(Image via via Camera Eye Photography)
I have gotten a lot of bad feedback from the industry for being so strongly against the issue of paying commissions without our client’s knowledge.
I just wanted to explain once more how less than 10 years ago, I almost went out of business.
Mostly because of this horrible practice of giving away 10 to 20% commissions to certain planners and vendors (among other issues).
I still think this is our industry’s “dirty little secret” no one wants to address, and I for one am not going to keep quiet about it.
I’ll try to list below the many reasons I think this system should be stopped:
- I don’t care how you look at it. If your clients are not aware you are doing this, you are being very shady and borderline illegal.
- You are not being fair to your clients if you only choose vendors that agree to pay you commission. Your choice of vendors should be based on their talent and skill, not their ability to give you a quick kickback.
- This practice is giving too much power to some planners and vendors.
- If you pay this commission, as I did, in the long run you will lose lots of profit. Here’s a simple example: You charge $25 for your services and $25 for materials, so your cost is $50. In order to make a decent profit, you bill your client $100. If you Pay $15 (15% of $100) for commission, your profit that should have been $50 dollars turns out to be only $35. In other words, you just paid 30% of your profit in commission.
- The only other way you could possibly make money while paying commission, is by cutting back your product. The clients get less flowers, food, etc. in order for you to meet your margin.
I have absolutely no issues with this if your clients agree that commission is your method of payment. If not, it’s time to stop stealing. What’s your opinion?
PREVIOUS
George Bernard Shaw once said: “You see things and say, ‘Why?’ But I dream things that never were and say, ‘Why not?’” That quote embodies how Preston Bailey approaches every event.
Mindy Rossignol
February 10, 2011
I totally agree with you! The point I agree with the most is No.2. Only recommending vendors who are willing to pay a profit definatly limits your clients choices. It is very unfair not to recommend what may be the perfect vendor for your client just because they can’t pay a commision!
Good for you Preston!!
Randee Wechsler
February 10, 2011
I could not agree with you more. The so called commissions eat away at profits and can hurt your creditability. Thank you for posting.
Events of Joy
February 10, 2011
Hi Preston,
I agree. It gives me the freedom to work with someone/company because they are the best person/company for the job and serves the needs of my client.
I’ve attended conferences where I’ve spoken to fellow colleagues who think I’m missing out on a revenue stream by not charging a commission or referral fee but it just never occurred to me to incorporate that into how I do business.
To each his own.
Elyn Rahman
February 10, 2011
Our clients pay us to negotiate the BEST prices services and prices from vendors. If you are also taking commission, its as if the client is paying twice. Be up front about your prices and honest with your clients. If you’re having to up-charge something, you best tell your clients why. If they find out elsewhere, it could cost a lot more than the job your lost. Your reputation should be built on honesty and professional ethics. We work WITH our vendors and FOR our clients.
Danielle Cococcia
February 10, 2011
I completely agree with you! In the past I have chosen not to work with vendors who require commission without disclosure. I think it’s unethical–as you said, if it’s disclosed to your client and they agree that’s one thing (although I even have issues with that) but non-disclosure is not right.
Valerie
February 10, 2011
Preston – I so agree! Everything you do so be above board and with the client’s knowledge. I would have been upset as a bride to know that if I hired a planner they were steering me to their “preferred” vendors because they are getting paid to do so. It should be that the bride picks the vendor that she feels comfortable working with for her big day. Event/wedding planners make money based on word of mouth. Losing business can happen the same way if word got out that you are not about making sure the bride has the best experience but that you get paid. JMO
zenia
February 10, 2011
i agree, cost control is critical for longevity, and commissions can really decrease your margins.
Mindy Rossignol
February 10, 2011
Forgot to mention that I have a few vendors who offer to give me a kickback or tell me to upcharge my clients and pocket the money….To that I have always said “I would perfer you to pass the savings on to my client!!” I make my money from my planning fee, if I find I need to make more money I will raise my prices!
Jaemi Graham
February 10, 2011
Preston, I completely agree with you. As a designer and planner, I rely on many different types of vendors to make my clients dream come true. Only using vendors who pay a commission limits what I can offer to my clients. I prefer to use a vendor that has superb service and products and who value their customer relationships like I do rather than use a vendor who’s products and services suck but I can make some extra cash on the side. This leads to way to many problems in the end and it shames the reputation and good name you are trying to build.
