Planning a large-scale event is a bit like completing a puzzle: Every piece must fit together in order to create the full picture. Negotiating contracts with vendors plays a central part in the event planning process, making contract negotiation a necessary skill for both current and aspiring event managers.
Read on to explore actionable strategies for event managers when it comes to evaluating vendors, negotiating fair terms, and building strong relationships that lead to event success.
What Are Vendor Contracts?
Vendor contracts are a legal agreement between two businesses that identifies the terms associated with an exchange of goods or services. In event management, vendor contracts are incredibly common, as event planners often work closely with third-party vendors for outside services (such as food, decor, or music).
A typical vendor contract encompasses:
- Scope of services
- Cost
- Payment terms
- Liability
- Cancellation policies
Remaining aware of these key details alongside their own needs, event managers can enter into the negotiation process with confidence.
Vendor Selection Criteria
Choosing the right vendor is the first step in successful contract negotiation. The criteria that experienced event management professionals commonly consider when selecting trustworthy, reliable, and reputable vendors include:
- Experience and reputation
- Cost and value
- Flexibility
- Communication
- Quality assurance
Researching and comparing vendors before beginning the negotiation process can reduce some of the stress and frustration of coming to agreeable terms.
Why Negotiation Matters in Event Management
Primarily, event managers enter into negotiations with third-party vendors to help lower the cost of services and maximize their event planning budget. However, effective negotiation not only helps event managers stay within their target budget, but it also allows them to build strong vendor relationships and ensure event reliability and flexibility.
Key Contract Components to Review and Negotiate
The key terms of a vendor contract may vary based on the scope of the event and type of vendor, but most contracts comprise similar components. Below are some of the essential elements for event management professionals to focus on when negotiating contracts with vendors:
Pricing and Payment Terms
Event management professionals and vendors work together to outline all the financial aspects of the contract, including the price of services and payment terms. Down payments, total payments, and payment deadlines are all part of the pricing and payment terms — as well as the conditions for payments and the consequences if payment is not met on time.
Price Adjustments and Incentives
In the event that price adjustments are made based on negotiations, the adjustments and incentives are outlined as part of the agreement, too. This allows both the event manager and the vendor to understand the scope of the concessions made during the negotiation process.
Deliverables and Timelines
Deliverables and timelines are integral to the vendor contract, allowing both parties to agree upon when and how services will be rendered. For example, an event manager who is hiring a photographer for an event identifies the hours that the photographer will attend the event, the quantity of photos they expect to receive, and when they expect final photos to be delivered.
Cancellation and Force Majeure Clauses
Cancellation and force majeure clauses in vendor contracts aim to identify what happens if one party decides to terminate the agreement in advance of the event or if an unforeseeable circumstance prevents one party from fulfilling the terms of the agreement. During the negotiation process, the specifics of the cancellation and force majeure clauses may be discussed.
Liability, Insurance, and Compliance
Liability, insurance, and compliance clauses are incorporated in vendor contracts as a means to identify who is legally liable and responsible for the event. In most cases, one party carries the insurance for the event, and the scope of insurance coverage is outlined within the agreement.
Software and Equipment Updates
If technology is integral to the scope of the event, the event manager and vendor may agree upon terms surrounding software and equipment solutions.
Steps to Effective Vendor Negotiation
The negotiation process may vary from one vendor to the next, but being aware of the leading negotiation strategies can serve as a guide for navigating these meetings with any type of vendor.
According to the U.S. Chamber, these are among the steps that lead to effective vendor negotiation:
Research and Preparation
Performing thorough research in advance enables an event manager to arrive at negotiations prepared with actionable information that they can leverage during the negotiation process. Understanding the current landscape of the vendor’s industry as well as how the economy may be impacting their business can help an event manager put forth enticing terms that are mutually beneficial to both parties.
Prioritize Your Goals
Establishing clear, measurable goals prior to the negotiations allows an event manager to stay focused on what is most important to them throughout the process. For instance, if your goal is to stay within your budget and maximize the resources available to you, you might focus primarily on the payment terms during negotiation.
