The pricing structure of A Fabulous Affair is straight forward.  The business charges the client a commission of the total cost of the event.  This method of pricing is the norm for the industry.  The commission structure is separated into two categories - events costing less than $50,000 will be charged a 10% commission and events over $50,000 will be charged 7%.  There will be instances in which a pre-determined number of events will be contracted (usually by corporate accounts), whereby a discount commission rate will be assigned.  For instance, A Fabulous Affair has recently signed a contract with XYZ corporation to provide them with event planning services for their corporate functions this year.  The budget the corporation has allocated is $500,000.  Based on this contract a commission of 6% was negotiated with the understanding that if the budget is decreased:

-  $100,000, the commission will increase to 7%

-  $200,000, the commission will increase to 8%; and

-  $300,000, and more the commission by will increase to 10%.

The commission schedule is in line with competitors in this industry.  A comparison that was made with the top three competitors of the business revealed results depicted in the table “Price Comparison”.

In addition to the commissions, the business will receive a 10% referral fee from each independent contractor the customer utilizes.  This 10% referral fee compensates for the discount given to the customer by the contractor, thus, the business does not lose any potential income.