» Should You Focus On Volume Or Profit?

Photography by StopGoLove Film+Photo

In my conversations with wedding pros, around the world, the topic of how many weddings/events a business should do each year is a recurrent one and there’s certainly no one answer that’s right for every business. So many factors will affect both your ability and desire to do more weddings/events. If you’re just starting out, and maybe still holding down a full-time job outside the industry, there’s certainly a limit to how many weddings you can effectively do. On the other end of the spectrum, if you’re well-established, maybe even looking towards retirement, you too may be looking to do a smaller number of weddings/events.

Growth strategy

But what about the businesses who are on the growth curve? There are different ways to grow your business. One is to grow the volume and another is to grow your average sale. Given the choice between those two, I would choose to grow your average sale first, so you earn more from each wedding/event. Then, if you choose to increase your volume, you’ll earn that much more. Before you decide to do more weddings/events, think about why you want to do more. If it’s to impress your industry friends, or as one wedding pro told me, to be seen as a major player in his market/category, make sure you’re also increasing profit. I’ve often said in my consulting that I don’t want to feed your ego, if we’re not also feeding your family.

Keep your eye on the profit

Regardless of which way you go, keep an eye on your profitability. Growing your top line is easy if you’re giving it away. Growing your bottom line is the better long-term strategy. Take a close look at your costs, the time it takes you to complete an event, and your pricing. Costs are relatively easy to find. You should know what the products, ingredients and raw materials cost for each event. Be sure to include everything you use, whether it comes off your warehouse shelf, or your kitchen shelf.

Time is something that seems to be harder for wedding pros to quantify. You invest time with each wedding/event from the moment you get an inquiry. How much time do you invest replying to their emails, calls and in meetings? It’s not just the time on the day of their wedding, it’s also all of the time before and after. For some, particularly videographers, there’s more time spent after the wedding than before or during. How much are you getting paid for your time? Would you take a job that paid that hourly wage?

The 40-hour wedding

While I was having dinner with a wedding DJ friend, he received a new inquiry that asked “How much do you charge for a 5-hour wedding?” We can’t blame the couple for the question, it’s the wedding pros who are selling their services that way that create that environment. If wedding pros only value the time they spend at the actual event, and not the time they invest before, and after, then we can’t expect couples to value that other time, either.

When I asked my friend how much time he actually invests in each wedding, he said it was somewhere between 30 and 40 hours. Given that he does a grand entrance, cuts and edits different music for bridal party introductions, displays photos, does a lighting plan and more, that’s a reasonable estimate. If he were to price his services, by the hour, for only 5 hours, his effective hourly rate is actually 1/6 of that. I suggested that he reply by saying “Thanks for reaching out. I’d love to make your wedding amazing, pack your dance floor, and have your friends and family saying it was the best they’ve ever experienced. I don’t have a 5-hour package, but I’d love to tell you about the 35 hours that I’m going to invest in making your wedding great.” – and then ask one low-commitment question.

What’s the value?

So, how should you price your product and services? I recently presented at WeddingWire World in Dallas and asked that very question. Given that many wedding businesses are service businesses (and yes, we can certainly say that ALL are service businesses, even those with tangible products), it’s really about your time, your creativity, designs, and ideas. How do you put a price on those? Do you price based upon what others charge? Do you take your expenses and then mark them up? Or, do you set your prices based upon the value that you are bringing to both your couples and to you and your family. You see, you set the price, your customers determine the value. Regardless of the price you set, if you need to discount to get the sale, then the actual value is the price the customer paid, not the original price.

Giving away profit

Remember that every dollar you discount is profit you gave away. Conversely, every dollar you raise your prices is additional profit you earn… provided the customers are paying the new, higher price. So, the next time you are asked for a discount, ask yourself how much of your profit you want to give away. Your customers are entitled to ask for a discount. When we’re the customer, we have that right as well. You, the business, have a right to say yes, or no. Just ensure that you’re profiting, regardless of your discounting policy. And, if you’d like to see how you can profit, from day 1 in your business, I recommend reading “Profit First” by Mike Michalowicz. It’ll change the way you view profit, for the better.

 

WeddingWire Education Guru Alan Berg, CSP has over 20 years experience in wedding related sales and marketing, and is an author, business consultant, a member of the National Speakers Association, and the wedding & event industry’s only Certified Speaking Professional®. Learn more at alanberg.com.