by Lisa Grimaldi | June 01, 2005

illustrationFor many years, incentive firms and other third parties hired by companies to create and handle their incentive programs charged for their services in one way only: It was a package deal. “We shared two prices with clients: airfare and land,” says Jonell Cella, senior director of business development and 20-year veteran at Minneapolis-based incentive and meeting firm Carlson Marketing Group. The land prices, she says, included items such as hotel accommodations, food and beverage, transportation, signage and pre-trip communications, along with Carlson’s fees, “but we’d quote it as one big price.”
    Today, however, it’s a different world, as Cella and her counterparts at other incentive firms readily can attest. Most such companies and, increasingly, other third parties are electing to price their incentive programs in a way that best complies with their clients’ accounting practices. And that means they are unbundling those package deals of yore and allowing for more transparency in what the different elements in a program actually cost, as well as what the firms charge for their services.

Market drivers
The influences that have lead to more transparent pricing bear explanation. Incentive experts point to several factors. 
    " The power of procurement. According to Steve O’Malley, vice president, financial sector, at Fenton, Mo.-based incentive firm Maritz Travel, the increased role of corporate procurement departments which typically require planners to get bids from several sources before they can select a supplier for their programs is the main reason more firms want line-item pricing.
    Kari Vrba, director of business development at Carlson Marketing Group, agrees. “In the past, a package price was fine for people in human resources and marketing, but with procurement, they want to see transparency,” she says.
    " Government and/or industry oversight. Beginning about 10 years ago, says O’Malley, “it was the pharmaceutical sector that said it needed transparency, due to the amount of federal regulation that industry is under.” 
    Now, he says, it’s the financial industry’s turn: “The National Association
of Securities Dealers is really going through everyone’s practices with a fine-tooth comb.” This includes those companies’ sales and incentive practices, he adds. 
    And with the introduction of the Sarbanes-Oxley Act, which was enacted by Congress in 2002 to increase corporate responsibility and curtail accounting scandals, even more industries are affected. “We need to show [client companies] we are getting the best value possible and that we are buying well for them,” says O’Malley.
    Though incentive firms and destination marketing companies now are creating pricing models that better meet the needs of their clients, not all methods are alike. Some corporations have their own set pricing models, and a number of incentive firms, including Carlson and Maritz, will customize pricing options for their corporate clients.
    What follows are descriptions of four basic pricing models available today.