Wedding Pro partnered with Michelle Loretta, Business Advisor to the Wedding Industry since 2009 and owner of Be Sage Consulting, to discuss how to evaluate your pricing in the current economic environment.
When talking with potential clients, the question, “Why do your services cost what they do?” probably comes up…a lot. But, even though you might have been able to navigate that conversation with relative ease in past years, it may not be so simple right now.
Pricing is a delicate subject in the best of times in the wedding industry, but it’s even more so now that it feels like everything is coming at a premium due to inflation.
A look at how rising costs are affecting the wedding industry
To start, it’s important to look at the state of the wedding industry we’re currently in. Our expert, Michelle Loretta, weighs on how COVID-19, labor shortages and inflation have gotten us to this point below.
Long before the whispers of inflation hit the news cycle, the global economy began experiencing shortages due to the COVID-19 pandemic. Service and product shortages occur when supply cannot meet the demand of a population. With the economic shutdown of 2020, production was completely turned off on some of our biggest consumer needs worldwide.
The wedding industry was impacted by these shortages, particularly in the areas of agriculture, lumber and textiles. For wedding businesses, this means that there haven’t been enough materials to create goods for weddings and events.
Then, there is the labor shortage. Labor is the biggest output as wedding providers, but it’s becoming increasingly more difficult to find staff. In years past, many business owners operated fine with just seasonal or part-time help. With job seekers needing and finding more permanent employment, the labor pool has become nonexistent in a lot of markets.
Additionally, many wedding businesses need to employ people for more hours than before the pandemic. This is due in large part to the volume of work pros need to produce, and also what job seekers require of their employers. Now, employees are getting full-time work at a premium rate, causing wedding businesses to spend more on labor than ever before.
That brings us to the wedding boom of 2021-2022. This boom is not only due to the pandemic hose finally being turned back on, but also the generational shift. Millennials are now aged 24-41, ages deemed to be demographically in line with the ‘peak age of marriage’, with Gen-Z following right on their heels. This is a double-whammy for service providers.
And, lastly, there’s inflation. Inflation is a result of money flooding the economy. Low-interest rates, COVID-focused relief programs and low-interest lending have allowed more people to get more access to cash. More cash means more spending ability, and more spending ability drives demand for goods or services. When we add this to supply shortages, the economy becomes inflated.
All these factors—shortages in raw materials and labor, skyrocketing production costs, a heavy spike in post-pandemic demand, the generational boom and economic inflation—have impacted wedding professionals greatly.
Wedding pros from across the country are still playing catch up from all of the economic highs and lows over the past couple of years. Some pros are finding that supplies are simultaneously much more expensive and harder to come by, or that labor is more expensive due to staff shortages. Because of these increased costs of doing business, many pros are re-evaluating what they are charging couples to offset them. In fact, in a recent survey conducted by WeddingPro, we found that 70% of wedding pros surveyed have or plan to raise their prices by the end of 2022.*
Of that cohort, 37% will increase by 6% or less. Additionally, another 33% will increase by 7-10% and 20% will increase by more than 10%.
5 things to consider when evaluating your prices
When you’re ready to sit down and calculate how much you should raise your prices, Michelle asserts that you should start by evaluating your business according to several pricing variables, including those listed below.
How to overcome pricing anxiety
Even if you’ve decided to re-evaluate your prices, we know that, for many pros, this can create a lot of anxiety. It’s incredibly common for small business owners to hold off on changing prices, and there are a lot of reasons behind it. Some may feel imposter syndrome when they think about how much they’re charging, while others may feel as though they’re alienating their audience. And, some people just don’t know where to start, in general. To help overcome any hesitations, here are some cardinal rules that will help boost your confidence.
Due to inflation, many pros are going into this wedding season not making as much profit as they originally thought they would when they booked their couples back in 2021 or even 2020. And, though it may be tempting to have a hard conversation about raising their rates due to these rising costs with current clients, it’s most likely not the right move. But, Michelle suggests looking at your contract to see what it says about mid-contract price increases.
