Tour Budget Roadmap: A Step-by-Step Guide

How to Create a Tour Budget

Creating a tour budget is one of the first things you need to consider when preparing to hit the road. It is the financial roadmap that enables you to make informed decisions about how to allocate funds and spend money. A tour manager is many things, but one of the most important responsibilities is being the financial steward of an artist’s touring finances.

The principles of creating a budget are the same no matter the level of touring. Getting in the habit of creating budgets for smaller tours can only help you as you grow your career in the live events industry. In this article, we will discuss best practices for developing a tour budget alongside an artist’s management and business management.

Key Skills for Successful Tour Budgeting

Let’s assume for a moment that you have no prior experience building a budget and you want to learn more. What are some skills you can work on to practice and prepare?

Technological proficiency. A solid understanding of Excel or Google Sheets is essential when it comes to budget building. Plus, it’s a great skill to have in general.

Attention to detail. Being able to catch small things can lead to substantial savings and more enjoyable days. Additionally, you want to show people that you’re able to create error-free, accurate work.

Planning and organization. Having a good organization system in place before starting on a budget is going to streamline the entire process. Email organization, folder structure, and file naming conventions will save you heaps of time.

Negotiation skills. Building relationships with vendors is key in the live entertainment business. A good practice is to get a minimum of 3 quotes from various vendors. This will help you to secure a fair price to meet the needs of your tour.

Risk assessment and management. Sometimes the lowest price is not necessarily the best price. It’s important to use judgment when hiring vendors, especially with those you haven’t worked with. You might save money on the front end, but when things go wrong, is that low-cost budget vendor going to answer your call at 3:00a?

Communication skills. Being able to communicate in a way that allows the artist and their team to make decisions without being bogged down in technical terms is a desirable skill.

Financial literacy. You do not need an accounting degree to create a tour budget, but financial literacy goes a long way in building trust with an artist and their team. Being able to speak the language of touring finances helps to build confidence.

Adaptability. The budget is a dynamic document that lives and breathes over the course of a tour. Being able to adjust course as necessary is a good skill to have.

Questions to Consider Before Creating a Tour Budget

There are a few things to consider before starting a tour budget. Think of this as the discovery phase when you’re first coming on to a tour. Every artist and organization is going to handle this differently, but it’s your job as the tour manager to ask the right questions and get the ball rolling.

  • What size venues are you performing in?
  • What region of the world will you be touring?
  • What is the length of the tour?
  • Is this a new artist or an established artist?
  • Do you have an existing band and crew?
  • What is the creative vision and goal of the tour?
  • What are the logistical considerations of the above?
  • What is the anticipated income?

By no means is the above an exhaustive list, but you can use it as a starting point to uncover other important questions that you need to ask. Think of the above as the first layer of figuring things out. Creating an accurate budget is all about asking questions.

Budgeting for Different Styles of Tours

Tour budgets come in all shapes and sizes. While the overall concepts remain the same (capturing income and expenses), different styles of touring require different budget templating solutions. Each of the following examples raises a different set of considerations and questions to explore. Here are some examples of different styles of touring that would require different approaches when building a budget.

Van Tours. In this scenario, you’re going to have a smaller touring crew and you’ll be traveling with limited production. You’ll often be driving during the daytime, and sleeping at hotels after the gigs.

Nashville Touring. Nashville-style touring generally involves everything being based in or around Middle Tennessee. This includes the band, crew, and vendors you’re working with. Long-term bus leases are more common in this style of touring, along with a crew that is on salary. The departure date is normally Thursday evening and returning Sunday morning.

Routed Tours: Club Level. A common style of touring in North America and Europe. You will leave for a predetermined length of time, focusing on markets in a geographic region. This could mean a full North American run, a west coast routing, or something else entirely. Festivals are often involved in this style of touring.

Routed Tours: Arena Level. A larger production means more personnel, gear, buses, and trucks. This means more money spent, specialized roles, and an increase in your overall expenses. The same concepts learned in club touring, apply to arena-level touring, just on a larger scale.

Fly Dates. Fly dates are generally not part of routed tours. They are standalone “one-off” dates that you are unable to route to, so you fly in. In this style of touring, it’s good to ask some of the following questions: What touring crew will be required for the gig? Are you traveling with a fly pack? Does it make sense to hand carry or should you consider cartage? Do these back-to-back fly dates?

International Touring. Self-explanatory, but this is when you leave your home country to tour a different region of the world. Touring internationally involves a whole other set of budgeting considerations. What is the cost of international flights? Do the countries you are going to require visas? Do you need to hire a visa processing agent? Will you be carrying production? Will you need a carnet? Do you need an international accountant? What is the exchange rate? Are there foreign taxes?

