Posts Categorized In Pricing Models:

The Day-Of Planning Dilemma

Posted July 14, 2011

Here’s an advance peek at my next In Business column for Event Solutions magazine.

“I think I can plan the event myself.  I just want to hire you to be there the day of the event.  You know, just to make sure everything goes smoothly.”

If I had a dollar every time an event planner was told this by a potential client, I’d be sipping cocktails on a beach in the Caribbean.  Forever.  Because I’d be able to own the island.  (Tell me I’m wrong).

The Planner Wanna-Be

For better or worse, this is reality, and complaining about it is like trying to hold back the tide.  These are the facts:

  1. There are lots of clients who are planner wanna-be’s,  That’s good, because it means we have cool jobs that people want to emulate.
  2. The wanna-be’s know that their event is too important to do it completely on their own, and know they need some level of professional support (even if it’s just day-of).  So let’s say there’s this final 15% of the planning process where they perceive enough value in what we do that they’re willing to pay for it.  That’s also good.
  3. But the wanna-be’s don’t perceive enough value in the other 85%.  And that’s not good.
  4. There will always be SOMEONE who’ll take a few bucks to show up ‘day of’ and try to be some kind of security blanket to the client.  That’s neither good nor bad; it just is.

[One way to look at these wanna-be’s is not so much as full paying clients who now want to just pay for day of, and instead think of them as an entirely new market sector who never would have hired anyone at all.  The market for planner services has grown, and this kind of thing is an inevitable step.]

That said, the biggest challenge planners face in showing up the ‘day of’ is that you’re literally walking into an event planning s**t storm.  It’s like being given a Stop sign, a whistle and a pair of white gloves and being asked to direct traffic at the roller derby.

Option 1: Educate the Client on the Value of Full-Service Planning

Odds are this is the crux of the problem.  Look, if you got arrested, you’d never think of saying to your attorney, “I think I can handle my defense myself (I was on the Debate Team, you know), but I’d like to hire you to just sit next to me the day of the trial.  To make sure things go smoothly.”

Can an attorney provide SOME value showing up the day of the trial?  Yeah, but given what’s on the line, wouldn’t you prefer he look at the case files in advance?  Of course you would, because you’re smart enough to know that you don’t know law.  So your job here, is to educate the client on all that goes into the planning process to insure a successful event.

Space constraints prohibit me from doing so here, but here’s a suggestion to help you out:  start keeping a journal and jot down all the things you do that a typical wanna-be doesn’t realize you do.  The list will grow quickly.

This is part of the value you bring to the table, along with your experience, creativity, vendor relationships, etc.  Getting to the point where you realize the full value you offer, and being able to communicate that to a client and stand behind it, is the holy grail of running an event planning business.  It’s the key to everything.

Option 2: Re-Think ‘Day-Of’ as ‘Planning Lite’

Clients came up with the whole day-of idea, but that doesn’t mean we have to stick with it.  What they really want is very limited planning; that last 15%, as some kind of insurance policy against an event disaster.  So how about you re-frame your service offerings as ‘Planning Lite’, and give the client 8 hours the day of the event, plus let’s say 6 hours in advance, broken down into 1 hour calls or meetings with the client every month for the 6 months prior to the event.

This accomplishes two things.  (1) It prevents you from walking in totally blind, and (2) More importantly, it gives you a chance to up-sell the client and convert them into Full-Service Planning along the way.  Each of these 1 hour planning discussions is an opportunity for you to show your stuff, and invariably the client will start to see all the important things you should be doing on their behalf, but can’t, given the limitations of Planning Lite.

If you do go this route, be up front with the client about the limits of what you can accomplish with Planning Lite, and be sure to advise them you can’t be responsible for the event’s success, but you’ll do your best  to make things go as smoothly as you can.

One benefit to this kind of service, is it really forces you to track your time.  When I teach my class on Planner Pricing, regardless of the pricing model people choose, I tell them it’s critical to know how many jobs you can do in a given year, which requires time tracking.

Everyone Hates the MiddleMan

Posted June 16, 2011

Do You Just Markup Your Vendors or Do You Add Real Value?

I’m sitting on the plane ride home from the BizBash West Expo, where I gave a 3 hour workshop called “The Business Accelerator for the Independent Planner: Best Practices for Building Your Event Company”.  (The next one is in Chicago on August 18th, then in NYC on October 19th).  I’m in the aisle seat and am having a bizarre episode with the man sitting in the middle seat next to me that is reminding me of an interesting discussion we had in our class on marking up vendors.

