Yes, every event is in the future, but when every dollar counts against you and your competition, how do you budget for future events? It’s a sensitive subject for many and it doesn’t have an easy answer. Companies must strive to present estimates to their clients while considering a number of contributing factors.
Costs rise annually and they are also calculated on taxes applied. You can average 5% – 10% annually, but not everything is going to inflate equally, if at all. Think about whether it’s a hard cost like a rental chair in inventory or a highly taxable item like transportation services that are influenced by fuel services. For items that have hard costs, try to negotiate with your vendors and discuss if they are able to honor current or specific rates for the future. You’ll never know what you can lock-in unless you ask.
Time is money. The farther away the event is, the more time you’ll invest. Although you may never really be able to predict how much time a project will take in the early stages – complexity of the project is definitely a driving factor. Any event management company will have to deal with working dynamics of/with the client. And the way that is managed is almost as significant as factoring time. Is there a committee/team of people that you report to? Is there one person who is quick and decisive? Is the project going to require a lot of revisions? All of this adds to the amount of billable hours spent. Consider adding some extra time to your budget no matter how you bill this, whether it be a percentage or flat fee.
Every event planner has a base margin that covers overhead. The rest is a sliding scale of profit and only you can decide just how much a piece of business is worth asking for. Whether you go for a higher profit or lower profit than your average there will nearly always be an inflation of costs on your overhead and your vendors. But, if lowering your profit margin a small percentage to beat a competitor is worth it due to volume, goals, exposure or more, it may just be the right thing for you.
You’re being hired for your expertise. Your service is a value that will never equate to a hard number. Predicting what costs will be in the future is more than an algorithm. If you break it down and consider your past experiences, you can estimate a fair value for your services, products and overall event.
Article by Bixel & Company.