T&E Plus

Demand Transparency in Pricing Models

Why do some suppliers hide mark up or management fees?  My role has taken a forensic twist this week as I am on a quest to uncover actual prices, and mark up fees, at every level for our clients. 

 

When organizations hire suppliers to manage meetings, travel programs or entertainment assets (e.g. tickets/suites), management or mark-up fees are often charged throughout the process.  This is a normal practice in most supply chains.  However, let me be clear:  Many suppliers offer pricing transparency and some suppliers "pass through" the actual costs without adding additional fees.

 

Even when suppliers charge fees, organizations can demand transparency to show the "real" costs.  Let's discuss two scenarios:

 

1. Your organization hires a meeting management company, who hires a destination management company, who hires an entertainment company, who hires the entertainment.  At every step, there may be management, or mark up, fees charged.  Do you know how much the actual entertainment actually costs without going through all the other companies? Is it even feasible to contract directly with the entertainment?  What if you hire a travel management company who hires a meeting management company? Are there additional fees?

 

2. Your organization hires a ticket broker, who hires a logistics organizer, who contracts with hotels, transportation, and food and beverage suppliers, as well as another secondary ticket supplier to put together the "entertainment" package. Along each step, there may be additional fees charged.  Do you know how much the actual "package" costs versus what the broker is charging? 

 

Two diagrams that help describe this typical scenario are below:

 

 

 

 

 

How do these suppliers charge the organization?  There are numerous methods and probably more that aren't captured in this column. 

 

Per Person Cost

Supplier may charge the a) actual costs of all services, b) a management fee or profit percentage.  The supplier may charge the organization based on a tiered volume of participants.

 

Buffet choices or Menu Based Cost

Supplier may charge a) per type of service the organization requests, b) management fee or profit percentage.  The supplier may not take into consideration the volume of participants

 

Fixed Fee

Supplier may analyze the work required and estimate a fixed fee prior to the work being delivered. 

 

Time and Materials

Supplier may charge for all time and materials required throughout the project.  A not-to-exceed, or maximum hours allowed, provides benefits to the organization.

 

Cost Plus

Supplier will show the actual cost for the service plus a management or mark-up fee. 

 

We offer our clients numerous templates and contract language to reduce spend on management and mark up fees.  If you want help uncovering your actual costs, contact me.

 

Debi Scholar, CMM, CMP, CTE, CTT

 

Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation, T&E policy, plus more...

 

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How will you BUY your tickets?

In the corporate T&E spend category, entertainment assets, also known as "tickets," are difficult to control and monitor without the right systems in place. Most people complain about ticket scalpers yet when the demand is high for a sporting event or concert, many of those people buy from the secondary ticket market. Some of the secondary ticket sellers are considered scalpers.

Now, according to TicketMaster, Miley Cyrus will try their new ticket scalper-less purchasing system. Instead of receiving tickets ahead of the event, it will be a validated "paperless" system. The credit card used to make the purchase will serve as the customer's ticket. To attend the show, the customer just presents the credit card used to purchase the ticket(s) and a valid, government issued ID (such as a driver's license, state ID or passport). The gate attendant will swipe the credit card and since all the seats are assigned to a single credit card, your entire party must enter the venue at the same time.

More information is here--- http://www.ticketmaster.com/mileycyrus/faq.html?ac_link=miley09_custom_splash_faq

Can this paperless system be used for SuperBowl tickets? The Stanley Cup? The Kentucky Derby? The Indianapolis 500?  If the system works, how would the corporate buyers obtain their tickets? By standing in line? Interesting thoughts…

There are always interesting pros and cons and many who like to share their thoughts….what is your opinion of this new system? 

Debi Scholar, CMM, CMP, CTE, CTT Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation, T&E policy, plus more... Follow me on Twitter ...http://www.twitter.com/debischolar and on LinkedIN at http://www.linkedin.com/in/dscholar

Greed: Supply and Demand in the Ticket Market

George Will raises interesting perspectives on greed in the entertainment ticket market.  http://www.springfieldnewssun.com/opinion/columnists/george-will-greed-is-punished-just-ask-a-ticket-scalper-121608.html.  Ticket scalpers turn up at every venue and almost all performances.