Ask for Itemized Proposals
Broad contracts can leave too much room for error. This means event managers are tasked with outlining the key details of all services to be provided during the event. By requesting itemized proposals, managers can develop a comprehensive understanding of exactly which services will be offered and at what cost — thereby ensuring that every detail is covered during the negotiation process.
Negotiate Beyond Price
Price may be the primary term on which event managers focus during negotiation, but negotiating beyond price could enable them to secure the most valuable contract. In addition to negotiating the price, event managers may consider collaborating with vendors to secure favorable deals for the contract length of duration, the type of deliverables included, or the value-added services that may be available.
Put Everything in Writing
After outlining all contract terms in writing, both event managers and vendors can ensure that both parties are on the same page when it comes to planning and executing the event. Anything agreed upon during the negotiation process is typically included in the vendor contract.
Maintain Professionalism
By maintaining a sense of gracious professionalism throughout the entire process, event managers have the opportunity to build strong and long-lasting relationships with their vendors that prove beneficial to both parties.
Negotiating Contract Renewal Terms
As event managers nurture vendor relationships, they may find themselves renewing contracts for recurring events or developing long-term vendor agreements. Here are a few examples of steps event managers can take when negotiating renewal terms:
- Review past performance. Evaluating the past performance of vendors can help event managers decide the best steps in terms of revising contracts moving forward.
- Renegotiate based on results. Reliable performance in the past can allow an event manager to renegotiate terms that are more favorable to both parties.
- Address price escalations. As the economy ebbs and flows, renegotiation allows an event manager to reevaluate based on price changes.
- Revisit incentives. Incentives may be revisited to help encourage vendors to continue working with an event management company.
- Clarify renewal triggers. Many long-term contracts include renewal clauses that require the contract to be evaluated at certain points in time. These timelines can be clarified during each renegotiation.
Common Pitfalls to Avoid
Consider the following common contract negotiation mistakes (plus how you might avoid them):
- Failing to compare options. Completing research in advance may help you find more vendors to compare.
- Ignoring the fine print. Reviewing all terms can prevent confusion and miscommunication.
- Rushing the process. Allowing ample time for negotiation can help event managers secure more favorable deals.
- Neglecting relationship management. Maintaining professionalism can help event managers nurture lasting relationships with the most reputable vendors.
How to Build Strong Relationships With Vendors
Given the essential role of relationship building in event management, these tips can help nurture lasting relationships:
- Communicate clearly and consistently. Touching base with your vendors helps you provide clarity and prevents misunderstandings during the event.
- Honor your commitments. Providing consistent, reliable service in return will encourage vendors to continue working with you.
- Provide constructive feedback. Offering compliments about favorable service, alongside useful suggestions for ways to improve, can help your vendors grow and develop.
- Show appreciation. Recognizing vendors when they follow through and deliver exceptional service can positively reinforce your relationship with them.
- Foster collaboration. To cultivate a collaborative spirit, strive to treat vendors as valued members and true partners of the team.
- Support mutual growth. By nurturing lasting relationships, you and your vendors can successfully grow your businesses thanks to greater morale and financial stability.
- Stay professional during conflict. Disagreements are bound to occur, and handling those conflicts with grace and respect can make a significant difference in the overall outcome.
Final Thoughts on Negotiating Contracts With Vendors
Vendor contract negotiation is a key professional skill for event managers. Through advancing one’s education and pursuing professional development opportunities, present and future professionals can hone this vital skill.
Explore the Leading Negotiation Strategies at Johnson & Wales University Online
Event management professionals spend a considerable amount of time negotiating contracts with vendors. If you are interested in pursuing a career in event management, it’s crucial to choose a degree program that equips you with the industry knowledge and negotiation skills needed to secure valuable contracts with reputable vendors.
The Master of Business Administration (MBA) in Event Leadership degree from JWU Online is a specialized program featuring an emphasis on business management and leadership skills as well as the event management sector. Throughout this program, you can learn more about the negotiation process and leading strategies for negotiating contracts with vendors.
For more information about completing your degree online, complete the Request Info form, call 855-JWU-1881, or email [email protected].
