PRESS RELEASES

‘Let’s Talk’ is contributed by Amanda Rogaly, owner of Kadoro Events & Communications, the successful event management and brand activations company. This industry leader and popular conference speaker believes in sharing best practice and welcomes reader input, so please contribute insights via amanda@kadoro.co.za. This time Amanda looks at management fees …

Professionalism is not negotiable by Amanda Rogaly

Some business people believe everything’s negotiable. In the event industry one thing isn’t – or shouldn’t be – and that’s professionalism.

The price of professionalism is called a management fee. This fee represents peace of mind. It is an assurance of fair-dealing and expertise.

In crude terms, two remuneration models apply in service industries as the better capitalised and led businesses develop into professional practices.

A fair management fee can be charged (when clients can be confident all arrangements are above board) or a ludicrously low fee or no fee can be levied (when clients may feel dubious deals inflate the invoice).

The first scenario characterises mature industries where professional standards are upheld. The second is more typical of immature or ‘cottage industries’ where double-invoicing, undisclosed rebates and disguised referral fees apply.

It is in the interest of reputable firms that they charge fair and reasonable management fees. (It’s also in the client’s best interest.) Do less and we implicitly acknowledge that professional standards are still far from the norm in our business.

A management fee of 20-25% of total cost is the industry standard locally. Regrettably, some clients have been known to use negotiating power to cut this in half.

At that rate, a company working out of anything other than a spare bedroom would have trouble staying in business.
Price negotiations are a fact of life, but you can’t negotiate away a professional reward.