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There are a number of ways an entertainment company may
charge for their services, based on the scope of the work,
their required performance and effort, knowledge, expertise,
and experience. Most companies will charge for their services
in one of following four ways:
1) Consultant Fee: This will generally be a "flat fee,"
based on either providing an expert opinion, negotiating the
rider requirements for a headliner, or another specific service
that the meeting or event requires. This can be a payment
per service, per quarter, year, or event.
2) Fixed Fee: Generally paid to an entertainment company for
a multi-day program to handle all of the entertainment for
all functions.
3) Hourly Rate: Some entertainment and production houses may
charge by the hour but this is uncommon.
4) Percentage of Product or Services Sold: This is probably
the most commonly used method for payment to an entertainment
company. Generally a straight agency fee would be 10%. However,
if the entertainment company is asked to do more than just
the paperwork on an artist, the percentage may start at 20%.
Artists' managers may make up to 50% of their artists' fee,
which is built into the price of the artist. In comparison,
most caterers mark up their product and services 300%.
It must be noted that when you hire an entertainment company,
unless they are part of your company's payroll, you are hiring
them as an independent contractor. The entertainment company
may also utilize a combination of independent contractors
and employees. Employees represent additional costs to the
company, which would be billed back to the hiring company
as part of their costs. In the U.S., these employee-related
costs include the payment of Federal Income Tax withholding,
Social Security (FICA), Medicare, and Federal Unemployment
Insurance (FUTA). At the state level, additional amounts would
include State Income Tax, State Unemployment Insurance (SUI),
State Worker's Compensation Insurance, and State Disability
Insurance (SDI). Other licenses or permits may be required,
depending on the company's core business.
There are other cost factors to consider that are part of
the production of a publicly attended event. These include
compliance with certain federal regulations such as Americans
with Disabilities Act (ADA), Occupational Safety & Health
Administration (OSHA), Federal Communications Commission (FCC),
and the Bureau of Land Management (BLM). At the state level,
there are additional tiers of compliance and regulation including:
CAL-OSHA (same as Federal, but specifically for the state
of California), public or state park property use requirements,
health and safety code, minimum wage/hiring requirements,
Alcohol Beverage Control (ABC), public safety, and overtime
calculation and payment requirements that may vary from state
to state.
Understanding all of the cost factors that will add to your
event's fixed costs is important in presenting a competitive
price. But, it is difficult to compete on price alone if you
do not have a cost advantage. Your cost advantage decreases
with each additional layer of contracting. For example, if
you are buying from someone who is buying from someone else,
you may not have a cost advantage once all of their margins
and markups are added into their price. Clearly, the more
money you can save on products or services, the higher margin
you may be able to earn or the lower the price you will be
able to offer on to your client. Conversely, the most expensive
provider is not always the best so price cannot always be
a decision point. Use your network of contacts, other experienced
industry professionals, and your production manuals from past
events to hire the best professionals at the best rate.
See Tips on Saving Money
and Getting the Most Impact from Your Entertainment Dollar.
See Jorge Santana,
this month's featured Artist.
 Mark
Sonder, CSEP is the Chief Entertainment Officer of Mark Sonder
Productions, a leading national entertainment agency providing
headline talent and production services for large venues,
corporations and associations. In addition, Sonder sits on
the faculty of The George Washington University, Stratford
University, Northern Virginia Community College and The University
of the West Indies. Event
Entertainment and Production is the book published by
Wiley authored by Sonder.
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