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How Much Should an Office Holiday Party Cost?

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Mini Snickers Bars and Kit Kats are selling like hotcakes, which can only mean that Halloween is just over the orange-and-black horizon. And right after that is Thanksgiving and right after that is already the winter holidays. Questions and strong opinions arise: What are we doing for the break? Do we need to fly anywhere? And, oh yes, we should have a holiday party at work.

This year has been an interesting year, though perhaps somewhat average in terms of growth — 2013 will never be confused with a year during the peaceful and prosperous 1990s, but it surely wasn’t as disastrous as 2008, either. The stock market is high; the unemployment rate is declining (too) slowly; the credit markets are somewhat well-oiled again. So then how much, in this pretty average year, should you spend on your office holiday party?

The Work Party, By the Numbers

While businesses vary wildly in degrees of success (or struggle) and in terms of size, a solid rule of thumb is planning to spend $75 per person for the holiday party. So if you have 10 employees, consider shelling out $750.

A study conducted by HR consulting company ERC last year gives a nice snapshot of holiday party data in the middle of the country, showing 73% of all companies surveyed were planning some sort of holiday celebration. So if you’re thinking about skimping on a party altogether, you may be in the minority.

About half of all parties were luncheons, according to the study. Though perhaps less fun than a dinner/dancing bash, this is a great way to save money as employees (one would hope) don’t drink as much on Tuesday afternoons as they do on Saturday nights. Or, if you have an evening shindig and you’re cost-conscious, you could cover everyone’s first two drinks by giving out tickets to be redeemed at the bar — with a cash bar afterward.

There’s also the question of whether to invite employees’ significant others to the festivities. Doing so would obviously nearly double the cost of the party; in last year’s study, 30% of companies reported that they invited partners. Only 7% invited children. So again, keeping with the $75 per person framework, if you’re budget-conscious consider going with the lunch party, as that model lends itself much less to inviting family members and mates.

But do the costs end there? Not really, according to the data. Holiday parties, on top of a general show of appreciation for your employees, can also be a time to showcase your generosity. Accordingly, 53% of companies reported giving out some sort of gift to employees at the event. One cost-cutting tip here would be to have a raffle. Buy something moderately sexy like a new iPad and raffle it off to a lucky single winner.

Be Strategic With the Budget

Then there’s the question of entertainment. Assuming you’re having an evening event, try to stay away from the live entertainment if your costs are already escalating. While it may be considered more fancy to have a band at a party, a DJ will do the job just fine. Think back to some of the best times you’ve had at parties, anyway — most likely a DJ was in the front of the room, not some dude playing a pan flute.

Lastly, there are invitations. This is a holiday party for your office, not a Bar Mitzvah or a wedding. You don’t need to send out a fancy invitation in the mail. In fact you don’t need to send out an invitation in the mail at all. Go for the free simple solutions like Evite or just crank out a quick promo campaign.

So let’s break it down: $75 per person seems like a fair baseline to start, though of course that number will vary quite a bit depending on location. New York City will be much pricier in terms of locking down a venue and feeding folks than Manhattan, Kansas. Clearly you can control that figure directly by managing your invite list; you should feel compelled to invite everyone in the company (exclusivity is not good for morale), but don’t by any means feel obligated to invite children and partners.

The other levers to pull are slightly more indirect. Figure out the time of day of the fiesta, and then the dominoes should fall in line regarding the spending on alcohol and entertainment. The earlier in the day you throw the party, the less money you will spend — though perhaps an evening party will create more lasting memories.

In any case, while budget concerns are a high priority, don’t get too caught up in the cost. Remember the reason for the party in the first place: to show your appreciation for your staff. Certainly this hasn’t been the best of all years for businesses, but the fact remains that the commitment and dedication of your team is the backbone of your company.

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