A budget is often a source of contention during the event planning process. It is a primary limiting factor and can raise endless questions. Without transparency, clients don’t understand why they are being charged the way they are. Before agreeing to a budget, you should understand how the company you chose charges.
There are a few primary pricing models that are favored in the events industry: percentage of budget, hourly or daily fee, and flat fee. The Event Leadership Institute conducted a survey of more than 500 event planning professionals in 2016 to better understand industry pricing model trends. They found that the most popular industry choice was the flat fee model.
The model a company uses aligns with the values and inner workings of the company. Some models focus on time, while others put a great emphasis on the starting budget. When choosing an event planner, you want to establish a relationship. The way they charge should make sense to your company. The budget is the first item of business when planning an event and, aside from the event planner, the most critical factor. After all, when you hire an event planner, you’re paying an outside company to help you create a specific experience. It’s helpful to understand the different pricing models that event companies use.
Percentage of Budget
When the budget is created, a percentage of the incurred expenses is taken by the planner. This percentage ranges from 15-20%.
Some planners bill at an hourly or a daily rate. The hours it will take to complete the project are estimated at the outset and the costs are adjusted as needed based on the project.
One fee is charged that includes the project scope and the management fee. A flat fee gives the client one number at the outset of the project. Typically, when using a flat fee, planners bill using a payment schedule.
What’s the norm?
Overall, the flat fee pricing model is the most popular. Most corporate event planners and association event planners use the flat fee model. Additionally, the more experience a firm or planner has, the more likely it is that they use the flat fee model. While other models have been used over the course of Linder’s twenty years in the events industry, the flat fee has proven to be the most successful. According to Clete McCarthy, VP of Finance, the flat fee model allows Linder to budget based on the scope of services. If the scope of services changes, then the budget changes. Budgets can change if they need to. More than anything, a pricing model must make sense for the company. If you belong to a company that emphasizes time worked on a project, then the hourly model would be a great fit. Event planners charge using pricing models to give their clients the best cost for value that they can.
In the end, cost is tied to perceived value. Event planning is not just about throwing a pretty party. The nuts and bolts of event production are strategy, logistics, and guidance. The right event companies serve as a partner. They help clients create an experience for the audience that has a tangible return on investment. When choosing an event company, you forge a relationship. Bringing in a company with extensive experience isn’t free, but it can make all the difference.