How Much are Things Worth?
Assigning a Dollar Value to Sponsorships
It is not easy to just assign a dollar value to a PA announcement, for example. Pursuers of corporate sponsorships must be aware of the “fair market value” of these items. If a local school or college offers comparable items in sponsorship packages, then that would be a good place to start. If there is no local precedent, then create a value. Creating a value is really no more than the “dart board method.” But, when doing this, one should get a feel for what a potential sponsor would pay for each possible item. Based on the maximum that someone might be willing to pay for those things, pro-rate others on size and location and potential turn around to sponsors.
There are other things that must be considered. For example, the costs associated with the production of the things offered should be thought of. It would not make sense to price a sign at $350 when it costs $700 to make the sign. This brings up the discussion of soft costs versus hard costs. Hard costs are those costs that can be considered to be “out-of-pocket” expenses for providing consideration to the sponsor. For example, in order to provide a sign to a sponsor, the sign must be produced. This costs money. Soft costs, on the other hand, are not really cash expenses, so to speak. For example, a PA announcement does not cost anything, but there is still a value for that announcement even though there is no cash expenditure to make it.
EXAMPLE: Approach a sponsor asking the sponsor to contribute $2,000 to the event. In exchange for the $2,000, the organization will provide a sign ($500), a full-page program ad ($100), three PA announcements ($50 each) two complimentary passes to all VIP event ($150) event sponsorship of a specific activity ($1,000), and 50 complimentary tickets to that night’s event ($250).
The above example showed an instance when there was a Legion cost and that cost was covered by the amount expressed in the contract. The actual dollar amount contributions do not need to match. According to the assigned values, the sponsor is getting more than what it is paying for (giving $2,000 and receiving $2,150). This is called: VALUE ADDED.
When coming up with the value of items that the organization can offer, it is important to place a “fair market value” on them. But remember to make the sponsor realize that they are getting a return on their contribution and, in some cases, it is more advantageous (looks better to prospective sponsors) if the value which the sponsors get in return is greater than what they are contributing.