Maybe “episode” is the wrong word.  Here’s the thing:  we’re in a row of three seats, and the window seat is empty, and for some bizarro reason, this guy refuses to move to the window and give us both an empty middle seat.  I gently give him more and more of my elbow on the shared armrest, but he’s dug in.  Now I’ve highlighted this paragraph and doubled the font size of it, hoping he’ll read it and take the hint.  But now he opens his smart phone and it’s all in Chinese, so I’m fighting the tide.  If there were someone sitting in the window seat we’d have no problem, but because it’s empty, it’s driving me crazy.

What does this “middle man” have to do with my class?  Well, when we got to the section on pricing models, we had a whole discussion about how to prove value when you’re marking up your vendors.  One guy lamented that, “my resources are my biggest assets.  What happens when my client wants to book them directly?”

That’s one of the biggest challenges of using the markup model.  But it goes much deeper.   I told him his first task is to really hone in on the value he brings to the table above and beyond just bringing in subcontractors, because if all the client thinks you’re doing is marking up a vendor, you’re just a middleman, and nobody likes a middleman.

Why?  The middleman is perceived as an obstacle to efficient pricing and fluidity in the marketplace.  Why should goods and services have to make a pit stop at the middleman on their way to the end user?  Seems like a waste, which is why one of the best marketing slogans ever invented was “we eliminate the middleman.”

So if you choose the general contractor business model, you need to counter this perception.  Here’s a few ideas we came up with that you can say to your client:

  • “I don’t just find my vendors, I manage them.  For every vendor proposal I forward you, there are 3 others I kick back to him because I know they’re not what you want.  I filter out everything that’s off base, saving you lots of time and aggravation.”
  • “I carefully evaluate and select each vendor for a specific job at a specific time.  The caterer I chose for your product launch might not be right for your gala dinner.  And they might not even be right for your next product launch in six months if I hear their chef left the company.  Some vendors work well in certain venues and not others.  Etc.”
  • “I know my vendors’ idiosyncrasies.  Some of them are always days late with their proposals, others leave key things out of their budgets, etc.  We compensate for that and isolate you from these headaches.”

Of course they can’t be empty promises.  You’ve got to actually DO all that stuff, but if you do, you will in fact be making a solid case for why vendor services are being run through you on their way to the client.

Commissions vs. Kickbacks

Posted March 1, 2011

Pop Quiz:  What’s the fastest way to make a fight break out in a room full of event planners?

Answer:  Start a debate about whether commissions are good or bad.

Yesterday I delivered a rousing seminar at the Event Solutions Idea Factory / CaterSource conference in Las Vegas.  The topic was “Show Me the Money: How & How Much to Charge for Event Planning Services”.  Everything was going great.  Of the three tracks being offered during my time slot, I was given the big i-Room, and we had a packed crowd.

Even better, the i-Room had a confidence monitor!  A real confidence monitor!  How cool is that?!  [For those of you that don’t know, this is a flat screen tv placed at the foot of the stage, facing the speaker.  It displays whatever is on the screens behind you, so when you’re speaking you don’t have to keep turning around to see what slide is being shown.]  I’ve spoken quite a bit, and though I’d arranged for tons of clients to have these at their events, this was my first time using one, and I was like a kid in a candy store.

Anyway, I’m cruising through my presentation.  We’d covered flat fees, hourly fees, markups, % of budget fees, the whole transparency/value thing, and had arrived at the commission section.  As with all the other pricing models, I went through the pros, cons and pieces of advice on commissions, and was about to get into the section on how to calculate your rates.

Here’s the last thing I said before the audience put their gloves on and went at it: “The difference between a commission and a kickback is one word: disclosure.”  It’s almost as if you could have heard the presentation skid to a halt.  Then hands flew up with questions and comments.  Really most were comments, very passionate comments.

“I will not take commissions because I don’t want that to influence who I recommend!” one woman says.  You can bet that went over well with the commission-takers in the crowd.  A Jerry Springer episode was about to break out.

I reiterate a key tenet I’d mentioned earlier: “Integrity has nothing to do with it.  If someone discloses that they take commissions to their client and the client is ok with it, that’s all that matters.”

And I believe that.  It’s my ‘consenting adults’ theory.  If your client wants to be paid with a weekly supply of Shake Shack burgers (feel free to substitute whatever local food item people will wait on endless lines for), and you agree, what’s wrong with that?

