Meetings & Conventions: Planner's Portfolio May
The Independent Life
BY MIKE KABO
What Are My Services Worth?
Figuring out how much to charge is the first order of
The day has finally arrived. You've jumped from the corporate
world to owning your own business. A potential client has asked you
to submit a proposal. You outline the purpose of the meeting,
define your activities and create a time line. Now comes the hard
part: How much should you charge?
There are three basic options. You can charge by the hour, ask
for a project fee or figure your fee as a percentage of the total
cost of the meeting. Each has its advantages - and
Charging clients by the hour is the most common method of billing,
because you are paid for all of your time. The difficulty here is
estimating how much time the project will require. If you bill for
more hours than you estimated, the client will probably be upset
and will want a full accounting of your time. If you overestimate
your hours, your costs may not be comparable to your competition's,
and you may price yourself out of the job.
One way to avoid "guesstimates" is by questioning your client up
front. Zero in on what is really going to be expected of you. Has
this meeting been held before? If so, how much time was involved?
If an in-house person used to make all the arrangements, contact
him about his experience.
The next step is determining a rate. Start with your last annual
salary in the corporate world, say, $40,000 a year. Add the expense
of medical insurance, taxes and running your business (telephone,
fax, copying, etc). Typically, these costs add an additional 40
percent, making your new gross salary $56,000 ($40,000 multiplied
To arrive at an hourly rate, divide the $56,000 by the number of
hours you expect to work in a year. Don't use 52 weeks times 5 days
a week times 8 hours a day (2,080 hours). Take into account
holidays (say, 10 days) and vacation (10 days). Also figure on
spending one day a week to market yourself or to improve your
skills. This reduces your available hours to 1,504. Divide the
$56,000 by 1,504, and your hourly rate is a reasonable $37.
Billing by the project means receiving a flat fee for the job. The
advantage is that you no longer have to track or justify your
hours. You can even ask to be paid monthly, guaranteeing a steady
income for you and putting a ceiling on costs for the client.
Again, the hard part is estimating the time you will spend
working. Once under contract, you will not be able to bill for
extra hours unless the scope of your assignment changes. Also, be
on guard for "project creep," where your client asks you to do work
not covered by your agreement.
To determine the project cost, list every service to be
provided, calculate the total hours you'll spend on each task, and
multiply those hours by your hourly rate. If you're not sure about
your ability to estimate your hours, or think that you won't be
able to say no if asked to do extra work, avoid project
However you charge, travel time for site inspections and
attendance at the actual meeting must be considered. I have known
planners who calculate travel time at their hourly rate, half the
hourly rate or not at all. While on site, you also need to define a
"day." My recommendation is to bill no more than 8 hours a day, no
matter how long you're on call. Point this practice out to your
client to illustrate your efforts to hold down costs.
PERCENTAGE OF THE COST
This type of billing most often is used by destination management
companies, large meeting houses and travel agencies. The client is
charged a percentage of the total cost of the meeting (anywhere
from 3 to 20 percent). The advantage here is that you will probably
make more money. But I think independents should avoid this type of
billing because of the ethical issues involved. In the percentage
scenario, if you take as a premise that part of your job is to hold
down the cost of the meeting, where is the incentive to negotiate a
lower rate? There might even be a tendency not to squeeze the
suppliers as hard as you would if your fee didn't depend on their
In the beginning, it's best to bill by the hour. You can switch
to project pricing once you have gained some experience, or when
you are bidding on multiple meetings. Before proposing any price,
do your best to discover what the competition is charging and try
to find out the meeting's budget and the client's cost
expectations. Finally, know your bottom line. What price is too low
for you? When all is said and done, you should feel comfortable
that you are being fairly compensated and that your client is
getting real value.
Mike Kabo is president of
Solutions Inc., a New York City-based consulting firm that
specializes in travel and meetings management.
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