your company's core skill set leading to a diversion in your employee's career goals.  

      After thinking about this a lot and reading up on it, I have come to the following simple rules when determining whether I should oursource a particular service or not.

      1. How frequently is the service needed?  - What I mean by this is the frequency with which the service is required.  If the service is required infrequently, and especially if the requirements for the service would not take up a full head count's time, this service is a good candidate for being outsourced.
      2. How core is the service to the Business? - What I mean by this is how important is the service to the business?  For example, take payroll.  Every business has to provide this service, but providing this service at a high level is not a differentiator in the service you provide to your clients.  There still might be other good reasons to handle payroll in house (if you have very particular payroll requirements that an outside provider cannot handle), however it is an example of service that is at least worth considering for outsourcing.
      3. How compatible is the skillset of the individuals needed to provide the service with the skills required to provide my core services?  - As someone who has been in business for a long time, one of the most important qualities of a company is its culture.  It is the heartbeat and the raison d'etre that allows you to provide the service that differentiates your company from your competitors.  It is my experience that one of the requirements to having a strong culture is fairness. Everyone needs to be treated in an equal and fair manner.  The challenge with this is that if individuals with different skill-sets have developed different expectations on what they expect their work environment to provide.  A good example of this is with technology.  Years of Silicon Valley start-up culture perks have caused a certain level of expectation from the best technology engineers regarding their work environment perks.  The challenge is that not every industry has profit margins that can justify those perks.  So if you are considering making technology services part of your core offering, you have a choice to make. 
        1. Don't hire the best engineers as they will likely not have the expectations for those work environment perks.  The challenge being that you will run the risk of offering a lower level of technology services to your clients than are being offered by competitors.
        2. Offer those perks at work, but only to those engineers.  The challenge being that you will now have introduced class warfare into your work environment and run the risk of having a fractured work culture. 
        3. Offer those perks to everyone.  The challenge being that your profit margins will be diminished by having to offer perks that your competitors may not be offering.
      4. How long will it take to develop an expertise in the service? - The reason this is important is that the business opportunity that is forcing the need to provide this service may not be around long enough for you to be able to develop the expertise to offer the service yourself.  
      5. Can we realistically this service at the same high level as our competitors or our client's expectations? - All of the above points are moot if you can't deliver the service to your client's expectations.  Your client doesn't care if you provide it in-house or out source it, they just need it to be executed to their expectations.  
      6. If we do want to be able to provide the service in house but one or more of the above questions make it tricky, can we develop a strategy that will allow us to get the best of both worlds? - In this scenario you may have concluded that is it a service that is worth being able to offer in house, but it is risky this time around trying to provide it yourself.  Can you take steps to partner with an outside vendor that will take responsibility this time around for delivering the service but will allow you to begin learning it so that eventually you can provide it yourself in house.

      So there you have it.  The six core questions I ask myself when faced with the need to incorporate a new service into my business.  I do not profess that this list is all encompassing or complete as there are countless additional questions you can ask yourself that have not been included here.  The reason I have chosen to include these six questions is just that in the years that I have been in business I have found these six to provide me with the best guidance when tackling this particular dilemma.  

    • The challenges of using new technology for an event

      by Pierre Chew | Sep 13, 2012

      As I mentioned in a pervious post, one of the biggest challenges faced by introducing technology into your event is the concept of an event. An event, is a moment in time. Months, sometimes years, or time and resources are spent preparing for that moment in time. It does not matter if something is fixed the day after the event, it only matters whether it worked for the specific event.

      Technology can used in several different aspects of the event. It can be used in the planning stages, the managment stages and in actual execution of the event.

      Technology can be used to lower your operational costs by lowering the number of man power hours, reducing printing costs, reducing communication costs. It can also be used to improve the experience of the attendee.

      An event is like putting together a live production rather than putting together a movie.