Mind you, nobody seemed to have an issue with markups, which, like commissions, are part of what I call non-itemized fee structures.  There’s something about the commission topic that elicits strong feelings on both sides, like nothing I’ve ever seen.  I spoke the day before on Prospecting: Where to Find New Business & How to Land It, and there wasn’t anything even close to this kind of divisive issue that came up.

Again, my biggest takeaway was that people should disclose whatever pricing model they use, and if you don’t disclose a commission, then it’s a kickback.  And make no mistake, a kickback has negative connotations.  It’s money you’re getting for something you’re not supposed to.  Money you don’t want people to know about.  Images of folded manila envelopes slipped into newspapers, being passed from one passersby to another at a train station come to mind.

And if you’re not disclosing it, chances are it’s because you don’t think you can justify it to your client.  The same applies to markups.  The cure for this is to work on your value proposition, and get to a point where you can openly defend the full amount of money you need to make for a project.  That’s the holy grail, to be able to tell a client, “This event is worth X dollars for me to produce it.  I can be paid for it in a number of different ways.”  And then the client’s choice of paying you a fee, or a % of budget or whatever, is no different than a store asking if you’ll pay with cash or a credit card.

FYI, if you’d like a deeper dive into this area, take a look at the White Paper I produced.

Postscript:  After about five minutes of back and forth comments from the audience, someone blurted out “lets move on”, which snapped me out of my umpiring stupor.  So let me say here, if you’re in the audience of a class somewhere and the conversation threatens to go off-topic, you have the right to yell exactly that.  It’s your time and money.  This will be Rule # 1 of my Audience Bill of Rights (coming soon).

61% of Planners Charge Flat Fee. See Rest of Survey Results.

Posted April 19, 2010

The results are in.  In preparation for a seminar I gave at Event Solutions in March in Las Vegas on pricing (“The Elephant in the Room: How, and How Much, To Charge”), I conducted a survey of 102 event planners from around the country.  Word spread that I was going to share the results, and I was quickly overwhelmed with requests.  Apparently there is a tremendous thirst for information on this topic, which prompted me to do two additional things, both of which are the reason I’ve had to wait a month before disseminating the results to everyone.

1)   I personally called around two dozen planners who completed the survey, to get further detail on some of the questions.

2)   I took the time to further analyze the information and wrote a comprehensive White Paper on the subject.  For who just want the raw data, you can download the pdf of the results here for free.  However some people wanted much more in depth information on the subject, and wanted to see a greater discussion on what the numbers mean.  If you’re one of those people, I encourage you to buy the White Paper, which at 20 pages is a pretty deep dive into this topic.

Survey question 1

What is your primary pricing model?

The question I was most interested in finding out was how planners made money.  I asked what the primary way of charging was, and the vast majority, 61%, said it was a flat / project fee.  Let me say here that there is no right way to charge; each has pros and cons, and provided the client is on board, it doesn’t matter how you do it.  However, my personal recommendation is in fact a flat or hourly fee, for a number of reasons, so I was pleased, though quite surprised, the number was so high.

On the question of commissions, 31% said they usually do accept them from vendors & venues.  If we scrutinize the numbers, however, this means that a decent chunk of planners whose main way of charging is with fees also takes commissions on the side.  (This analysis is explained in more detail in the white paper.)  Of the group that does take commissions, only 49% of them disclose this to their clients.  Personally, I think that number is really lower, as I think this is the kind of question that people tend to fudge on surveys.

I’ve become a big fan of transparency when it comes to pricing.  The main reason is it forces you to focus on the value you bring to the client, which is the holy grail of the entire equation.  So while it’s great to see that the majority of planners surveyed use some kind of disclosed fee, the commissions on the side is a potential hazard.

Hourly rate graph

What is your hourly rate?

In terms of hourly rates, 40% charge $50-99 / hour, with another 25% charging $100-149 / hour.  So two thirds are in this sweet spot of $50-150.  Most planners do not charge by the hour, and I asked those people to estimate what they would charge hourly if they had to, just to get a proper sampling.  There are numerous factors to take into consideration about these numbers, not the least of which is that they do not take into account regional cost differences, nor do they factor in differences in experience levels.  (More on these in the white paper), but it should give you a reasonable point of reference.

Again, please download a free pdf of the complete survey results below, and if you’d like more analysis, pros & cons of the different rates, etc. you can purchase the white paper.  Either way, this is a topic I’ll be blogging more about, so I’d welcome feedback from all of you on this subject, either directly on the blog as comments, or by emailing me offline with your thoughts.

Click Here for Full Survey Results

Click Here to Learn About the White Paper on Planner Pricing