For 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.
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
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
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
What follows are descriptions of four basic pricing models