Press and Promo Events. These can involve radio tours, late-night television performances, and any number of other styles of media outlets. Sometimes hair and makeup artists, along with wardrobe specialists will be hired for these events. It’s good practice to break these costs out because they are often reimbursable depending on the artist’s label agreement.

Rehearsals. More often than not, this will occur directly before the departure of a tour. It is part of the overall tour, but it can be helpful to break out these expenses to get a better sense of the rehearsal costs.

Touring Income: Identifying Revenue

The first step of creating a tour budget is to identify sources of revenue. Generally, this is going to come in the form of artist guarantees. An artist guarantee is the amount of money that is expected to be received for a performance. There are different ways that these deals can be structured. For the sake of simplicity, let’s assume we are on a run that only consists of flat guarantees.

For example, the artist guarantee might be $10,000 USD per show. Regardless of the number of people who attend, the artist will receive $10,000 USD. If a tour is selling poorly, sometimes a reduction may be requested by the promoter, but that’s beyond the scope of this article. On the flip side, certain performance agreements may include a bonus structure or backend. At a certain number of tickets sold, the artist will receive additional compensation.

Think of the total revenue as the parameters that a tour’s expenses must fit inside to remain profitable. However, margins are often incredibly slim for an artist who is just starting out. Lots of newer artists will only break even going on their first tour, or even lose money in some cases. Often, this is part of a longer-term strategy for growing their brand and business. Eventually, they would want their tours to become profitable.

Other Sources of Touring Income

Other forms of touring revenue might include merchandise, VIP activations, brand sponsorships, and tour support. It’s good practice not to include any of these variable sources of revenue in your initial budget. You don’t want to budget for income that may not ever materialize. Even when a tour is selling well and reaching a backend bonus is anticipated, leave that part out to create a more financially conservative budget.

The touring side of an artist’s career can sometimes be supplemented by other revenue streams the artist may have, but this is something that would typically be handled by management and business management. They will have a better grasp of the full picture of an artist’s finances. The core touring budget still needs to be built, but how certain items or staff get paid for may be coming from something other than artist guarantees.

Touring Expenses

Identifying touring expenses, and properly capturing them in a budget is a time-consuming and necessary process. Involving an experienced tour manager, tour accountant, and production manager during the pre-planning stages of a tour can help to reduce costs in unforeseen logistical considerations.

Oftentimes, the tour will already be routed by the time a tour manager comes on board. It then becomes the job of the TM and PM to figure out a way to make the tour happen in a way that balances cost-effectiveness, comfort, and logistics.

Payroll

Payroll expenses are going to be one of the largest line items when building a budget. What band members and crew you hire will largely be informed by room size and the scale of the production you are traveling with. An arena run is going to have much different staffing needs compared to van touring. You will also likely see roles combined on a smaller tour.

Sometimes an artist who is just starting out will sometimes tip out crew members of the headlining band to help save on overhead. This is something that needs to be discussed and approved by the headliner’s production manager and crew. Smart touring crew members understand that today’s support act is tomorrow’s headliner so it’s a win-win.

Keep in mind that when you add personnel, you are also adding flights, hotels, per diems, and additional expenses to your bottom line. There is a little bit of a chicken and egg scenario as you build everything and figure out what staffing configuration is going to be both cost-effective and meet the tour’s needs.

Don’t forget to include any type of pre-production advancing fees that have been negotiated. Often this will come in at 25% to 50% of the length of the tour. IE: A 30-day tour’s wage multiplied by 25% to 50% equals the amount of compensation for advance work done before the start of the tour.

Payroll Taxes

With payroll comes payroll taxes that are paid for by the employer. Take the total amount of payroll and multiply this by 18-20%. This is to pay for the employer’s portion of federal, state, and local taxes. Please note, this assumes that the band’s business is based in the United States. Please consult a local business manager for advice on taxes in other regions of the world.

Per Diem

Per diem is paid out on a daily basis. More generally, it is paid out as a lump sum on a weekly basis. It is intended to cover out-of-pocket expenses for employees. Generally, these are paid out at $25 – $35 per day, per person. In major metropolitan areas, it is often paid out at a higher rate. Per diem can be paid out as cash on the road, but more commonly, it is included in a direct deposit with the employee’s weekly wage. Please note that per diem is non-taxable.

Flights

  • Plane Tickets
  • Baggage Fees
  • Travel Agency Fees

Oftentimes, a tour will start and end with a flight. Figure out what your routing looks like and start asking questions. Who needs to fly? In what class? Will we be traveling with a fly pack? Is there a preferred carrier? How many bags are the band and crew traveling with? Are these domestic flights or international flights? Are you using a travel agent? What is the travel agency’s fee for booking flights? Could regional trains be a better option?

