It’s estimated that the meetings and events industry generates over $500 billion annually. Wedding planning also falls within that classification. That’s no small chunk of change by any standard. So it would probably come as no surprise that there is no one answer to the question: how to charge for event planning. During my time in the industry there has been a lot of standardization in this area. I can remember starting out when each company would have its own preferred method of pricing for its customers. Now as each of these businesses are independent there is nothing wrong that. However from a meeting planner’s perspective reviewing proposals from various suppliers can become confusing.
How to Charge for Event Planning – 3 Scenarios
For the purposes of this article I’m breaking the event planning pricing methodology into three categories; management fee, percentage of expenses/commission fee, hourly rate. Each one has its pluses and negatives.
Management Fee. A management fee (also be referred to as a project fee, or flat fee) is fairly straightforward. In this type of the scenario an event planner would present the components of the program to the meeting planner at the cost that the suppliers are quoting. And then a management fee would be added to the overall program. Some event planners are hesitant to charge in this manner as the meeting planner would be able to see exactly how much they are paying for the event planner. What the event planner needs to outline here is exactly what services are covered under that management fee. And it’s always recommend it to discuss, upfront, any additional charge triggers.
Percentage of Expenses/Commission. Commissions are quite common with group hotel bookings and, in the past, airline reservations (today it’s quite common for airlines to pay a flat fee to the organizer). Using the percentage of expenses method is quite common for event suppliers such as destination management companies. In this scenario the costs provided by the various suppliers are marked up (usually it’s around 15%). Transparency is important in this fee structure. I always recommend providing an item line of each cost so that the meeting planner can see all of the components that make up the total cost.
Some event planners will approach suppliers and ask that they provide a commission for the business that they’re bringing to the table. Some planners find this controversial as not all suppliers will pay commissions. Therefore preference will be giving by the event planner to those venues and suppliers that do pay commission. The fear here is that this would restrict options that could be available to the planner.
Hourly Rate. This one takes a little bit of preplanning for the event planner. The planner needs to determine upfront what their hourly rate is. Then he or she needs to look at the project and determine how many hours are required to execute the program. What should be discussed up front with the meeting planner is what happens if there are any variances to the program. For example, is there a cap on the amount of hours that the meeting planner will pay the event planner.
How much do event planners make? Check out this related article: Salary Expectations for Event Planner Jobs.
In 2010 event industry strategist Howard Givner surveyed event planners around the US. The results of that survey indicated that 61% of event planners charge a flat fee. There is no single answer to the question how to charge for event planning. However associations, such as the Association for Destination Management Executives International (ADMEI) have helped standardize the way that many industry suppliers charge for their services. Event planning involves a multitude of players to execute an event. It’s imperative that the event planner understands how to present pricing in such a manner that a meeting planner can comprehend. It also helps a meeting planner when comparing proposals that the pricing structure is similar enough that they can compare apples to apples.