As a new year comes, it is common for wedding vendors to set up a new pricelist. This new pricing would have been worked on since months before so it could be effective immediately when the year changes and also serves as a year-end marketing strategy to encourage potential clients to book immediately.
While the more established vendors would have known to price their products and services, this same task could seem complicated for those who are relatively new or still testing the water. What if the price is too expensive and no client books you? Or, what if it is it too cheap and your profit does not increase? So, before you start counting for days, here is a short guide we have prepared on how to price your wedding business.
Finding the right price
In the wedding industry, market research is one way to know how others are pricing their products and services. You can have a rough estimate of the overall cost first by looking at the number of their employees followed by the man hour required, level of difficulty involved, and cost of the products themselves among many others. These information can be the benchmark for pricing your own business.
Counting your costs
Before pricing your products and services, you have to figure out all of your costs first. Know that there are two types of cost:
- Fixed cost. Cost that does not change regardless of how many clients are in your plate. This include monthly rent, salary, insurance, and website maintenance fee if you have one.
- Variable cost. Cost that changes depending on the amount of works your produce and how many weddings you work on. This cost varies by clients and therefore you cannot really project how much you will be spending. The two most common variable costs are the materials and utilities you use
Other than fixed and variable cost, you also need to consider your yearly marketing budget. If you are about to take all golden opportunities that come your way like a collaboration, styled shoot, or wedding exhibition, then it is really easy to go over the budget. Therefore, as a wedding vendor, it is wise to set up a realistic budget that you will not suffer over. The amount should not be too little that you cannot spend on any good chances, nor should it be too big that it hurts your profitability.
On top of all these tangible cost, there is one intangible cost you should add – you. How much do you want to get paid? How do you price yourself? It feels almost wrong to think about this, but at the end of the day, there is a fee for your service too.
Once you have sorted all of your costs, add them up to find the total cost. One of the most common ways to set up a price is to use the ‘cost-plus pricing’ method whereby you add the profit margin you wanted to the total cost. Prepare both of your highest and lowest profit margins so you can have a room for negotiation later.
Creating your pricelist
Armed with information from your market research and a list of your total cost, it is time to determine the price for each of your product and service. Here are three ways you could consider in your pricing strategy:
Hourly rates are usually charged by wedding organizers, emcees, and entertainment vendors like DJ or live band. Though it might seem unconventional, this pricing strategy is effective for services that is uncountable or qualitative. If you choose to offer such pricing, calculate the rate based on the effort required and how much your quality guarantee is worth. Remember, set a realistic price and do not overpromise.
This pricing strategy is popular among vendors like wedding planners, and wedding stylists. First, you would look at your client’s budget, then charge your service fee as a percentage of the budget. For example, if your client has a $40,000 wedding budget and you charge a 10% fee, you will bring home $4000.
On the other hand, if you are a decorator, then you would look at the overall cost of the wedding theme and charge your service fee as a percentage of that cost. For example, if your client’s wedding decoration would cost $3500 and you charge 10% of that as a service fee, then you will get $350 for yourself.
This percentage pricing might seem unjustifiable for those who have smaller-scale wedding, therefore, you should consider creating a tier pricing to attract potential clients.
Creating packages could be one of the most popular pricing strategies among wedding vendors. Normally, vendors would bundle several services and put a price on it so potential clients can easily choose which wedding package they need. This pricing strategy is particularly preferred as you can offer add-ons to the package a client has chosen.
Wedding packages are sought after by many engaged couples because of the perceived discount, therefore be smart with what you include in a package so you can convince them easily.
When you are creating a pricelist, remember that your asking price will be as important as your portfolio – they both influence a potential client’s final decision. The last thing you want is to get greedy and end up setting the wrong prices that only damage your own reputation.
So, how do you price your products and service? Share us your two cents below!