Turning a Profit in the Event Planning Business

By: Crystal Nicole Soto | November 18, 2016

 

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 to be cautious when they estimate the cost of holding events. Your goal when pricing a service is to mark up the labor, and costs of materials sufficiently to cover overhead expenses and generate an acceptable profit.

Typically fee’s are determined by three factors:

1. Experience Level & Reputation

Whether you are just staring out or have been in the industry with the experience to show its recommended to not undercharge or overcharge.

2. Niche Market (Your Audience)

There are different fee structures for each industry; social events charge differently than corporate events. For the social events industry, planners charge a fee for their services – PLUS – a percentage of vendor fees. If Social Event Planners were to break down their fee into an hourly charge, they would make anywhere from $12 to $75 per hour, plus vendor commissions.

In the corporate events industry, planners 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 method of invoicing is via a flat fee, or “project fee,” typically used when the event is large and the corporation wants to be given a “not to exceed” figure. Hourly rate for corporate planners can be between $16 and $150, plus vendor commissions.

3. Geographic location.

The 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.

So how are the above-mentioned fees-for-service calculated?

 

By pricing your fees-for-service using a “cost plus” method. This includes the contracted labor, supplies and materials involved in producing the event, then charging your clients anywhere from 10 to 20 percent of the total cost of the event, with 15 percent being a rough average.

With that in mind, it is important to know before planning an event exactly what your clients want, and what they can spend. Knowing this information makes estimating costs to contract for labor and supplies easier, leaving the best part for last – adding your commission. After this, be sure to 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.

  • 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. Some events call for the use of 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, find out the going rate. Try contacting a few of each kind of vendor and supplier you’ll need. This is to calculate the costs for each category listed.

When you give an estimate to a client, be sure to present it in an itemized list. This will show a visual break down of what services each vendor or supplier will 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.