Julia Hewitt
February 10, 2011
Love your post!! I am in total agreement. I have never received a kick back from the vendors I work with. I use them because they are great at what they do and we are a team who work to produce fabulous results for our clients. A lot of planners are able to “charge” the clients less and make it up in kickbacks which in my opinion is un-integral and leaves me looking expensive to potential clients, when in fact I may make less on an event than someone who appears cheaper. I also think my vendors really appreciate working with me as I am about making the client happy- and it is not at anyone’s expense.
Shannon Leahy
February 10, 2011
Here Here! When I started my business I made a commitment to myself to be upfront with my clients about every charge and cost at every turn. I don’t think I could sleep at night knowing I was stealing from my clients and I certainly couldn’t be friends with them after the event is over like I’m able to now!
Cindy
February 10, 2011
I am in total agreement, Preston. If you do not do business in an honest forthright manner you will eventually pay in the long run…and it is stealing. If you have a contract with your client and have gotten their business at an agreed upon rate then why would you feel the need to be underhanded and take commissions behind their back. This really shoud be illegal. Weddings can be costly enough as it is for the bride and groom so don’t take more from them than they have agreed to pay you. If this practice is incorporated into your business plan then you need to shut down because you will not prosper for being a liar and a cheat! Folks take Preston’s advice..he is the pro here…he has been there done that!
Joanna Bailey
February 10, 2011
I completely agree with you Preston. Why are people having to buy referrals is the question. Earn a referral; don’t buy it. Miss Elyn said it best. We work for our clients, and with our vendors. And let’s face it, as saturated as the market is now, we all need to make sure we’re on our A game… the industry is rich with talent.
Carolyn
February 10, 2011
I agree with you totally on this issue. I do not like the practice of accepting a commission from a vendor. I feel the client is paying me to do a job and part of that is finding the best pricing. If a vendor is giving a commission then that is reflected in what they will charge your client. So now you are not working for the client.
Wendi Jones
February 10, 2011
I am new to the business as of last year and when I heard of this practice I was shocked. I can’t imagine taking money from a vendor that I am securing for my clients. If I am being paid by them to represent their interests then it seems an inherent conflict of interest to take money from vendors I am securing for them. I have never understood the practice and will never be a part of it. If vendors offer me commission I will see if I can turn that into a discount for my client otherwise I will turn it down. Thank you for validating my concerns about this issue.
Amy Nelson Hannon
February 10, 2011
I refer vendors who are creative, skilled, talented, and enjoyable. Referring vendors who pay you commission for those referrals tarnishes the vendor/client relationship in my opinion and stirs up impurities in the love of the industry. We are artists. We create. We love what we do. We shouldn’t have to receive additional compensation for our craft. Vendors should work hard to be fabulous and passionate about what they do, thus, earning the referrals of others.
Lori Kunian CFD
February 10, 2011
This happens so widely across the flower industry to the point of killing it. From funeral homes requiring 10-30% for referrals, event halls up charging package flowers or requiring a percent from the florist to wire services, for years florists didn’t want anyone to know this information, but now with the commissions cutting so badly into profits and shops going out of business it must be addresses, dragged out of the closet and beaten into submission. I think florists need to step up, become real business people and get paid for what we do. Full 100% monetary compensation, this is not a hobby it is a craft that many of us spent thousands of dollars on to hone..our labor and creativity is worth every penny…
YOUR NAME Susan
February 10, 2011
WHAT WOULD YOU LIKE TO SAY? I agree 100%, but I must say that it has taken me years to create a list of top vendors that fit into different budget ranges so that I can accomodate all my clients’ needs. So already my referrals are the best for what my client is looking for. I’m also super excited to work with vendors my clients have chosen. That’s what it’s all about.
Meagan
February 10, 2011
I personally do not accept commission. I always tell vendors that I pass all savings on to my clients. The more I can save them, the more I can do within their budget.
The only kick-backs that I personally give are to friends & family who refer a client to me. Upon contract & deposit, I send out a little thank you with a gift card to a local restaurant or boutique.
Melonie Karl
February 10, 2011
Preston thank you for exposing and discussing this topic. This practice stifles creativity. Also as event planners, designers etc we are suppose to advocate for our clients.
