Charging enough—but not too much—for
your event planning services is key to ongoing business success. It's important
for first-time business owners, therefore, to proceed with caution as they
begin to estimate the cost of holding events. The goal in pricing a service is
to mark up your labor and materials costs sufficiently to cover overhead
expenses and generate an acceptable profit.
According to industry experts, fees
are typically determined by three factors:
1. Market segment served. Social events have a different fee structure than corporate
events. In the social events industry, planners typically charge a fee for their
services, plus a percentage of some or all vendor fees. If you were to break
down your event planning fee into an hourly charge, a social planner would,
according to industry expert Patty Sachs, make anywhere from $12 to $75 per
hour, plus vendor commissions.
In the corporate events industry, however,
planners typically charge a fee for their services, plus a handling charge for
each item they contract. For example, a planner buys flowers from a florist,
marks them up (usually by 15 percent) and charges that amount to the client.
Another possibility is a flat fee, or “project fee,” often used when the event
is large and the corporation wants to be given a “not to exceed” figure. Sachs
estimates an hourly rate for corporate planners of between $16 and $150, plus
vendor commissions.
2. Geographic location. Fees are higher in the Northeast, for example, than in the
Southeast. This difference reflects the variation in cost of living. In addition,
areas of the country with well-defined on- and off-seasons, such as the
Hamptons in New York or Martha’s Vineyard in Massachusetts, for example, base
their prices partly on the season involved.
3. Experience and reputation of the
event planner. If you're just starting out in the
industry, it's reasonable to charge less for your planning services while you
gain expertise. A word of caution, though: Don’t charge too little just to get
the job. Although clients shop around for the best price, a planner who comes
in too low with an estimate may be as off-putting as a planner who comes in too
high. Your client may question your ability to throw a top-tier event based on
the price you have quoted.
So how are the above-mentioned
fees-for-service calculated? Most event planners price their fees-for-service
(the total cost to the client) using a “cost plus” method. They contract out
the labor, supplies and materials involved in producing an event and charge
their clients anywhere from 10 to 20 percent of the total cost of the event,
with 15 percent being a rough average.
Before you can begin planning an
event, you have to know exactly what your clients want and what they can spend.
Then you estimate how much it will cost to contract for labor and supplies, add
your commission and present the total fee for services to the client as an
estimate. Below are some possible per-event expenses:
- Site rental. Depending on the event, site rental fees can be considerable, nonexistent or anywhere in between. This is an opportunity for you to save money for a client on a tight budget. Perhaps a client wants a scenic summer barbecue. A site at a public beach can often be reserved for practically nothing while tony beach-side clubs often command premium prices.
- Vendors. This category could include a caterer, bartender, decorator, florist, photographer, entertainer or videographer, among others.
- Supplies. Any supplies not provided by vendors or the client will need to be purchased by your company. This can include anything from food to potted trees to table candles.
- Equipment rental. You may need to rent audiovisual or lighting equipment.
- Licenses and permits. Some types of events require special permits or licenses, such as a fire marshal permit or a license to use a musical score.
- Transportation and parking. If the event requires you or your staff to travel or requires the provision of transport for attendees or speakers, there may be significant transportation costs.
- Service fees and gratuities. Hiring temporary help, such as servers, for the event can be costly.
- Speakers’ fees. Conferences and other educational or commemorative events often involve speakers.
- Publicity and invitations. A large event may be heavily advertised, but even smaller events might entail the use of fliers. Invitations are also frequently necessary.
- Mailing and shipping. If you're mailing out invitations or fliers, don’t forget this expense. Some event planners even ship flowers.
- Photocopying and preparation of registration materials. Any handouts for attendees or photocopying of fliers fall under this category.
- Signage. Any signs or banners designed for the event should be figured into your per-event expenses.
Once you know which of the above
expenses you'll incur, you can prepare an estimate of the event cost and the
fee-for-service. First, find out the going rate by contacting three of each
kind of vendor and supplier you'll need. Then calculate the costs for each
category listed (and any others that might arise), add them up and add a small
amount for unforeseen expenses.
When you give an estimate to a
client, you may want to present it in the form of an itemized list. Show each
vendor or supplier separately, with a brief description of the services they're
to provide, and list the price of each service. This strategy is helpful for
reminding clients that your company will receive only a small fraction of the
total fee for services.