      Conclusions

      The best time to introduce new technology into either your planning or event management processes, is not when you are planning or managing an event. This may seem obvious, but the number or times that they has been attempted with ill results is outstanding. If you do decide tha tyou must integrate the new technology, usually because the client demands it, we have found the best strategy is to partner with someone who has done it before. This will give you the opportunity to learn how the technology works and decide if you wish to incorporate it into your days to day operations.

    • Facing today's staffing challenges

      by Pierre Chew | Sep 13, 2012

      Headcount is usually a fixed cost

      Delegation

    • The challenges of being an event planner

      by Pierre Chew | Sep 13, 2012

      If you are an event planner, let me start by saying that I am blown away by what you do. You see, I am not an event planner. I am outsider to this industry.

      The amount of details that you must track and timeline that you must manage is incredible. If I am being honest with myself, I am more of a uni tasker. I can't imagine being able to juggle the amount of items you have to juggle.

      If you want a less stressful job, you might consider becoming a software project manager. Much less details to deal with.

      But I digress, the challenges as I see them.

      Lots of balls in the air

      Communicating with your clients and your team

      Uncertainty associated with your plan

      Changing direction mid stream

      Like a general contractor, overseeing losts of aspects

      Challenging to become a specialist

      That is why as a technology service provider I am constantly faced with the following question. Who am I building these tools for? Are they for event planners, their support team or us?

      Let's look at that for a moment because that question alone affects a great deal about the tool being designed. Software at its core is just a tool. Like a hammer or a chisel. It is designed to help you perform a task. Like hammer a nail or massage a piece of granite. But just like with the art of sculpturing, the same chisel in my hands as the one in Michael Angelos hands, will not produce the same out come.

      The question becomes when building a tool, how much training will your target audience need to be effective? How will you administer this training? How often will their training need to be updated? Do they have the time for the training, and more importantly do they have the time to perform this new task?

    • The challenges of online registration

      by Pierre Chew | Sep 13, 2012

      While is strange to think about this now, onlne registration was one of the first technical services offered to the industry. And while a lot of new features and functionlaity has been added to it in the last few years, it is still a challenge to execute seamlessly.

      Custom attendee shopping experience
      They are purchasing their experience.

      Know your attendees. Different attendees will have differenet levels of patience as well as famililarity with technology.

      Remember, they are doing you a favor. They are entering in their order manually so that you have don't have to hire someone to take it over the phone or by fax.

    • Computers vs Humans, whose better?

      by Pierre Chew | Sep 13, 2012
      This is a question that has been explored to death in science fiction books and movies.  The point of this article is not to explore the philosophical aspects of this idea a-la "Blade Runner".  

      Rather I am approaching this from the very mundane view point of a small business owner.  Since the service we provide our clients is a mix of services provided by computers and humans, I find that it is important to understand the strengths and weaknesses for each so as to place them in the best position to succeed.  

      Before I delve into this I just want to say that my points here will apply to those of us who do not have access to the latest artificial intelligence machines.  The machines that are being built by Big Blue and can compete at Jeopardy are challenging humans in a whole new way.  However, at this point in time, most of us do not have budgets that would allow us to entertain employing Artificial Intelligence systems, so what I have included below will apply.  

