Just as the industry emerges from the pandemic downturn, economic pressure is keeping event professionals on their toes. With terms like “recession” and “inflation” showing up in seemingly every news headline, many business owners are battening down the hatches to prepare for the uncertainties ahead.
Needless to say, balancing rising costs with client satisfaction is a fine line to walk. On one hand, you must protect your business’s profit margins at all costs. Yet, extreme pricing hikes and surprise fees aren’t a recipe for happy customers.
But, wait. Is your bottom line supposed to swallow the impact of inflation?
“When it comes to inflation, prep your clients in advance,” she says. “Everyone is aware at this point that inflation is an issue, and we are experiencing supply chain issues and labor shortages. Open communication, planning for the worst, and working together on creative cost savings are the way to go.”
So what can savvy entrepreneurs do to safeguard their business’s interests while keeping clients happy? Here are a few places to start.
Keep your contract up-to-date.
There’s no question that a client agreement is one of the most vital documents within a business. If it’s out-of-date or inaccurate, you may set yourself up for losses, disagreements, and even legal trouble. Many event pros revisited their contracts in light of COVID, but a force majeure clause doesn’t cover pricing increases and supply chain issues.
Peter Mitsaelides of Brooklake Country Club & Events encourages business owners to include a clause stating that pricing is subject to change.
Then, “have a professional conversation with clients about the impacts of COVID, supply shortages, and inflation,” he recommends. “Work on a client-by-client basis to find the right compromise, especially if the wedding date is less than 60 days.”
While open communication is key as Sheils noted, your contract serves to legally bind customers to the terms and conditions of your work together. Tightening up your client agreement will secure your profit margins while keeping everyone on the same page.
Consult with a legal expert.
While you may be a skilled photographer, designer, or chef, most event professionals don’t have a legal background to confirm the validity of their contracts. Just as clients seek you out for event planning support, it’s wise to work with a business lawyer to ensure your documentation is up to par.
“Consult an attorney to see if an addendum can be added to your contract that covers significant, unexpected price increases,” advises Betsy Scott of Hudson Valley Weddings at The Hill.
Once you’ve checked all the boxes, the next step is communicating the terms of your contract with potential customers. Scott adds, “Go over this carefully with prospective clients so they have a clear understanding.”
Going forward, keep your legal counsel informed of any changes within your business, market, and audience to cover your bases in any situation.
Think about long-term consequences.
If you still need to update your contract, make that your priority. But what about the clients who signed an older version that didn’t consider inflation?
Bunn DJ Company’s Joe Bunn suggests that it may be wise to accept your losses and move forward. “If your contract does not have a ‘prices subject to change’ clause and the price is guaranteed, you need to honor it,” he affirms. “While it may hurt financially in the short term, a damaged reputation on social media lasts a lot longer.”
The market’s ebbs and flows are temporary, but your brand perception is long-lasting. Rather than disappoint clients and garner negative reviews, find other ways to cut expenses and increase revenue.
As you discuss market trends and pricing changes, remember that you’re in a position to educate prospective clients rather than beg for their understanding. As Jenna Porter of Jenna Noelle Creative reminds us, “We should never go into a sales conversation with the attitude of feeling we need to apologize for or explain our pricing.”
“It is the professional's job to know what a service costs and what their time and experience are worth,” Porter adds. “Navigate financial conversations with confidence in the investment you require to do your job best.”
And with inflation as a widespread concern, consumers are already aware of the ramifications so it’s more important to demonstrate value than justify your pricing.
“Not only does inflation exist across the board in all things, but your experience also increases your value over time,” Porter asserts. “Therefore, it should be made extremely clear both in your brand and your pitch that you are worth your price.”