Michelle shares, "This is a tricky situation to navigate. You may not have any wiggle room to change your pricing to accommodate added costs. This may be an opportunity to sit with your lawyer and revise your contract moving forward. If you offer a service like wedding design or stationery with a budget that moves depending on changing needs, you may be able to have a conversation with your client about rising costs and how that will impact pricing and their wedding budget. Always navigate on the side of respect and caution."
In many cases, changing previously agreed-upon prices could sour a relationship and destroy any rapport or trust you’ve built. It can also lead to negative reviews that can affect future bookings. We know it’s scary to potentially break even—or take a loss—on a wedding, but focus on providing five-star services so you can use their review to book your next client at a higher rate.
What does this mean for your pricing?
A Wedding Pro's Guide to Navigating Price Re-evaluations
How to Evaluate Rates and Educate Couples On Price Changes
Did you know?
Inflation isn’t new by any means—in fact, the economy has experienced many periods of higher prices—but this most recent ballooning in costs has increased to a rate of 8.6%, the highest the U.S. economy has seen since 1981.
So, what does inflation have to do with your wedding business? Michelle Loretta, the owner of Be Sage Consulting, says, “rising costs on raw materials and labor, coupled with the impact of inflation, will dictate how expensive it is to service your clients, meaning you should evaluate how much you can reasonably charge for your services going forward.”
In this guide, we partnered with Michelle to take a deep dive into inflation, how to re-evaluate your pricing to reach your business goals and how you can communicate any needed rate adjustments to your couples. Follow along to learn more!
*Survey conducted by WeddingPro in April 2022 of 558 wedding pros in the United States.
In light of these sweeping price increases, it’s only natural for you to start thinking about your rates, as well. Before that can happen, though, there are several things to take into account if you are considering re-evaluating your pricing.
These factors are also great benchmarks to use as you think about how much your business has progressed over a certain period.
Pro-Tip
Speaking of benchmarks, have you downloaded our Benchmarking Your Business report? In it, you’ll find exclusive data on how other pros advertise, how much they spend on advertising and much more!
Let’s talk a little more about that last bullet: price for what your couples can realistically handle. As a business owner, it’s important that your services are priced in a way that turns a profit and meets your financial goals. But, it’s also important to think about your prices from the consumer's perspective, especially as we move into the 2023 wedding season. If couples in your area have more conservative budgets than in prior years because of current market conditions, you may want to prepare yourself for the inevitable conversation about how and why you set your prices the way you did and why your services or products are worth the investment.
Pro-Tip
If you don’t want to type out the same message over and over again, create templated responses to keep your messages regarding your rates consistent, (while also saving time!)
How to educate your couples about your pricing
Another way to educate your couples is to provide them with articles that explain the rising costs of weddings from their perspective. Couples aren’t privy to the inner workings of your business, so they’re just experiencing the jump in prices without much context. So, if you give them additional resources that help explain why rates may be going up across the board, your conversation is more likely to start out on equal footing.
These should look familiar–they are the same variables that are used when setting initial pricing structures. Beyond that, they're also great benchmarks to use as you think about how much your business has progressed over a certain period.
These should look familiar–they are the same variables that are used when setting initial pricing structures. Beyond that, they're also great benchmarks to use as you think about how much your business has progressed over a certain period.
The cost of goods and services
The amount of money you need to spend to actually create your product or service. If you’re a baker, for example, think flour, sugar and eggs.
Expenses
These are the other costs you have when you’re running a business. So, after you’ve spent money on the materials you need to produce your service or product, you’ll need to also pay for things like business cards, overhead expenses (phone service and lighting) and gas to get from place to place.
Time invested
Remember, your time is valuable and quantifiable. The hours you spend speaking with your clients, workshopping their ideas and actually creating their vision should all be baked into your pricing. Additionally, consider if the couple adds on something that will increase the time you’ll spend on that project.
Quality
The quality of your services should also be something you account for in your prices. If you’re using the highest quality materials for your products, consider how your rates cover those additional costs.
