The Proposal, Budget, and Deposits
When it comes to finalizing the details, the client will be looking for your expertise to guide him through the financial process. With a signed contract, you have entered into a legally binding relationship with your client. If possible, draft a contract and event sheet for the initial meeting. It is best to review the budget, deposits, contract, and proposal in person. This way if your client has any questions you can address all issues in person.
It is wise to seek legal advice from a lawyer and have her review your contract and its contents. Your lawyer should make corrections to your contract based on the law in your area. Most events you plan will not result in a legal battle, but it is wise to make sure you are protected just in case.
The proposal is an estimated invoice for an event. Many clients will request a proposal prior to your initial meeting. The proposal will outline food costs, beverage estimates, room charges, taxes, and gratuities. The proposal will also outline additional services for the event; for example, flowers, rentals, and valet services.
To price out your event you will likely need the assistance of your chef or caterer. If a client is planning a cocktail party for one hundred guests, the caterer may price the event out at $25 per person. For a three-course formal dinner, the event may be priced out at $85 per person. Usually caterers and chefs will create menus with pricing formulas to simplify this aspect for you. If a formula is not yet in place, ask to sit with your chef and create menus together. You just might learn a thing or two about menu pricing.
Based upon your proposal, the client may then ask for changes to fit within her budget. She may ask that the $25 per person cocktail party be increased to $30 per person. You would then consult the chef about the additions the client could receive with the price increase. He may suggest adding a stationary artisanal cheese platter to the event. After some negotiations, you and the client will have established the budget.
The budget is something of an abstract number when you first speak with a person inquiring about your services. For example, a prospective client may call and ask if you can plan a family reunion for one hundred and fifty guests for $10,000. The amount of $10,000 is her budget.
The definition of a budget changes a bit during your initial interview. Once you have drafted the proposal, the budget then becomes a much more concrete figure. The proposal for the family reunion, for example, is now $10,000. You are making a commitment to plan this event within the proposal figure.
In event planning, a deposit is an amount of money to secure your services. Deposits are usually taken within ten days of signing the contract. If a deposit is not received, the signed contract becomes null and void.
The deposit amount is subtracted from the final invoice. A deposit policy varies from company to company. Some event planners require 15 percent of the budget total up front. Other event planners request a set amount, such as a $2,000 deposit to secure an event. Still others simply ask for a receipt of a credit card number. If a client cancels in this case, the credit card may be charged a cancellation fee.
Industry standard suggests proposals fall within 10 percent of the final invoice. Alert the client of any changes she makes to the event that might jeopardize the budget.
A deposit represents a commitment from the client to the event planner. In some instances, a deposit is required to begin the event process, meaning the deposit amount may be used to begin purchasing items for the event. Check with your local bank to research the proper use of deposits.
Be sure to include a cancellation policy in your contract to avoid a credit card charge back. A charge back is used when there is a dispute between the credit card company and a business or individual and results in the credit card company charging back (crediting the client) the disputed amount until the issue is resolved. Without acknowledgment in your contract, a client can file a charge-back dispute with his credit card company and claim he was unaware of the policy.
Congratulations. You have survived your first client interview. Assess your performance by jotting notes in a personal journal. Were you well prepared? How can you better prepare next time? Were you nervous or relaxed? You will also become more relaxed as you speak to more clients. As time passes in your career, you will find you are more excited and less anxious. Learning something new with each experience will better prepare you for your career in event planning.