      So let's start with the obvious.  What types of tasks are better performed by computers than by humans?  
      1. Memory / Storage Tasks - This one is semi obvious.  Computers have infinite amount of memory while most humans can't remember what they did yesterday. Think of what your computer stores on it's hard disk or what google is able to bring up instantly, and there really is no comparison.  There is no human in the world that can compete with how much information a computer can store and instantly access.  If the task is memory or storage intensive, have a computer do it.
      2. Clearly Defined Tasks - This one may be obvious as well.  Computers can repeat the same exact set of steps perfectly every time.  If you have a machine pitching a ball, and a machine hitting a ball, and they are calibrated to hit home runs.  These machines will hit more home runs more consistently than Barry Bonds or Mark McGuire ever could.
      3. Repetitive Tasks - This one is a little less obvious so it is worth mentioning.  Computers can repeat a clearly defined task infinitely while the average human's mind will start to get bored and to make mistakes after 8 repetitions or so.  This is such a problem that Airlines are constantly having to come up with new ways to keep pilots fresh and alert on long flights.  
      So if computers are better than humans with these types of tasks, what types of tasks are humans better than computers?
      1. Not Clearly Defined Tasks - If a task is not clearly defined and is therefore fluid or requiring intuition or experience to successfully complete, humans have got the upper hand on non AI (Artificial Intelligence) computers of today.  That is because humans can create new rules on the fly to adjust to new situations while your standard non AI computer cannot.
      2. Tasks that Requires Reading Others Emotions (empathy) - Again, this may change in the near future, but as of today your average run of the mill server or computer cannot easily read someone's emotion to the same level as your average human.  So tasks that require adjusting to another humans' emotions can still be better performed by humans.  Believe it or not, that insensitive overseas Air Agent who does not understand your particular predicament is still doing a better job than could be performed by an automated system. 
      So, why should any of this be of the slightest interest to you?  Well, if you are ever faced with the decision of whether a particular task within your business or event is worth automating and therefore being performed by a computer, a little reflection on what it takes to perform that task, combined with these rules will hopefully give you the obvious answer as to the best course of action.
    • When is it not worth automating a task?

      by Pierre Chew | Sep 13, 2012

      As much as I am fan of automation, you may be suprised to find that the answer is not "always".

    • Interesting mobile trends

      by Pierre Chew | Sep 13, 2012
    • Realistic goals for introducing new technology

      by Pierre Chew | Sep 13, 2012

      I find this to be an interesting and not so obvious question. Having come through the dot com boom and seen technology used to do almost anything (and watching them get funding for it), I have come to the following list of simple goals that I think are truly achievable by technology.

      automate

      simplify

      lower operational costs

      improve attendee experience

    • What makes the event industry so (challenging) unique?

      by Pierre Chew | Sep 13, 2012

      In my third decade of life, I have come to the following realization and that I have gone through distinct stages (and I assume that everyone my age has done so as well).

      The first stage is when we begin to discover the world. At this stage, we are struck by how different everything is. Apples, Oranges, Grapes. They are all have different colors and taste differently.

      By the second stage, we begin to see the pattern of the world and similarities begin to emerge. Apples, Oranges, Grapes, these are all just variation of a fruit. So we start to see everything as just being the same. We are struck by how a simple set of rules can be used to generate what on the surface seems like such a variety of fruit. They require similar things to go and go through similar stages in life.

      The third stage, the stage that I am currently in, we start to appreciate that the smallest differences can have the biggest outcomes. And it is these smallest differences that make all the difference. We share 99.8% of our DNA with chimps. And yet, here we are having completely expand to every corner of the earth, and they are still relegated to the African continent.

      In the four years I have been running this company, and the 10 years that I have been affiliated with this industry, I can say that I have reached stage 3. While on the surface your industry appears to be very similar to other industries, the subtle differences end up making all the difference.

      Concept of an Event

      An event is a moment in time. That may seem obvious to all of you, but the profoundness of this idea took me a while to understand. It is like a dinner. The value of the service is different before and after that moment in time. This is different then the case for providing a technology services for other industries. In every other industry, it is expected that there might be bugs with a particular service the first time it is exposed to the public. Even Apple, considered by many to provide the best user experience out there, has to release patch updates to address short comings in its technology platform. And unless the bug is completely cripling, like you can't use your phone, you will grin and bear it until the patch is released.

      This is completely different with the expectation placed on technology services for a particular event. The value of that service only exists for the specific event. It does not matter if you solve the problem the day after the event, it only matters whether the problem existed during the event.

