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Sticker Shock

Managing customer expectations while protecting your bottom line.

Features | August 1, 2022 | By: Michelle Miron

Though prices are rising, demand is so healthy that there’s no need to haggle with customers, reports David Cesar of Blue Peak Tents, which provided tenting for this wedding. Photo courtesy of Blue Peak Tents.

Even as COVID-induced cancellations recede, vendors must now deal with spiking costs resulting from rising demand, geopolitical instability, supply chain breakdowns and other economic trends. In fact, the Wall Street Journal reported earlier this year that recent consumer prices are the highest in 40 years. 

Companies across all industries are facing rapidly rising costs for fuel, labor, materials and more. But as wages continue to lag well behind inflation, consumers are struggling as well, leaving everyone with some tough choices to make.

“If you fear backlash from your customers, you may decide against price hikes,” notes entrepreneur Kyle Leighton in Forbes. “But absorbing inflationary costs could hurt your business, forcing you to downsize, scale back operating hours or streamline your offerings. That raises some important questions for leaders: when is the right time to raise prices, and how do you do it without alienating your clientele?”

Particularly in the events business, companies want to focus on raising expectations, not prices. But suddenly they’re faced with having to dramatically raise prices and lower client expectations to protect their company’s bottom line. To see how the event rentals industry is adapting to these unprecedented challenges, we talked to four companies dealing with these issues at the height of the 2022 rental season. 

One Clements Tent Rental strategy has been marginally increasing costs for established customers and introducing higher prices for new ones, reports Vice President of Operations Andrew Owens, shown here (at right) on the job. Photo courtesy of Chris Muldoon. 

Raising prices

Not surprisingly, one of the largest overhead increases has been fuel costs, reports Andrew Owens, vice president of operations for Warsaw, Va.-based Clements Tent Rentals. As a result, he’s had to boost delivery fees by about 25%. Over a third of his business comes from private backyard events (the rest is made up primarily of corporate functions and weddings), and the increase in fees has definitely had a negative impact on those smaller events. 

While most of his tent and other rental inventory is already in place, he estimates the cost of tent components has recently risen by about 22%. 

To help offset these price hikes, he says Clements’ strategy has been increasing costs marginally for established customers, while introducing higher prices for new ones. The company also places expiration dates on all cost estimates so they can be adjusted as economic forces dictate. 

“Before 2022, we hadn’t had a price hike in many years, so it was long overdue. I honestly think the industry as a whole is undervalued for the services we provide. I see a lot of other industries charge a lot more for a lot less, considering the labor and time involved.

“We haven’t gotten a lot of kickback, really,” he continues. “We’re in a time when everybody is increasing prices … so I think to some extent they just expect an increased price.”

In fact, by year’s end, Clements expects a 20% revenue increase over annual sales prior to 2020—a trend he predicts will continue through 2023. 

“One of our returning clients has decreased the size of the event it does each year, but another large client is doing double events,” he notes. “I think they held on to the money allocated for [missed years].”

A positive trend? Customers now seem better aware of the benefits of holding gatherings outside, but under cover. 

“Those who wanted to have their events at restaurants, and found the restaurants closed, started Googling,” he explains. “And I think they stumbled across this industry and realized they could instead host [outdoor events].”

Valerie Flynn of T3 Event Rentals suggests clients “consider reducing specialty items.” This beautiful reception was achieved with simple greenery, candles and string lighting. Photo courtesy of T3 Event Rentals.

 Adapting quotes to budgets

Rising labor and fuel costs have been something of a double-whammy, confirms Valerie Flynn, office manager at T3 Events Rentals in Alpharetta, Ga. 

“It seems every company is hiring … [so] you have to make sure you offer a competitive wage,” she notes. “Then we have to increase delivery fees due to the cost of gas and paying employees while they drive to the jobsite. Many of our customers are choosing customer pickups to save on the expense.” 

To help counter that, along with cost hikes on products often compounded by import fees and surcharges, T3 is trying to buy used equipment at lower prices that can then be passed on. 

Nevertheless, it’s never easy explaining to repeat customers why rental prices have risen. 

“At first it seems like a hard pill to swallow,” she says. “We have to explain that we traditionally have slight price increases each year, and if their event was canceled due to the pandemic, they missed out on transition periods.”

Immediately after COVID, T3 customers seemed eager to start spending again.  

“Now, they aren’t spending as much as the year before,” Flynn notes. “We’ve started asking what their budgets are so we can make sure we fine-tune the quote if they’re working with a limited budget.”

To protect itself from unforeseen cost increases, T3 now places deadlines on cost quotes to customers. It’s also more careful about quoting prices for items it doesn’t already own.

“If a rental item has a high labor factor to it, it is non-negotiable in price,” she adds. “People don’t always understand how much time and work is involved in setting up a tent or an event.”

Just say “no.”

