If you’re not collecting a deposit for your events yet, you should seriously consider starting. Deposits are standard in many industries, including the event rental industry, and act as a buffer and safety net for both you and your client. Once money exchanges hands, contracts take on a whole new meaning and it really helps drive motivation. Money is already coming in, so you’d better make this the best event ever! In case you’re on the fence about collecting a deposit, we’ve created a list of the top 5 reasons why they’re a great addition to your event company.
#1 - Discourages clients who are not serious about booking
Say goodbye to event clients who have you go through all the work of organizing the rentals and designs for their event, only to turn around and say, “oh, never mind” because they’ve actually been shopping around the entire time. With a deposit, they’ve got money on the line, so they’ll want to see that party happen as much as you do!
#2 - Encourages client involvement throughout the process
As mentioned, there is money involved! When you collect a deposit, your client is much more likely to remain engaged and responsive during the planning process. That way, if there are any changes the client will be motivated to loop you in ASAP instead of waiting till the last second.
#3 - Minimizes your risk
Taking on an event may mean that you have to turn down other opportunities. If a client cancels and you come out of the whole thing empty handed— well, that’s a terrible feeling. And it’s unnecessary. A deposit ensures that you will get paid for all that planning work before an event.
#4 - Provides funds for your project
If a client has special requests or you need to purchase some items for their event, your event company may be paying out of pocket if you don’t take a deposit. With a deposit, you’ll have income to cover the costs of any new items you add to your inventory for an event. The same applies for materials for custom items; the cost can be covered by the deposit.
#5 - Legitimizes your work
This one has a psychological component to it. People tend to value things more if they are more expensive. If your event company charges a deposit, it demonstrates that you take your time and work seriously and that you’re worth any additional upfront cost.
Collecting a deposit is a smart move for anyone in the events industry. There’s a lot of work that goes into planning before the event even happens, and a deposit ensures that work is at least partially financed. It also encourages your clients to remain involved in the process, while simultaneously discouraging clients who aren’t serious about their booking. Plus, nothing motivates you to do your best work like money flowing in! Deposits also come with a higher-end, in-demand perception and will automatically elevate your event company’s work. And as we all know, perception is key in the events world.
As with any legal policies and documents, consult your attorney before implementation. Local laws may dictate whether you're allowed to collect non-refundable deposits. Some companies opt to choose the word "retainer" instead of deposit. Investigate what is legal and most appropriate for your specific business and location before choosing a course of action.