Posts Tagged ‘budget’
Determining how to base your fee structure as a wedding planner is one of the hardest things when you’re starting out. It certainly was for me! When I was in school I was taught to base my fees on my clients’ wedding budgets. As a young planner, the industry standard was 10 per cent. That meant if my client’s wedding budget was $50,000, my fees would be $5,000. I thought that was a pretty good, simple deal, until I had an enquiry for a wedding with a $10,000 budget. Did that mean that my fees were to be $1,000?
All of a sudden this percentage-based charging didn’t seem like a great idea anymore. With the number of hours I’d be devoting to their contract I would end up making about $6.00/hr. Very quickly, I realized I would need a minimum charge regardless of the budget just to cover my labor and costs of doing business. The problem was at that time in my business’ young life I didn’t really know the average number of hours I would put towards a contract. So I talked to other planners, got a sense of what they were charging, and tried to guestimate how many hours of work I thought I would have to put in. A minimum fee was established and I set forth to gain my first full planning contract!
Everything moved along as planned and I secured my first “full planning” clients within a matter of three months (yes, it does take that long – sometimes longer!). A contract was drawn up and my fees were based on 10 per cent of their budget, which was $25,000. All was good, that is until we started delving into the planning process, securing vendors, and making decisions. It quickly became apparent that the budget was going to change. Some weeks it was up, others down. Once we got to the week of the wedding, it was time to reconcile my charges with my clients’ final expenditures. I ended up owing them money. However, that wasn’t the thing that bothered me most. It was having to reconcile at all. I couldn’t help but wonder if I would have felt uncomfortable having to ask for more money if my clients had gone over budget. Might I have felt a little weird benefiting from their over-spending? My answer to that question was a definitive “yes,” and I quickly threw my budget-based fee structure out the window in favor of flat-fee based quoting.
Now don’t get me wrong, flat-fee based earning is no perfect solution either! How do you know how many hours you’re going to put towards a given contract? Gather as much information as you can about your clients’ wishes before you start working to give you something to go on when trying to estimate a time commitment. But let’s face it, it’s not an exact science, and I do believe we win some and lose some with this type of charge. Despite that, it better reflected my values and required no interim accounting (which I loved). Plus, I thought it was fairer to my clients that they know exactly what their commitment is at the outset. Six years later, I still base my fees in this manner. It works for me and I will never go back to percentage. There are times when I hear of large earnings from colleagues who were involved in top-budget weddings based on percentage-based charges. It makes me wonder, momentarily, if I made the right decision some years ago. It’s just human nature to question things a bit!
So which way is right? The answer is that the right choice is what is right for you. Each business owner has to make the decision based on their own business values, needs, and abilities. But take solace in the fact that nothing that you decide is set in stone and adjustments to your fee structure or pricing can be made down the road should you decide that changes are warranted. So, which method of charge will you use starting out? Here are a few points to consider as you’re weighing the options:
Percentage based fee structure
- Rumored to increase your earnings in the long run
- Some planners don’t feel this structure is in keeping with their own value set
- Some clients balk at this variable structure since they don’t know their exact financial commitment until all the spending is complete
- You will not know your exact earnings until the planning process for each contract is complete
- A lot of paperwork is involved with this structure
- You may want to estimate your fees on the low side so that when you reconcile at the end of the planning process, your clients will owe you, and you don’t have to pay out
Flat fee structure
- Rumored to provide you with lower potential earnings when compared to percentage based fees
- Easy accounting for you- one quote and you’re done!
- You don’t necessarily benefit from being involved in higher-budget weddings with this fee structure (unless you increase your quote based on the wedding budget)
- There’s no going back with this type of fee structure. Your quote sticks even if your client increases their budget or accelerates their plans down the road (unless you include some sort of contract clause to cover you in certain instances)
- In my experience, some couples have greater sticker shock looking at a dollar figure as opposed to knowing they’ll be charged a given percentage. I think it’s just having that big number placed before their eyes, which is why I like to break the total fee down into monthly payments for them. It’s not so overwhelming that way!
Regardless of your choice, talk to other planners and educate yourself on industry standards and regional norms. That will help you to know what your local market will bear in terms of pricing. Plus, by keeping pricing standards in line with our competition, we encourage couples to choose their planner based on performance, reputation, portfolio and personality, not price. This is important since we are still developing our credibility as an industry, and the more we can do to improve expectations industry-wide, the better it is for everyone concerned, ourselves included!
Best of luck with your decision! Till next time!
Lynn Lee has over 10 years experience in the event and wedding planning industry. These days, she’s focusing her attention on her growing wedding planning business, Weddings Unveiled. Her weekly blog posts include business tips, wedding trends, and expert advice.