Company president David Cesar says skyrocketing product, labor and fuel costs are also problematic for his rental firm Blue Peak Tents Inc. in Batavia, Ill. As such, it’s had to “significantly” increase prices.

“Our labor costs in the last 18 months have increased by 25% to 40% due to an extremely tight labor market and the fewer people in the labor pool willing to do physical labor,” he explains. “If we’re quoting an event for the following year, normally we quote at a 5% to 10% increase to account for the anticipated rise in labor rates. Some clients understand and some are surprised. We’re lucky most are in the upper income and wealth percentiles, so higher prices don’t necessarily affect them as much. Most sticker-shocked clients are lower-budget clients, nonprofit clients and festival organizers—all of whom have been accustomed to rock bottom pricing for years, and now have to adjust.” 

Fortunately, notes Cesar, industry demand is up enough that Blue Peak feels no pressure to offer cuts or discounts that could significantly affect profit margins. 

“Demand for outdoor events, and tenting in general, continues to be at all-time highs,” he says. “So we have no problem saying ‘no’ to clients not willing to pay the prices necessary for what they’re asking for.” 

Blue Peak also sets 30-day deadlines on proposals, so it can closely match fluctuating market prices on elements like carpet, propane and fuel. 

“That’s hard, as most clients are wired to expect pricing not to change from the time they sign their contract,” he says. “But clients have a lot of expectations that are unrealistic. Unfortunately, you just need to let a lot of clients go and not try to appease everyone at your expense.”

Lefty’s Tent & Party Rental in Bovey, Minn., hasn’t been as impacted by high fuel costs as competitors in large metro areas, reports owner Pat Kane. Photo courtesy of Lefty’s Tent & Party Rental. 

Protecting profit margins

Many industry vendors are also coping with supply chain issues over items like tents, tables and chairs, notes Pat Kane, owner of Lefty’s Tent & Party Rental in Bovey, Minn. 

“Lots of items come from overseas and are getting hung up and creating shortages similar to the auto industry,” he observes. “It’s creating almost a frenzy, sometimes, for people to buy items like chairs.”

Fortunately, Lefty’s stocked up with new tables, chairs, tents and other necessary supplies just before COVID hit. Kane says his largely rural northern Minnesota market is not as impacted by high fuel costs by firms in big metro areas; nevertheless, he’s imposed fuel surcharges and expects other price increases if inflation and supply issues continue. 

His clients to date have been accepting, and he hopes future clients are just as understanding. 

“Prices will have to continue to rise; there’s no way of getting around it,” he notes. “You can play the game for a while of lessening profit margins, but you can only do that so long before you start to impact the company and its employee wages.”

For now, business at Lefty’s is good. In 2021, it realized its best sales since its founding 41 years ago, and 2022 sales may break that record. He believes that trend represents more than just corporations and municipalities using money unspent due to the pandemic. 

“Community events, town celebrations and things of that nature … are back on the books and full steam ahead,” he says. “I guess for us, the market is rebounding well.” 

Michelle Miron is a freelance writer based in Hugo, Minn.


SIDEBAR: Vendor tips: Be frugal, not foolish 

Andrew Owens, Clemens Tent Rentals:
“A lot of people ask for a tent that’s way too big for their event, so we guide them to the right size. We often recommend not seating everyone inside a tent, and instead using cocktails tables and buffet-style food. They can also save on linens; use lower-grade chairs, rustic benches or hay bales; forego a dance floor and/or provide their own bar.”

Not recommended:  Going without tent sides, particularly when rain is forecast. 

Valerie Flynn, T3 Events Rentals: “Consider reducing specialty items. High-demand items, unique items or those that are hard to come by are always going to be more expensive. If a rental item has a high labor factor, it’s non-negotiable in price; if not, there’s more negotiation. We’re not afraid to recommend a different company that isn’t as expensive.”

Not recommended:  Failing to pay for two sets of chairs, or for the transport of chairs from the ceremony to the reception site.  

David Cesar, Blue Peak Tents Inc.: “Maybe we do a carpeted lay-down tent floor instead of a hardwood floor. The same can be done for many products: Century tent vs. sailcloth; white top vs. clear-top; fans vs. A/C; carpet vs. hardwood; string lighting instead of chandeliers, etc.”

Not recommended: “Don’t cut items that will affect the guest experience or reduce the probability of a successful event; for example, cut the floral budget by $10,000 instead of removing the tent floor. The floral affects the look, but the tent floor could make or break the entire event. Flooring is the only way to guarantee the event space is usable regardless of weather.”

Pat Kane, Lefty’s Tent & Party Rental: “Don’t insist on every item you’ve seen on Pinterest. Using banquet instead of round tables may reduce the size of the tent and the amount of linens you’ll need. Consider less-fancy chairs or reserve the fancy ones for the special table(s). Rely on our 42 years of experience to learn what works best.” 

Not recommended: Opting for porta potties instead of trailer-style bathrooms. Opting out of tent siding and its weather protection to save a few hundred dollars. 

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