      You have to understand how strange an idea that is for a technology person. We are usually tasked with bulding for the future, continutally improving on what was done before. When technology is offerered for an event, the value of not having any problems today greatly out weights the ability to build upon that technology tomorrow.

      So what does that mean? Well it means you design your solutions differently and you allocate your resources and time differently. For starters, QA ends up being much more important. you end up with a larger percentage of QA engineers then you do for traditional projects. You also have to be very diciplined with your feature selection. The question no longer is whether the feature might be useful in the future, but whether it is absolutely critical for the user experience at the specific event. It also makes you much more conservative in your design and implementation. Since "any" mistake always trumps "nice to have".

    • When to consider delegating?

      by Pierre Chew | Sep 13, 2012

      This is a question I am sure everyone has come across at some point in their career. At what point does teaching someone else to perform a task outweigh "fine, it will be faster to just do it myself"?

      I have had to think about this question quite a bit, not just because of my role as CEO of my company, but because when deciding on the product road-map you find yourself going through a similar decision making process.  

      What do I mean by that?  Well software for all its glory is nothing more than a series of instructions that are to be executed by a computer.  And you can think of a computer as the world's dumbest intern.  It has no prior work history, intuition or experience to rely on when making decisions on how to perform a task.  Everything it does, I mean everything, has to be explicitly laid out for it in the form of source code.  

      So as you can see when deciding on whether to add a particular feature or to automate a particular task, I always ask myself, is this something that I could delegate to the world's dumbest intern?

      So after many years of thinking about this question, I have found a few questions that provide me with some guidance into how best to proceed.  Listed below are these questions.  

      1. Is the task repeatable? This one should be obvious. If the task is not repeatable, meaning that you will not have to do it again, it will be faster for you to perform it yourself then to teach someone to do it once.
      2. What is the frequency with which this task will be performed? Again, if the frequency is low, it may not make sense to delegate this to another individual. Especially if the task requires some level of frequency for someone to remember how to do it. No point in teaching someone how to do something and then having them forget it because they don't need to do it very often.
      3. How repeatable is the task?  Meaning is the task exactly the same everything single time or does it require some level of intuition, experience or decision making to be able to execute correctly repeatedly.  Tasks that can be clearly defined and require very little decision making are going to be easier to delegate since the outcome will be more predictable. Tasks that are more variable in nature will be more dependent on the skills of the individual that you are delegating too and will require a learning period during which that individual will need room to make mistakes.
      4. What sort of work load does this individual already have? Computers and Humans have a fixed amount of bandwidth (time), and switching between types of tasks has an opportunity cost as it requires the individual time to get setup and prepare to perform that task. 
      Again, I do not profess that this list is all encompassing or complete.  Only that these questions have provided me with the best guidance when dealing with this particular dilemma.
    • Repeateable vs Non-Repeateable Events

      by Pierre Chew | Sep 13, 2012

      I wanted to take a moment to point out some differences between Repeatable and Non-Repeatable events. The differences are actually substantial enough that it does bear discussing.  

      What am I defining as a repeatable event? A Repeatable event is an event that is repeated on a specific frequency. It can be yearly, quarterly or monthly. It does not matter the frequency, it just matters that the large portion of the meeting or event is repeatable from one time to the next.

      Similarly a non-repeatable event is one in which the event is never to be repeated.  Once in a life time Incentive Trips to Greece are good examples.  You know, the events designed to blow your attendees away. 

      So why does this repetitive nature of this meeting make a difference? Because as I discussed in my previous posts (When to consider delegating) regarding what sorts of tasks are worth automating, a repetitive meeting lends itself more to the benefits of automation then a non-repetitive meeting. This is simply because there is a benefit to figuring out today how to do it faster, easier and more predictably, since tomorrow (or some point in the future), you will have to do it again.

      While there is a cost in both time and money to automating a task, it rarely makes sense to attempt to fully automate a meeting or even the first time around.  Rather my strategy is to identify a few new tasks each time the meeting or event is offered that are to be automated.  This allows me to spread the costs of automating the meeting across all the meeting or events as well as ensure that it takes less time and resources every time the meeting is offered.  