Jean Neuhart
February 10, 2011
Don’t worry about the negative feedback. When you’re right, you’re right. Paying commissions, or receiving them is so not the way to go. It hurts profitability, which is what keeps us able to do what we do and it limits our clients’ choices. Also it is deceitful to receive a commission when the client is already paying your fee. My referrals are always based on availability, style and budget – never on who will pay me something extra.
merlina78
February 10, 2011
I totally agree!!! Here in Italy the whole industry is based on commissions and clients like me are limited in their choices and sometimes even stolen by Wedding Planners.
I found this little dirty little secret on my own while planning my wedding for july 2011. I compared the price my for lightning Design my WP gave me directly with the vendor. €4.000 to €2.000 for the same job!!! He added 20 to 50% to all services.
My WP is one of the most renowned in Italy!! I don’t know what happens in small cities with new WPs.
Goldenchicgirl
February 10, 2011
I have never worked with commission on either end, and am so thrilled with your stance on this issue – I think if you happen to get discounts from vendors then that should also be passed on to the client. Part of the job is to do the best event honestly for them and also help them save money. So if I get 10% off a linen bill-that savings is passed to them.
docann06
February 10, 2011
Yes, Some funeral home does that. They will try their best to encourage the customer to get flowers from their chosen florist because of a commission. They will take a customer from you, if the customer is not warned. I am hear to help one another and not take what I can get. I am greatful to be in an awesome business that gives me the freedom to design, care for my family, and make money.
Amrit Dhillon-bains
February 11, 2011
Couldn’t agree more. It is unethical, plain and simple!
Denise
February 11, 2011
It is shady underhanded and dishonest. It should be personally upsetting for the vendor to practice without guilt.
Very well put Mr. Bailey
BonBon Dubai
February 11, 2011
Profit is not everything, and I think that the good reputation and credibility are important, and this is what your customers expect from you at the end of the day
and paying commission to get the job It’s a disaster, especially in these days and usually follow up by people who do not have any experience in this area, and they just want to profit quickly without effort …
Sandra Picksley
February 11, 2011
I completely agree, you sould recommend/be recommended for your work not because you receive a percentage. Ultimately it is the client who loses out.
Stephen
February 12, 2011
I agree with you 100%, I have been in the flowers and wedding business for almost 25 years. I have seen it all and I will not pay a commission to any of the planners or coordinators. I have always been honest and upfront about my prices and always look carefully at those that ask me for a commission. Thanks for your blog and covering such great subjects.
Anonymous
February 12, 2011
I have to respond again because this subject is very important to me. I also have a degree in design form the art institute own an antique shop along with the flower and wedding business. I am always being approached by interior designers to pay them a commission on top of what their clients are paying them. I always refuse. The ASID ( American Society of Interior Designers) guidelines prohibits its member from charging the vendors a commission with out revealing it to the client. I feel that if you have to expect a commission from the vendors then you are not charging the correct fees for your service or you are greedy. Either way I do not want to work with planners like that.
YOUR NAME
February 12, 2011
It’s mostly greed and incosideration. Why would you want to “shake down” another professional for money you did not earn? Be satisfied with the fees your client is paying you and stop dipping into someone else’s pocket. The vendors you recommend is part of the service you are being paid for. Both the ones who receive and the ones who pay out need to recognize this fact.
Reputation is what people know about you. Character is who you are when no one is looking. Grow up in character!!!
Sonia
February 12, 2011
Oops, I forgot to sign my name. Yes, let’s grow up in character.
Sela
February 16, 2011
I couldn’t agree with you more. My clients are my first priority and ensuring that they get quality service is my last resort. I refuse to work with vendors who require that commissions be paid to them.
Jeanne
February 16, 2011
I want to be chosen because of the quality of my product and design; I don’t want to have to pay someone to use me. There are many planners who will only refer their friends.
In our area, publishers approach venues to produce a full color brochure. They ask the venue’s preferred vendors to pay for an ad, which is how the brochure is produced. I found out this summer that because I wasn’t able to pay for an ad in a brochure, I was dropped from the venue’s preferred vendor list. When I brought this up to the venue, they dismissed it. It showed me they valued who paid for the ads more than the quality of the people they recommend. That’s what I have a hard time with. Do you want me because I can pay for an ad or because I’m good at what I do?