The Problem: Busy, But Not Necessarily Profitable
A Melbourne-based events and entertainment company producing corporate events, public festivals, and private functions had built a strong reputation over eight years. The team of twelve produced between 35 and 45 events per year, ranging from intimate 80-person corporate dinners to public food and music festivals drawing several thousand attendees.
The business had consistent revenue — typically $2.8 to $3.2 million annually — and the directors were proud of their operational capability and event delivery quality. But when a new investor joined the business and asked a simple question — "which events make money?" — the leadership team realised they had no reliable answer.
Profit and loss reporting existed at the company level. Revenue was tracked by event. But the allocation of staff time, shared operational costs, equipment, subcontractors, and post-event administrative burden had never been mapped to individual events in a systematic way. Some events had basic budget-to-actuals tracking; most did not. The business operated on the implicit assumption that if total revenue covered total costs and left a margin, the mix of events was roughly right.
The investor's question exposed the flaw in that assumption. Some events were almost certainly subsidising others. Without knowing which was which, resource allocation, sales strategy, and client acquisition efforts were all being made without the most fundamental piece of financial intelligence a service business can have.
Marginfy's Approach
Marginfy's first task was designing an event-level P&L model that could accommodate the significant variation in event type, size, and structure within the business's portfolio. A one-size-fits-all template was not appropriate — a three-day public festival and a two-hour corporate cocktail event have entirely different cost structures. The model needed to be flexible enough to reflect this while remaining consistent enough for cross-event comparison.
The framework Marginfy developed allocated costs into three tiers. Direct costs — venue hire, catering, AV, entertainment, and event-specific subcontractors — were straightforward and already tracked reasonably well. Semi-direct costs — staff time, equipment deployment, and logistics — required a time-and-resource attribution methodology, which Marginfy built using timesheet data and equipment utilisation records. Indirect costs — business development time, post-event administration, client relationship management, and a share of fixed overhead — were allocated using a driver-based approach calibrated to event revenue and duration.
Marginfy then worked backwards through the previous 24 months of events, applying the model to reconstruct an event-level P&L for each of the 82 events in scope. This historical reconstruction was the most labour-intensive part of the engagement, requiring collaboration with the events management team to validate time estimates and cost attribution.
The findings, when presented to the directors, prompted a long discussion.
Of the 82 events modelled, 31 had an EBITDA contribution margin below 10%. Eleven were operating at a loss on a fully-loaded basis. Most significantly, three of the company's annual recurring events — all of them well-regarded in the market and proudly listed on the company's website — were collectively generating a negative contribution of approximately $140,000 per year once all costs were properly attributed.
These events were loss-makers not because they were poorly executed, but because their pricing had been set years earlier and never revisited, their operational complexity had grown over time, and the internal staff time they consumed had never been visible in the numbers.
Scenario planning was conducted for each of the three loss-making events: what would need to change — in pricing, format, sponsorship revenue, or cost structure — to make them viable? For one event, a viable path to profitability existed through sponsorship development and a modest ticket price increase. For the other two, the analysis indicated that viability would require changes to event format that would likely alter the character of the events in ways the team was unwilling to accept.
The Results
The directors made the decision to discontinue two of the three loss-making annual events. The third was restructured with a revised sponsorship strategy and repriced for the following year's edition.
The operational capacity freed by removing the two discontinued events was substantial. The core events team recovered an estimated 340 person-hours annually that had been absorbed by events generating no financial return. This capacity was redirected toward business development for higher-margin corporate event work and the production of two new events designed from the outset with profitability targets built into the brief.
Within 12 months of the model going live, the business's EBITDA margin had improved from 9% to 21% — a 12 percentage point improvement. Revenue was slightly lower in absolute terms due to the discontinued events, but profit in dollar terms increased by approximately $155,000.
Equally important was the change to how the business evaluates new event opportunities. Every prospective event now goes through the profitability model before a proposal is submitted. The sales team has pricing floors for each event category, derived from the model's cost structure analysis, below which they will not quote without a deliberate strategic rationale.
The investor who first asked "which events make money?" now has a business where that question has a clear, data-driven answer for every event on the calendar.