    • Scalable vs Non Scalable Services

      by Pierre Chew | Sep 13, 2012
    • "Fixed costs", "Variable Costs" ugly step sister

      by Pierre Chew | Sep 13, 2012

      This article is primary directed to business owners or anyone directly affected by the profitability of providing Event planning services. In this article I am going to talk about the differences between fixed and variable costs. Specifically what they are, why fxied costs are generaly less desirable that their variable counterpart, and some tricks that can be used to try and convert one to the other.

      So first what is a fixed cost? Wikipedia defines the fixed cost in the following manner:

      "In economics, fixed costs are business expenses that are not dependent on the level of goods or services produced by the business.[1] "

      In the event business, examples of fixed costs are rent, utility bills, computer equipment or salaries. The main characteristic being that the size of these costs is irrespective of your sales.

      This is as opposed to a variable cost, which Wikipedia defines in the following manner:

      "Variable costs are expenses that change in proportion to the activity of a business.[1]"

      In the event business, examples of variable costs are per attendee food, lodging or transportation costs.

      At the risk of stating the obvious, the main advantage of a variable costs to a fixed cost is that it goes up and down in lines with your sales. This ensures a direct correlation between the amount of business you are doing and your profitability as well as allows you to get really small (without going out of business), should demand for your services temporarily dry up (cirqua 2008 - 2009).

      So as a small business owner, one who is very conscious of the natural eb and flow of demand, I am always trying to give mysef the greatest flexiblity and chance of success, and one way I try to do that is to continually look at ways of converting my fixed costs to variable costs. Not only does this ensure my profitability, but it also makes it much easier for me to recognize how to correctly price my services. Fixed costs get baked into your general operating expenses and it is easy to not account for them when pricing one's services.

      But I digress. So what is my biggest fixed costs that I am constantly looking at converting to variable cost, salary. Salary and technology. Salary is an obvious one. Man hours are relatively expensive compared to machine hours. Running a machine costs a fraction of the cost an employee does.

      As I stated above, The fixed cost. As a small business owner, oh how I hate you. Why? well for those who remember their accounting, a fixed cost is a cost that is incurred regardless of your use of that service. This is as opposed to a variable cost, that is only incured based on your use for that service.

      As a business owner, you are constantly trying to position yourself to support demand for your services. The beaty of the variable cost, if you have properly priced your services, theoretically your costs go up and down in line with demand for your services. This (again theoretically), ensures that regardless of how much service you are providing, you are always able to provide it at a profit.

      This is different then her ugly step sister, the fixed cost. The fixed cost is sunk regarldess of how much of it is consumed. So regardless of whether you get 5% or 100% utility out of the service, your cost is the same.

      That is why as a small business owner, I am constantly looking at my operational processes and trying innefficiencies in them. Since running anyone a 100% utilitization rate is both impossible and imorall, a better (or some would say realistic strategy) is shooting for a 75% utilization rate to give them the ability to shift up during the unavoidable spikes in demand for their services.

      Fortunately with the advent of online technology services, more and more support services are priced variably. It is probably this single fact alone that has lowered the barrier to starting small business. Upfront fixed costs are the single largest barrier to starting a business.

      Unfortunately the single largest fixed cost out there, and the one that will never go away is labor. Regardless of whether you are paying your employee hourly or by salary, as an employer you must estimate ahead of time how much of that employee's time you are going to purchase, and how to best manage it.

      I then have my managers focus on reviewing their operational procedures and identifying those tasks that can be automated.

      When I successfully convert a fixed cost to a variable cost, I am often reminded of the old Pac Man game when Pac Man successfully gobles up one of the ghosts.

