The goal in pricing a service is to mark up your labor and material costs sufficiently to cover overhead expenses and generate an acceptable profit. First-time business owners often fail because they unknowingly priced their services too low. According to industry expert and author Dr. Joe Goldblatt, fees are typically determined by three factors:
- Market segment served. Social events have a different fee structure than corporate events. In the social events industry, planners typically receive a fee for their services, plus a percentage of some or all vendor fees. The two income streams produce enough revenue for a profit.
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 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.
- Geographic location. Fees are higher in the northeast United States, for example, than in the southeast. This difference reflects the variation in cost of living. In addition, areas of the country that have well-defined on- and off-seasons base their prices partly on which season they're in.
- 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.
How, you may ask, are the above-mentioned fees-for-service calculated? Event planners we interviewed 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 a service fee of about 10 to 20 percent of the total cost of the event, with 15 percent being a rough average.