Defining Your Hourly Rate
One of the biggest questions I get from event planners (or any business owner) is how to price themselves. Do you do a % of budget, flat rate or hourly charge? There are many things to consider when you determine your price and I actually wrote about this in another blog called SMART PRICING STRATEGIES FOR INDEPENDENT EVENT PLANNERS.
But let’s assume that you decide to charge hourly, or at least use that hourly rate to set a flat fee. I wanted to go into a bit more detail on how you can calculate that rate.
Here is what I learned from my mentor (along with some of my own personal experience over the last 9+ years). You can use these steps to set your hourly rate and then use that to build out a proposal for clients.
1. Add up all of your business expenses.
This should be EVERYTHING you need to run your business, including recurring expenses, things you need to buy to grow your business and more. This also includes salaries for any staff – ALL OPERATIONAL EXPENSES.
2. Add in your salary.
What do you need to make personally from your business and think about where you need to be.
3. Add in your profit %.
This can be from 1-5% – if you aren’t thinking of this yet – you should read the book Profit First.
4. Make sure you’ve included $ for your taxes as well.
This should give you a total annual $ amount for what your business needs to bring in to be successful. From here, this is what you do.
1. Divide that # by 48-50 weeks – depending on if you hope to take 2-4 weeks of vacation. This could be more or less, depending on what you need to do.
2. Then – divide that # by 20 hours in a week.
THIS IS A KEY STEP and where most people go astray. You will NEVER work only 20 hours a week, but at least 20 hours of your week is unpaid directly by clients – this is business development time, marketing time, etc. You need your clients to cover this as well.
THEN – when it comes to getting the proposal,
1. I break down the scope VERY specifically.
How many speakers are you coordinating? How many venue options are you giving them? What are the SPECIFICS of what you need to do? This is important for the client so that they know exactly what you get and it also helps you to estimate your price.
2. Break down the # of hours estimated for each task.
You will get better at doing this the more you do it. For example, if coordinating a single speaker takes about 1.5-2 hours, and there are 25 speakers, I’m estimating 50 hours.
3. Add up those hours, multiply by your rate and that is the flat rate the client gets.
I prefer this because (a) it covers my time and is reasonable and fair – the price does not change based on client budget or how I “feel” that day, (b) There is a lot of room for negotiation. If the price is too high, you know where you can remove scope to get the price within budget, and (c) If anything changes, you can easily change your price. So make sure you have a clause that if they up the scope to 30 speakers or 10 venues – you charge accordingly. That will be in a change notice and added as an addendum to the signed contract.
This is how I do it – I know a lot of other people take commissions and add value in other ways, but I think planners should be compensated for our work. Just my 2 cents – hope it’s helpful to someone! Let me know how it works for you!