    • Staffing for Registration

      by Pierre Chew | Sep 13, 2012

      In this article I am going to discuss what I consider to be the most efficient way to staff for registration. Listed below are different strategies that you can pursue to balance providing the best possible registration experience for your attendees while minimizing your registration handling costs.

      For the purpose of this article I am going to define Registration as the process of capturing data from attendees to aid in the planning and execution of their event experience. This process can either be handled automatically online or manually offline.

      Since at this point everyone has undoubtedly experienced the cost benefits of automatically processing registrations online, I am going to assume everyone already offers an online registration option and focus on two goals. First, driving as much of the registration process online as possible , and second handling the offline registrations in the most cost-effective manner possible.

      Attendees are like water, they will always go with the option of least resistance. Give them a tedious registration experience and you will suddenly find yourself handling a majority of your registrations offline.

      The goal is not to simply offer online registration, but to offer an online registration that is used by as large a percentage of your attendees as possible. With that goal in mind, the following steps can be taken to improve the percentage of registrations handled online:

      1. Minimize the amount of data entry the attendee has to enter. Remember, they are doing you a favor by entering it in for you instead of asking one of your staff to do it for them. To minimize the amount of data that needs to be entered, do the following:
        • Think through what you absolutely need to collect for your event. Nice to have data should be kept to a minimum. Keep in mind that the attendees expectations are that this is going to be as simple as an online shopping experience. Considering most shopping experiences just require you to enter your credit card and shipping address, you are starting from a disadvantage.
      2. Pre-populate as much of the attendees data as possible. If this means importing data from your internal database to pre-populate the registration records prior to having the attendee register, it is worth it. Also reuse data within the registration process as much as possible. If an attendee has already entered in a shipping address for their event materials, default the credit card address to this address when they go to enter in their payment information.
      3. Make the registration process as linear as possible. The attendee should only be able to go forwards or backwards. This will avoid confusion.
      4. Allow the attendee to know at a glance where they are in the registration process. How far they have gone and how far they need to go. This will help them set their expectations and avoid the "are we there yet?" syndrome.
      5. Allow the attendee to get as many answers to their questions as possible through an easy to navigate event web site. While it is not usually realistic to anticipate all the questions that are going to need to be answered for a particular event, putting in a process by which frequently asked questions can be collected from your registration admins during their handling of offline registrations, can go a long way in reducing the number of future calls related to that same topic.

      Despite the best laid plans of mice and men, for every event a percentage of registrations will have to be handled offline. I will now discuss what I consider to be the most cost-effective way to handle registrations offline.

      To start, my first recommendation is to eliminate real-time phone support. What do I mean by real-time phone support? I am defining real-time phone support as the ability for an attendee to call a phone number and expect to always be able to speak with someone on the other line that can help them with their online registration.

      Get rid of real-time phone support? sacrilege! Before you tar and feather me, let's go through and talk about the real costs associated with providing such a service:

      1. To be able to truly staff for this service you must have enough registration admins on hand to handle the spikes in phone calls, not just the average number of daily calls. So if you have a 7000 person event, it is not unreasonable to think that at some point during the registration process you will get 10 registration calls at the same time. Therefore, to truly be able to provide this service you would have to have 10 registration admins on handle at all times during your regular registration hours.
      2. Having your registration admin organize their time around the attendees schedule is infinitely less efficient than letting your admin's use their experience to organize their time around the demands of the overall workload. By having admin's adjust their schedule to the interruption of handling real-time phone calls, you are making it much more inefficient for them to process an offline registration.
      3. The more administration staff you need to provide, the harder it will invariably be to keep the quality of each staff member consistent throughout your team. I've seen first hand the risks of relying on hiring temp workers to fill your registration team. The problem is not necessarily the competency of these individuals, it's the training, experience and specific knowledge of the event that they bring to the job. This means that even though you may have succeeded in providing your attendee with a warm body on the other end of the phone, you still may have failed in providing them a satisfactory registration experience.

