Determine the Best Pricing Model For Your Event Management Services

The usual reaction when you say that your business is event management is somewhere along the lines of “Oh, cool story bro, but what is it exactly that you do?” Face it, your job title sounds somewhat insubstantial to most people. The best you could hope for in most cases is that they think you have something to do with marketing (which is true) and/or promotion (which is basically the same thing as marketing in most people’s eyes).

The usual reaction when you say that your business is event management is somewhere along the lines of “Oh, cool story bro, but what is it exactly that you do?”

This also means that it will be hard for most people – and this, unfortunately, includes clients – to determine what your service is worth. So, all this ultimately means that it is up to you to set a price for your work.

Setting a price for your services

But how to determine what price is appropriate? How to know you are not underselling yourself, your skills and experience (providing you have any)? How to be sure your price does not come off as too high in the eyes of the potential client, who probably doesn’t have a clear grasp of what it is exactly you will be helping with? Of course, experienced clients know well enough what is your role and the value you bring to their event. But even they, being so experienced, often fall into what I like to call the “80-20 trap”. The “80-20 trap” is a frequent misconception that event planning, organization and management are strictly common sense affairs and that clients’ can handle most of it themselves, only hiring you to be there on the day of the event to make sure that everything runs smoothly. And it’s a trap designed to capture you exclusively, because it funnels event managers into charging for their services per hour, which creates expectations that every service you or your event management company provides will be priced in this manner.

Avoid the 80-20 trap with hourly pricing

Let me make this clear: you should not never enter into those kind of arrangements, unless you have worked with the client previously. Not only because you will in effect be relegated to the role of an overseer, but because you are setting yourself up to be responsible for things – and problems – you did not have a hand in creating. Okay, let’s not digress further and let’s get into the nitty-gritty. So, what should you consider when determining your price and what pricing model is suitable for your services? (Note: of course, the assumption here is that you are a (relative) novice in the industry, you don’t get to be an experienced event management professional without knowing how much to charge your clients.) The first question you have to ask yourself is: are you going to be specialized for a specific market segment? The answer will go a long way towards informing your fee structure.

Choose your market segment and pricing model

Various market segments have differing standard operating procedures when it comes to how you charge for services. For example, when you are dealing with social events, it is usual practice to get an upfront fee for your services in addition to a fixed percentage of vendor streams. Corporate occasions, on the other hand, are more elaborate and thus expensive and it is customary to use a fee plus costs model: event managers charge a rate for their services and then pass on all additional costs. The main criteria for determining pricing itself are your operating costs and industry practices. So, as is almost always the case, information is your best friend.

Research your operating costs and competition

You should know your operating costs in as much detail as possible, including prices for various potential equipment providers and outside vendors. These should actually be easy to get, since they should have their prices already determined and ready to be delivered to you upon request. It’s their job, after all. The second part of this is a bit more challenging. In order to get a feel for what your potential competition charges you will need to get a hold of some insiders in the event management industry or find some other way to keep an eye on what your competition is doing price-wise. If you are not in a position for that, there is not much else you can do but rely on determining what your minimum acceptable profitability would be, based on your operating costs. Another thing to consider when determining your price structure is the geographic region you are operating in. You can’t charge the same in India and in the United States – or in different parts of United States for that matter. Adjust any fee in accordance with average income in the area.

Select a pricing structure that works for you

Finally, there are several approaches to structuring your charges. Most event management services offer a fees-for-service framework, with a “cost-plus” method. This means that they contract outside vendors for equipment, supplies, and materials involved in an event production, including entertainment and speakers, and charge their clients a fee, calculated as a percentage of the total cost of the event – usually somewhere along the lines of 10 to 20 percent. Another popular model is the so-called per registrant model. Here, you also charge a percentage fee, but for each charged registrant – or you simply charge a flat per-registrant processing fee. Yes, I’ve known people to get away with both at the same event, but I consider that bad practice, because the client could find this unfair, quite reasonably might I add, and may not want to do business with you in the future. Alternatively, you could devise some kind of a tier charge system, especially if your client can be committed to organizing several events during a given period, say, three or six months. You could even work for a flat monthly fee, but make sure to take production and overhead costs into account when calculating it. This charge structure is perhaps better left to the more experienced professional. Determining a pricing structure that will facilitate profit and growth is actually where the vast majority of new businesses (including event management companies) tend to come short, as fresh-faced managers often underprice their services. And if you do that you easily may not be able to meet overhead costs and you will not last long in the cut-throat but exciting event management industry.