Once you know the routing, you can go through and figure out what is going to make the most sense. Another question that sometimes gets asked is when to fly in. Some artists prefer to fly their band and crew on the day of the show. This saves on the cost of accommodations, payroll, and per diems, but risks blowing the gig entirely if there is any kind of flight delays.

Hotels

  • Artist Rooms
  • Band Rooms
  • Crew Rooms
  • Driver Rooms
  • Day Rooms

Depending on the budget of the tour you are on will inform what properties you stay at. Will you only have a shower room on days off? Are there shared rooms? Single occupancy rooms? What if the venue doesn’t have a shower? Are there multiple traveling parties on the tour? Do you require certain amenities? What property makes sense for your bus driver?

On a mid-level tour, it’s a balance of trying to find properties that have a balance of the right location, amenities, and cost. Sometimes it makes sense to spend a little more on a property in a better location, versus going for the cheaper property if it means the tour can be next to food options and something fun.

Certain cities are going to cost more than other cities. Because of this, it can often be a good idea to approach the hotel budget holistically. Saving money in one city gives you wiggle room to spend above your daily budget in other cities. Obviously, if you can come in under budget overall, then that’s the move.

Production

  • Backline
  • Audio
  • Lighting Design
  • Lighting Rentals
  • Video
  • Scenic
  • SFX
  • Radios & Wifi
  • Carnet & Cartage
  • Road Cases
  • Gear Purchases
  • Gear Rentals
  • Production Supplies
  • Gear Storage
  • Wardrobe
  • Rehearsal Space

Production can feel like a bit of a puzzle to solve at times. It’s really something that has to be figured out on a case-by-case basis. On a mid-level club tour, you are often reverse engineering what can fit into either a bus trailer, box truck, or semi-truck. Some artists want all the bells and whistles and don’t care if it’s going to add another crew bus or semi-truck to the budget.

As the size of the production grows, so do expenses. A tour that might be profitable, can quickly find itself in the red. All the more reason to hire an experienced production manager.

Transportation

Transportation is going to be another one of your most substantial line items when creating a tour budget. The cost of buses and trucks continues to rise year after year.

There simply isn’t enough supply to meet the demand, causing prices to soar. Even if the cost was of no importance, tour and production managers are having a hard time securing buses and trucks simply because of availability.

Most buses can be set up for a 12-bunk configuration. Some European-style vendors offer 16-bunk setups. A tour that exceeds 11-12 touring personnel means you’re having to add another bus. Sometimes a co-driver is necessary, but it depends on the routing of the tour.

Fuel is going to be your largest variable expense on a tour. Some companies will offer an all-in quote but if prices substantially increase, they will charge you back for the difference. Budget high to avoid any issues.

Insurance

  • Equipment Insurance
  • General Liability
  • Workers Comp
  • Travel Insurance

Although insurance is not something people like to pay for, it becomes highly appreciated when needed. Having appropriate insurance policies in place will repeatedly prove to be valuable when unexpected events occur.

Admin

  • Phone & Internet
  • Shipping
  • Office Supplies
  • Credentials
  • Bus Stock & Meals
  • Wire Fees
  • Gratuities

These items often escape one’s attention when building a budget, but their costs accumulate quickly over the course of a tour.

Professional Fees

  • Management
  • Booking Agent
  • Business Management
  • Legal

These fees are going to vary depending on the organization you are working for. Deal structures continue to rapidly evolve in the music business. Historically, management would receive 15% of gross revenue, booking agents would receive 10% of performance revenue, and business management would receive 5% of gross. Legal will vary depending on the scenario, but budgeting 2% of gross revenue is generally a good move.

Taxes

  • State Taxes
  • Foreign Taxes

Business management will have a list of states and foreign territories and the rates at which they withhold taxes. Make sure you do due diligence and set aside money to avoid an unpleasant tax bill at the end of the year.

Contingency

The addition of a line item for contingencies helps to account for any unforeseen expenses or increases in price in a budget. A good rule of thumb is to take all of your expenses, add them up, and then multiply everything anywhere between 5% to 10%. Murphy’s Law will rear its head at some point during your touring career. When it happens, you’ll be glad that you added contingency to your budget.

Intangibles

As a tour manager, you have to make decisions that take into account both the bottom line, along with how certain decisions are going to impact the overall health, rhythm, and morale of the tour. Touring incurs an intangible cost in the currency of morale. There is a give and a take here, and the more experience you gain as a tour manager, the more in tune with the needs of your traveling party you’ll become.

Conclusion

As you advance in your career in the touring industry, you will encounter a multitude of tour budget styles. To ensure success, it’s important to aim for a tour budget that is both easy to understand and follow. Over time, you will find opportunities to refine and improve the presentation of your budget through adjustments to your spreadsheet design. Stay flexible and open to change to ensure your tour budgeting process remains effective.