How to Avoid Financial Pitfalls :: Part 3Thursday, April 09, 2009
Written by guest expert Tim Gill of The White Box of Wedding Design.
3. Charge what you’re worth.
There are many different factors that go into determining your pricing. In addition to your fixed expenses that we discussed earlier in this series, you obviously need to consider all expenses you will incur directly from a specific client. This is why having set package prices can be somewhat difficult. Every wedding is different and the level of your involvement can change just the same. If you do choose to offer package pricing, you may want to note that the prices are “starting at” $X amount.
Time is Money
You are running a business and you know there are never enough hours in the day. Phone calls, emails, driving to meetings, tastings, desperate brides calling at 1:00 in the morning . . . or in my case, spending a week trying to get your email up and running when it goes down. What are you worth per hour? Don’t settle on $20 or even $30 per hour. I believe a solid wedding planning professional is worth at least $50 to $100 per hour. By the time you subtract your overhead and direct expenses, you should land at an hourly rate that makes you proud to be doing what you do.
Take your average wedding and calculate the hours you put into it. Multiply this by your “hourly rate” and you have just found a general price to work from. If this price you come up with is many times over the price you currently charge, then one of two things is happening: Either you have been charging less than you’re worth, or you are spending too many hours on a single wedding.
For example, if you charge $500 for a Wedding Day Management package (also commonly referred to as a “DOC” package) and end up spending 25 hours on it, you are only “grossing” $20 per hour. Once you apply a proportionate amount of your monthly expenses toward this contract, you are left with even less. You also need to account for fuel costs, travel time, the latte you drank at your meeting, etc.
Adding on Services
If you are going to offer a service that another vendor in the industry offers, don’t undercut the other vendor’s price by a wide margin. For example, your bride wants to have a candy buffet and can either hire you to do it or a specialty vendor in your area who does these as well. Unless you throw in the buffet to seal the deal on a very large contract, don’t charge less than it’s worth. If your client trusts you, they will hire you to do the buffet if your quote is the same, or even slightly higher, than the other vendor.
What are you giving up so that you can take on this client? If you book a client for minimal services on the busiest weekend of the summer, chances are you are going to have to pass on a potentially larger contract for that weekend down the road. Also consider your family and personal life. If you have a long string of weddings in a given month, you may want to leave an open weekend for the sake of your own sanity. Money certainly isn’t everything.
By applying these principles to your business, my hope is that you will have a better grasp on where your money is coming from and where it is going. This is the ultimate balance you need to control in order to have a profitable wedding planning business.