READ TIME: 3 minutes
Pricing is an important consideration for budding event entrepreneurs. However, you’ll need to do some homework before you decide your hourly rate or whether pricing by the hour, project or budget is a better way to go. Here’s what you need to consider before you choose a pricing model.
How many hours per week can you devote to the business? There are only 24 hours in a day and 7 days in a week. So, you have to be realistic about the number of hours you can devote to the business and understand that not every hour is billable.
What fees will the market in your area bear? If you live in a city where there is a lot of competition or where your earning power is limited, you may have to (if possible) expand your service area. You might also consider developing some unique offerings that allow you to charge more.
Will you use event planning software? If you plan to automate, you’ll be able to work faster, which means that charging by the hour penalizes you unless you use the added efficiency to your advantage and charge accordingly.
What is your level of expertise? If you are experienced, you should be able to charge more because you can work more accurately and quickly regardless of the pricing model you choose. On the other hand, don’t count yourself out as a less experienced planner. You can still earn money as “an extra pair of hands” and charge hourly until you learn the ropes.
Are you working alone or with a partner? Do you have staff or work with freelancers? Are you renting office space or working virtually? You will have to take fixed and variable expenses into consideration when pricing any project.
How many decision-makers will there be? Whether you’re planning a wedding or a corporate holiday party, the more people weighing in, the longer the planning phase will take. In these cases, charging by the hour (for multiple changes and revisions) makes sense vs. charging by the project or as a percentage of the budget.
Are you pricing out a first-time event? The unknown is always a little riskier than the known. For these types of events, make sure you charge for the extra time it will take for research and decision-making.
What kinds of charges do your clients expect? Not every client likes professional service fees singled out as an invoice line item. Others don’t mind as long as the charge is defensible. Have a conversation with the client in advance to determine whether a flat fee or a percentage of the overall budget is more palatable or be prepared to defend your hourly fees.
What is your level of financial risk? Some event planners keep costs down by reducing their financial exposure; for example, asking for deposits or progress payments or having clients pay vendors directly. If you plan to have substantial financial exposure, you may want to consider charging more.
In the end, making money planning events is an important goal, but it’s not the only goal. Also make sure your pricing meets your expectations, you feel fairly compensated, and you’re providing a good value to your customers. Careful consideration of these requirements can help you survive and thrive.