University and Industry Seminar LONDON Feb. 09/

Transcription

1 University and Industry Seminar LONDON Feb. 09/

2 Pricing Model$ DMC Vs PCO

3 Pricing Model$ How do we quote? Mark ups, commissions, working hours, flat rates, fixed price... DMC Vs PCO

4 PCO DMC PRICING

5 VALUE OF A PCO Consultancy and management services Expert knowledge Experience Operational resources Optimization of time and resources for LOC Proper information circulation Glue for all the involved parties Ensure clear dialogue across stakeholders

6 Our perspective Operating as a PCO we focus our attention on General satisfaction of the client Economic aspects of the conference Perfect synergy of the suppliers

7 PCO S PRICING MODELS Generally there isn t a fixed model and will often depend on the level of service support that the organising committee require to the PCO. Commonly building budget structures include: A fixed management fee or honorarium and/or a percentage of the budget 7 15 % A management fee per delegate up to 1K 50 up to 2K 40 up to 3K 30 more than 3K 20 A management fee per abstract / paper handled 20/30 A management fee (fixed or %) per sq.m. of exhibition space sold 7/12% A management fee (fixed or %) for sponsorship sold rome 20% Milan 30% Profit sharing (sharing the risk!) Commissions & Mark ups 5/10% overcomm???

8 PCO S PRICING MODELS Often it is a combination of more than one of these pricing structures and it is recommended that you discuss and establish what structure best meets your needs. Most PCO s will be flexible in adjusting their pricing model to reflect the needs of each specific event and reflect the services the PCO is being asked to manage. Some services such as bid support, initial needs analysis consultancy, a PCO will offer free of charge as part of their willingness to share the risk with the other parties who are also giving their time as part of the bid team. Other services such as accommodation management, social and tour programme planning, PCOs will support at no cost to the budget as their administration costs are covered either in commission revenue from the supplier or built into the ticket price beingsold to the delegate. It is our advice to talk to the PCO and have open dialogue to ensure both parties have a clear understanding of each other s needs so the most appropriate transparent pricing structure can be established.

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10 CASE STUDY

11 CASE STUDY numbers days visitors (+12% of previous years) foreingners visitors yuan ( Euro, the most expensive World Expo ever) countries organizations yuan ( Euro) operating profit thanks to the record attendance

12 CASE STUDY ega skills Recruitment Education Editing HRM Laundry Service Institutional Visits blog, website, editing application form rent of spaces in the Universities, speakesrs selection and management 100 pages manual for personnel of hostess and management ( p.) 180 uniforms twice a week of Italian Ministries, delegations from the Italian Government, Corporate and other Countries Commissionaires and delegations

13 CASE STUDY pricing model A fixed management fee = to 5% of the budget and/or a percentage of the budget A management fee per delegate A management fee per abstract / paper handled A management fee (fixed or %) per sq.m. of exhibition space sold A management fee (fixed or %) for sponsorship sold Profit sharing Commissions & Mark ups

14 VALUE OF USING A DMC From a tourist point of view, destinations are the real business units (cfr. Pechlaner/Weiermair 1999,2000): considering services as the first competition item is an ancient way to do business the increasing industrialization of tourism, flows of globalization and "multinationalization" of large groups bring new challenges to traditional tourist destinations. Josep Ejarque

15 VALUE OF USING A DMC Comprehensive destination knowledge Professional planning and execution team Total destination logistics management Cost savings derived from targeted buying and volume purchasing Projects delivered within budget Measurable Results Have a real PARTNER

16 DMC S PRICING MODELS

17 1. Packaged Pricing Elegant, refined but with a cool style. You could get it for casual or formal occasion WHAT? Direct costs plus a gross profit is factored into the total price representing an all inclusive charge HOW? Calculated as Percentage Presented as: Per Person/Total Cost Always based on minimum # WHEN? General Uses: Tours/Recreational Activities/Off Property Evening Events/In combination withother models

18 1. Packaged Pricing Elegant, refined but with a cool style. You could get it for casual or formal occasion PRO When using inclusive packaged pricing: DMC guarantees delivery for price quoted DMC absorbs the risk of any errors, omissions or changes in cost that would affect the price. CON Perception of: Overpaying No control of where money is being spent

19 2. Cost Plus Determined and ironic, is recommended for a young gala dinner or an exclusive sport event WHAT? Shows the actual vendor costs, plus a fixed or percentage line item for overhead and a mutually agreed upon mgmt fee/profit HOW? Calculated as: Percentage/Hourly Rate/Daily Rate/Management Fee/Combination WHEN? General Uses: Top NameEntertainment/Dine Around/Items Billed on Consumption

20 2. Cost Plus Determined and ironic, is recommended for a young gala dinner or an exclusive sport event PRO When using this format, all costs, including DMC staffing associated with the pre program and on site program management, should be included in the invoice. CON While every effort is made to control costs, the inherent unpredictability of this model means the DMC cannot offer the same pricing guarantee as with the inclusive format.

21 3. Menu or Line Item If you can t decide your look for tonight, this will be the right choice. But forget about clubbing WHAT? Major categories are identified and presented in a menu format HOW? Calculated as: The profit is factored into each element WHEN? General Uses: Complex events with multiple elements and wide range of variables

22 3. Menu or Line Item If you can t decide your look for tonight, this will be the right choice. But forget about clubbing PRO Menu based pricing allows the client to pick and choose specific elements CON Because a client can choose a single or combination of elements, some fixed costs must be included in each line item

23 4. Fee Based european union Impeccable and authoritarian: are you a top manager? This is your style for today s meeting. WHAT? A fee based pricing of services is agreed upon prior to the program development and based on time and expertise HOW? Calculated:The fee is based on time and expertise WHEN? The least used of all models, with multiple elements and wide range of variables

24 4. Fee Based Impeccable and authoritarian: are you a top manager? This is your style for today s meeting. PRO Perception of paying less CON Like Cost Plus while every effort is made to control costs, the inherent unpredictability of this model means the DMC cannot offer the same pricing guarantee as with the inclusive format.

25 CASE STUDY

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27 CASE STUDY numbers days participants foreingners participants euro final budget (approx) countries hotels booked different price categories (std, sup, sea view)

28 CASE STUDY sharing ega profits skills Hotel booking Tours Social Events Personnel Trasportation sharing profits package package menù or item list menù or item list

29 CASE STUDY sharing profits ega contracted with the core PCO a sharing commisison hotel booking management. Commissions generally amount to the 8/10% of hotel rates and we obtained a 70/30 % splitting with the PCO (70% ega/30% PCO) ega adopted a Cost Plus price strategy, considering the tremendous number of hotels booked, and the wide range of room rates (min. 70,00 max 240,00 )

30 CASE STUDY packaged ega skills Hotel booking Tours Social Events Personnel Trasportation sharing profits package package menù or item list menù or item list

31 CASE STUDY packaged For all the tours ( Amalfi coast, Capri, Naples, Pompeii and Positano) and social events (9 total, average cost 65, average attendance 450 pax, total budget 250K ) ega mantained the same contract condition (70/30 % sharing) buyng at direct costs and selling with a gross profit, representing an all inclusive charge ega adopted a Packaged price model, cosidering the complexity of social event (catering, entertainment, transportation, personnel, )

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