By Jennifer Taylor, Taylor’d Events Group
Entrepreneurs get a unique insider’s perspective of the work that they do, but sometimes it can be difficult to define the value of your work with a dollar value. You know all of the little things that go into your services, as well as the sacrifices you have to make in your personal time – but how much is that really worth?
All business owners know that there is an opportunity cost that comes with running a company – missed birthday parties and baseball games can start to add up. Pricing your work with all of that in mind will ensure that you are properly compensated for the time and effort that you put into your work. Each business structures their pricing differently and it will depend on your preferences, as well as the services you offer, so avoid comparing your pricing to your competitors too much. It can help to use their prices for a general idea of where you should be, but don’t expect for it to reflect your work.
Here are some of the options for pricing your work:
This is generally not the best way to charge for your work, but it’s worth being familiar with it. Commission means that you get paid for the vendors that you hire – for example, if you are a planner and you bring on a caterer and lighting company, you would get a certain percentage of their fees. In general, I do not recommend this structure.
Percentage-based fees can be a decent starting place for new business owners, as it’s simple to calculate based on the client’s overall budget. If, for example, your going rate is 15%, you would look at your client’s budget and charge them 15% of it. The one hitch in this structure is that you need to keep an eye out for clients who change their budget midway through the planning process. In order to combat this, ensure that your contract includes a clause that requires a fee adjustment if there is a change in the budget.
If you don’t mind the math, charging hourly can make sure that each of your clients pays you for the exact amount of time you spend working on their event. Use this formula to guide your hourly rate:
(The amount you want to net annually) / 50 weeks / 5 days per week X 2.5 (factoring in expenses) = per diem / 8 hours = your hourly rate
For example, if you hope to earn $50,000 in the year, you’ll need to charge $62.50 per hour in order to achieve that goal. For many event professionals, however, the average day doesn’t break down into neat hourly units. A strict time management tool can make this easier to calculate, but may not be the most effective solution for your investment.
This is the standard pricing structure for most event professionals, as it makes it simple for both you and your client. Of course, determining the costs of your packages isn’t just about choosing an arbitrary number that makes sense to you. Take some time to tally up the amount of time you spend on a test client, and then calculate the average price using the formula for the hourly rate above. This includes meetings, behind-the-scenes work, and onsite hours spent on the rehearsal and event day, if applicable.
Once you have an average package rate, create your other packages around that one – make sure you have at least one that is more affordable and one that is pricier.
Negotiating your costs
Many clients will try to negotiate your rates, even if you have some of the most competitive pricing in the market. While most negotiations are on a case-by-case basis, I encourage you to never shortchange yourself. Don’t charge any less than what your work is worth. If you charge less, you may find yourself resenting the event, so it’s better to come to a compromise to avoid any negativity.
My advice is to negotiate with add-ons to your services, rather than providing discounts. Look for small ways to make the client feel like they’re getting a good deal, but doesn’t devalue the work that you do or fill your plate with too much.
It can take some time to get your pricing structure to your liking; don’t be afraid to tweak it if it’s not working out right for you. Put the time in to find a structure that fits your business needs – it will be well worth it in the long run.
Jennifer Taylor is the owner of Taylor’d Events Group, a planning firm that specializes in celebrations of all kinds in the Pacific Northwest and Maui. She is also the creator of The Taylor’d Plan, a self-administered class for wedding planners who are new to the industry and looking to grow and develop their skills.