      My last point is that it is my experience that while clients would like to offer their attendees real-time phone support, they rarely want to pay for it. After all, who wants to pay to have 10 individuals on hand answering phones for 3 months? As a result, many service providers offer a watered down service as a loss leader hoping to make a profit on other services.

      So am I advocating no phone support? No, just like in today's age where you would be uncomfortable purchasing a product online if there is no phone number associated with the web site, phone support in some shape or form still makes sense. I just proposed using the following strategies to mitigate its costs:

      First, have your registration admin's keep control over their schedule. Allow them to organize their time in the most efficient manner possible given the current work load. So how does one do this? By setting up the process in a manner similar to how one checks out in a grocery store. By the use of a queue. Rather than bringing our a new registration admin every time an attendee wishes to checkout, have the attendee get in line and the next available registration attendee can handle them.

      So how is this different then when I call for technical support? The big difference is that the request is handled and the attendee is informed that they will be called back when the next attendee is available to handle their request. It is this simple disconnect in the process that brings about the cost savings through the reduction in the staff needed to support offline registrations.

      Your registration staff is then trained to work through the request queue. Tackling the requests one at a time. Ideally some sort of online workflow is set up so that registration staff can see which requests are outstanding and who is working on which requests.

      By staffing yourself this way, you can continue to provide a professional offline registration experience for your attendees while using a registration team that is a fraction of the size of the team you would normally need.

    • LinkedIn Event Technology Groups

      by Pierre Chew | Sep 12, 2012
      Over the years as LinkedIn has continued to expand it's technology offering, I find that I rely more and more on it for my day to day business activities.

      One area that I have really become dependent on is with regards to the LinkedIn Groups.  Especially when you consider what a specialized industry the Event Planning industry is.

      Listed here are the groups that I have found to be very helpful with regards to Event Planning.  I have included them here in case anyone else is looking for which linked in groups might pertain to them. 

      • MPI Emerging Leaders 
      • Association Meetings
      • BizBash—Event Planners Gather 
      • EIBTM 
      • Event Planning & Event Management - the 1st Group for Event Professionals
      • EXHIBITOR 
      • Experiential Advertising & Event Marketing 
      • Global Meetings & Incentive Travel Exchanges 
      • i-Meet - The online community for People Who Plan Meetings & Events 
      • Keep America Meeting 
      • Media & Entertainment Professionals 
      • MPI's International Discussion Group 
      • MPI's Meeting & Event Discussion Group 
      • MPINCC 
      • NAMMATIMES 
      • Networking & Professional Development for Event Planners, Meeting Planners & Event Managers 
      • Offline Affairs | Event Management & Marketing 
      • Professional Convention Management Association (PCMA) - Official Group
      • Professional Convention Management Association Northern California Chapter
      • Social Media and Event Technology for Event Planners and Meeting Planners 
      • Top 20+ 
      • Event Planning Checklists 
      • TRAVEL 
      • Virtual Events & Meeting Technology 
      • Who's Who in Events
      If there are any other groups out there that you rely on for keeping tabs on developments in the industry, please post them as a comment and I will add them to the list.

    • Introduction

      by Pierre Chew | Sep 12, 2012
      Welcome to what I am calling the "Event Technology Mashup" Blog.

      The idea behind this blog is quite simple.  It is to be an outlet for me to explore the technology challenges that we all face in the Event Industry.

      So what's up with the name?  Well for those of you who don't now what a music mashup is, Wikipedia defines a music mashup in the following way:
      A mashup or blend[1] (also mesh ,mash up and mash-up) is a song or composition created by blending two or more pre-recorded songs, usually by overlaying the vocal track of one song seamlessly over the instrumental track of another.[2]
      I thought this was a perfect way to describe what happens when you try to merge the repetitive and staid world of technology with the creative, unpredictable world of events.  

      So hopefully you find something here that is of interest and can help you in your pursuit of delivering the perfect event.

      Sincerely,

      Pierre Chew