Let's ask our corporate leaders additional questions ...

*If you receive tickets from a sponsorship agreement, how do you track them at the corporate level?
*If you purchase annual suites or boxes at stadiums, do you know the different types of tax deductions? (for suites, boxes, for clients, for individual ticket purchases?)
*How do you know, globally, the distribution of tickets that have went to your top clients annually?
*How do you know, globally, if the suite or box you've chosen and the individual tickets you're purchasing are the right mix for your clients?
*How many seats (box, suite or individual tickets) were purchased, and not used?
*How many seats, globally, went to internal users?
*Do you know how much, globally, you're spending on entertainment tickets and the return on investment?

To George's point "...price gougers are at the mercy of a public armed with information..."  Guess what? "The public" buying tickets at premium prices are often corporate buyers.  Without laws in place to curtail the spending, corporate leadership owns accountability.

In my informal LinkedIn poll asking "Why aren't tickets strategically sourced?" http://polls.linkedin.com/p/36855/dpjrl, 28% (as of today) say that tickets cannot be managed through normal procurement methods because it is too political -- and that corporate leaders are managing them.  As we seek transparency in our corporate spending, I recommend a marketing entertainment ticket strategy, across the entire global organization, a ticket technology distribution method, adding strong policy language to your current T&E policy, monitoring compliance and using consequences when not followed.  In fact, few companies have this in place today.  Thus, corporations often take part in Ticket Scalping.

Without a global strategy, you're spending just as much on tickets as you are other travel, meetings and events...but you probably don't realize it.   A handful of ticket brokers offer a corporate methodology strategy.  Only a few have technology tools in place to manage distribution. An example of one tool on the market: http://www.ovationsmanagement.com/  Keep in mind, the supplier is not the place to start -- but rather, with a financial and procurement strategy and someone who knows the industry. Contact me if you want help.

Debi Scholar, CMM, CMP, CTE, CTT

Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, events, incentives, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation plus more...

Follow me on Twitter at:  http://twitter.com/debi001 or at LinkedIN at http://www.linkedin.com/in/dscholar

Free Baseball Tickets May Lack Integrity

Once again, sports tickets are in the news.  This time, a candidate for mayor was hoping to influence voters by giving them free baseball tickets to the city's suite at Tropicana Field. 

http://blogs.tampabay.com/baybuzz/2009/05/schorsch-trashes-jamie-bennett.html

Ethical behavior plays an important role in ticket distribution -- for businesses, politics, universities and associations.  Transparency reduces costs and poor perception.  Best-in-class organizations purchase and manage tickets centrally, using standard policies and tools.  Contact me if you want help managing your tickets.

Debi Scholar, CMM, CMP, CTE, CTT

 

Thank you for visiting the T&E Plus Blog on expense management, travel management, business meetings, strategic meetings management, entertainment, virtual meetings, tickets, hotels, airlines, ground transportation plus more...

Congratulations to Penn State for reducing scalping

Ticket scalpers hurt the entertainment and sports business.  Congratulations to Penn State for trying to curb the practice.

http://www.ticketnews.com/Penn-State-football-goes-ticketless-to-thwart-student-scalpers509441?utm_source=email&utm_medium=2009-05-07

Now, if we can use more creative ways to eliminate it for everyone else...

In the corporate market, cost transparency of packages, suites, tickets is key to fair pricing. Entertainment assets, such as tickets and premium seating, can be purchased and managed with integrity. Moreover, they can be distributed and tracked enterprise-wide.

Contact me if you want help managing your entertainment assets.

Debi Scholar, CMM, CMP, CTE, CTT

Entertainment tickets - Why aren't they strategically sourced?

Take a quick LinkedIN poll on sourcing Entertainment Tickets

Entertainment tickets, part of T&E, cost companies millions of dollars. Take a quick LinkedIN poll on sourcing Entertainment Tickets:

http://polls.linkedin.com/p/36855/dpjrl

Debi Scholar, CMM, CMP, CTE, CTT