What the market (aka your couples) can realistically handle
This is the least tangible factor in a pricing strategy, but it’s also the most important. Take into account the demand for your product or service. If you’re selling out, or at capacity for events far in advance, this means that you have a high-demand offering. If you offer something rare that no one else does in your market (like weddings celebrating varied cultural traditions), that uniqueness is valuable and should dictate how your price. If your artistic work and reputation are at the top of the market, your pricing should be built around the exclusivity to work with your company.
You don’t have to make huge increases whenever the time comes to reevaluate your pricing. Making big jumps can feel intimidating, but incremental increases—which can be as little as $50-$100—are much easier to grasp mentally and financially (for you and your couples). Michelle shares, "In my 14 years of looking at wedding pros' financial strategies, the most important factor in profitability is pricing. Even if that jump is only 10% it can make a huge difference in that company's profitability overall. And, I've seen business owners pay themselves and their teams better on account of these small shifts."
Consider evaluating your pricing structure annually. Think about it; a lot can change in a year—like your experience level and the number of employees you have—and Michelle says, “The other factor to consider is that if you are booking out longer than 12 months, you need to consider a) your pricing structure will likely be higher in a year and b) you will be working with that couple for a longer timeframe (more labor output). Pricing should reflect that. What we saw during COVID was a lot of frustrated wedding professionals who were servicing 2021 clients on postponed events at 2019 rates. It’s good to think forward at where your pricing should be in the following year.” No matter what your experience level is, you owe it to yourself to make your rates work for you. And, once you get in the habit of gradually increasing your prices, it will be a lot easier to explain why you’re doing it to yourself and others.
Know that it’s okay to charge a fair price for your services. Many small business owners feel the need to justify their worth to their clients (and to themselves.) But, it’s important to remember that your business is growing, you’re getting better at your craft and you are and will be worth it to your ideal client. So, know that you’re not doing anything wrong by re-evaluating your prices—you’re simply continuing to maintain the quality of your products or services.
What if you want to change rates for current couples?
Couples are just starting to notice the major increases caused by rising costs, so, it’s now up to you to help educate them on why your business may be upping rates.
When doing this, it’s important to lead with honesty and transparency. Think about what you would want to hear from their perspective. So, on top of pointing to your price changes, Michelle recommends helping them understand how rising costs may impact their wedding budget. They may not be familiar with how many flower farms worldwide were left to die starting in March 2020 and how that impacts flower costs today. They may not know that the lumber shortage will impact their ability to get a certain type of envelope for invitations. Couples may be unaware that rising food costs will impact their catering budget. And, they may be unaware of the impact of labor on the wedding overall.
But, pricing isn't just about costs. It's about your fit in the marketplace. When educating couples on prices, it's important to identify what makes your business unique, why the service you provide is different and how your company will provide exceptional service beyond their expectations. Make sure you give them context around why your business and services are still worth their investment if your prices aren’t in line with their original expectations.
Conclusion
Pricing your products and services is a delicate balance, especially now. But, remember, the current economic environment is temporary, and your business has survived so much over the past few years. You have the tools to push through. And, hopefully, this guide will be another one you can add to your tool belt as you prepare to face these challenges head-on.
Michelle Loretta is a strategist for the events industry and creator of Be Sage Consulting, formerly Sage Wedding Pros. She has been educating, coaching, and consulting event professionals since 2009. With a degree in accounting, roots at the Big 4 firm Deloitte, and experience as a stationery entrepreneur, she dissects numbers to help level-up businesses’ earnings. Michelle wakes up each day excited to create Financial Strategies for Wedding and Event Businesses. She has been asked to speak at a number of industry conferences, including NACE Experience, Biz Bash Live, and The Special Event. She was named one of the TOP 1000 Event Professionals by BizBash in 2019. She is also the winner of the 2021 ILEA ESPRIT best conference award for the Be Sage Conference. You can join Michelle at Be Sage Conference in Sonoma this February 2023 for deeper learning.
Please note: WeddingPro and the materials and information it contains are not intended to, and do not constitute, financial or tax advice and should not be used as such. You should always consult with your financial and tax advisors about your specific circumstances. This information contained herein is not necessarily exhaustive, complete, accurate or up to date and we undertake no responsibility to update. In addition, we do not take responsibility for information contained in any external links, over which we have no control.
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