Understanding the events industry has been a challenge. As a new-comer, I've noticed that discussions and questions around agency commission and value for money have continued to pop up.

So, does everyone understand the role of an agency? How do so-called ‘free services’ cost the client in the long run and do we need to be more transparent, as an industry whole, in the way we communicate to clients about charges for an event?

Before we get into it, it’s important to acknowledge that there are those on both sides, venues and agencies, who do not follow the methods we explore in the blog. As in all cases, there are two sides to every coin.

The first point of contention comes from the ‘venue-finding-model’. Certain agencies will advertise that they’ll find you a venue for free whilst others will claim that they get paid by the venue for any business coming in. All whilst stating that extra costs will not reflect on the client.

So, how is this possible? If a venue is paying an extra 10% of the incoming money towards an agent, someone must be footing that bill. Additionally, when a venue is sourcing a product for price A and then selling that on at price B, unless they are making a loss, there must be a markup to reflect the 10% commission fee. For example, if a microphone is priced at £100, then the venue would have to charge the client a cost of at least £111 to pay the 10% commission allocated by the agency. Whilst this is due to tight margins and competitive pricing, ultimately, there is no way around the client having to front higher costs.

One question that comes from this, can an agency obtain better rates, due to a higher buying power, than an individual client? In some cases, this can be true and preferential rates can be offered to agents who bring in a lot of business into a venue or collective. Thus, these savings can be passed onto the client through the agent. On the other hand, selected agencies may keep those extra savings for themselves as a larger incentive and therefore provide no saving to the client.

This raises further concerns. Are you really getting the most suitable venue for your event or do partnership incentives prioritise higher profits over better service.

That’s where Preferred Partner Programmes come into question. Offered by certain larger agencies, these programmes entail a venue paying an annual fee to an agent to receive enquiries and business. If you are not part of the programme, you are unlikely to receive business from that agent unless any of the partner venues are unsuitable.

One of the more questionable practices that has grown in popularity the past few years, an agent is able to keep business between richer venues and themselves and operate a larger ‘slice of the pie’. We explored this programme in a previous EventHuddle, with an unfavourable outcome; is a client being restricted to venues that have been prioritised as opposed to getting the best fit for their event.

Whilst there can be a lot of merit and benefits to a client and agent working together, these select practices are causing an unease within the industry are not always in the clients’ best interests.

Still, the question remains as to why these models are increasing popularity? Is it that agencies find it difficult to make money and stay in business if there are unscrupulous venues and clients that will cut them out, especially whilst costs rise, and profit margins don’t?

So, what’s the best way to rectify all this? Is transparency on the fee models necessary or is there an alternative route that the industry should go down. If it is truly a service adding value, knowledge and savings, you’d expect to pay for this. But should we look at standardisation within the industry as commission rates can be anywhere from 8-25% currently.

A business needs to make money in order to survive but with hidden costs and a lack of transparency, practices have been allowed to continue without monitoring. Now, with the move to digital live bookings, do we need to make changes to enable trust to remain and businesses to flourish?

We want to hear your thoughts, what side of the discussion do you fall on?