I am a big fan of weddings!

One after another over the years, I have thoroughly enjoyed The Event, especially including my own thirty years ago this week. It’s not just the ceremony, mind you, but all of the ancillary “stuff” – the welcoming party, the meet-and-greet, the obligatory pre-wedding athletic activities (a high-energy generator), the toasts, the food, the drink, and especially the music and dancing.

Driving home last weekend from the latest of these memory-makers, featuring my nephew Peter and his now-wife Molly, I began to do a little mental number- crunching, borne of my role as “The Producer” of my daughter Kate’s wedding last summer. Among several lessons that I learned (some of them after the fact) were the following:

1. The direct cost is just the first step in the calculation;

2. Semi-variable costs have a way of sneaking up on you; and

3. As in almost every viable economic model, controlling the overhead is critical.

In the wedding business, everything revolves around the head count: 50 guests is different from 150 guests and very different from 300 guests. This “production size” controls the selection of the sites for the ceremony and the reception, which is the key element in fixed costs. It also determines the basic variable cost, as a multiple of the per-person price for food and beverage. The add-ons – the “features and benefits” – help to memorialize the event (or “product”) with music, flowers, invitations, table decorations, clothes, photography, and so on. These all might be considered semi-variable costs.

The first number, then, that The Producer confronts is the total variable cost, perhaps $100 (food and beverage) for each of 150 guests, a price tag of $15,000. With the addition of the semi- variable and fixed costs, however, the tally may turn out to be more like the current average wedding cost in the Northeast of about $30,000, or $200 per guest.

Similarly, in a manufacturing organization, the basic cost of a unit of production is for labor and material (think: food and beverage). This varies directly with the number of units produced (i.e. the more guests, the higher the total cost).

In the middle of the equation lie the semi-variable expenses, those that tend to ratchet up or down as you pass certain thresholds of production complexity (think: music – maybe a D.J. for 50, a three-piece combo for 100, or five pieces and a vocalist for 200).

At the other end of the spectrum are fixed costs for the plant and equipment (think: site). The more units that you can produce within these fixed costs, the lower your unit costs, e.g. –

$200,000/yr. fixed cost with 400,000 units = $.50/unit $200,000/yr. fixed cost with 800,000 units = $.25/unit

The financial challenge for the manufacturer is threefold:

1. To reduce direct costs (labor and materials) by increasing productivity;

2. To control semi-variable costs on the plant floor; and

5. To expand production while holding fixed costs constant.

Each unit of production has to bear its share of all of the costs, a total which includes (a.) the direct labor time and material for each unit, plus (b.) the manufacturing overhead costs, plus (c.) the Selling, General, and Administrative expenses. Dividing the budgeted annual total for b. and c. by the projected number of units to be produced for the year establishes the burden rate. This plus the direct costs (a.) provides an approximate unit cost, which means that selling out the production run should cover all of the expenses, if the price is right.

The selling price for the product, net of all discounts and allowances, has to cover the total of these three elements, plus a provision for income taxes and net profit. It really is as simple as that, even when there are multiple products, a variety of distribution channels, inventory valuation issues, and subcontracted work to be accounted for. The key is to account for all of the costs on a timely basis, to budget overhead expenses, and to compare the projections with the actual results each month to maintain control.

The pay-off for the manufacturer who knows his/her costs and is committed to controlling them within the projected revenue is a quantitative result – a positive bottom line. The pay-off for The Wedding Producer when the bills come in after the wedding is to have no surprises and to relish the qualitative result – it was worth every cent!

Alligator Bites

Assessments of worth, of course, can vary greatly from group to group and from culture to culture. The Officiant at Pete and Molly’s wedding, Dr. Brett Bruyere, shared this story during the ceremony:

I recently spent a month in Kenya, in the Samburu region where I have been before, with some of the most friendly and hospitable people you will ever meet. I was working on today’s ceremony, sitting at a table under a thatched straw roof next to a river, surrounded by copies of emails that Pete, Molly and I had exchanged, potential readings, drafts of old outlines…..and this piqued the interest of one of field camp workers, Titus, who inquired about what I was doing.

I told him about the upcoming ceremony of two close friends, and to take advantage of an opportunity for cultural exchange, I asked Titus what the protocol and ceremony would be like in the Samburu region. He said it depended on a few things about the bride, and he asked me questions about Molly.

“Is she educated?” “Very much so. She has a college degree.” “What is her vocation?” “She works as a teacher.” “Is she beautiful and honest?” “Absolutely, inside and out, and with a tremendous smile.”

Now given that Samburu are primarily still a pastoral and nomadic culture, there were some additional questions regarding Molly’s ability to watch over herds of livestock and whether or how she could slaughter a goat, but I considered those to be irrelevant. Overall, Titus’ conclusion was that given Molly’s level of education, her vocation as a teacher, and beauty, that this would call for a celebration of far- reaching scope, and that Pete would be the envy of the entire village.

And then Titus had a question of his own. He asked:

“How much must the groom pay the bride’s father to marry her?

Titus’ question made me curious.

“How much would you suggest?”

He thought about it for awhile. A good long minute at least. “I believe she is worth 18 cows and 6 goats.” More than money, livestock is a sign of wealth and prosperity in Samburu culture. It is a trademark of their culture. To put this into context, Titus’ estimate is quite a compliment: he said he knew of no other scenario in Samburu in which the dowry included so many livestock.

When I explained to Titus that in fact Pete must pay nothing to Molly’s father, and that in fact the traditional approach is for the bride’s father to pay for the marriage ceremony, he remarked – with all due respect to Molly’s dad – “That man is silly. He could get a lot of cows for a daughter like that.”

Titus’ assessment is certainly on-target with what all of us also know, that Molly is a wonderful and special human being.

Draining the Swamp

According to SmartMoney.com, the breakdown of costs for a budgeted $30,000 wedding looks something like this:

Reception	$14,400	(48%)
Photo / Video	$ 3,600	(12%)
Attire	$ 3,000	(10%)
Flowers / Décor	$ 2,400	( 8%)
Music	$ 2,400	( 8%)
Tips / Taxes / Overages	$ 1,500	( 5%)
Ceremony	$ 900	( 3%)
Stationery	$ 900	( 3%)
Wedding Rings	$ 900	( 3%)
Gifts	$ 900	( 3%)
Transport.	$ 600	( 2%)
Totals	$31,500	(105%)

 

Source: The Knot