Maximizing Profit Margins: Budgeting for Show Expenses and Gift Giving

[yummybytes]

Preface: I'm totally asking this with an open mind -- I certainly don't think that doing gifts at a show is wrong -- I do it myself, I'm just looking for some thoughts/opinions/input.

How much do you typically spend out of your pocket for a show? I see so many people who pay for the ingredients, give extra booking incentives, give door prizes, free shipping, other prizes, etc and it seems like so much some times.

So I'm wondering if you have a budget limit? What do you typically give out of your pocket?

I was adding up how much I was spending on everything and while I realize it's a write off, it can really add up to a lot of upfront expense. I truly believe we already have a wonderful and generous hostess program and wonder how necessecary the added expenses are.

Here is what I do:

-Door prize for free shipping w/ slip ($4)
-Free gift if they bring 2 ordering guests or 2 outside orders (usually 2-3 of these so around $4)
-1-3 winners (depends on size of crowd) for the ask me about my job game.
(for the latter two, usually a seasons best, tongs, quikcut, citrus peeler) (At most $4)

And then I usually give a little gift to the hostess to thank her -- a Season's Best that I write a little thank you note in and one other item -- usually a spice or small serving spatula, definitely under $5.

So I guess I'm pretty cheap and that brings me to about $17... If my show only ends up a $400 show then I just cut out a nice chunk of my profit margin, but where it makes my eyes boggle is when consultants pay for ingredients and get even more extravagent. Say I do 6 shows a month -- that comes out to just over $100 - probably more than I made on that $400 show... That's a lot of cash to me!

Are these little gifts really what generates bookings and sales for us? Are they worth the added expense?

Oddly -- no one has ever complained that there weren't enough prizes. Most of them were elated to get something at all. If I cut it down would they even notice/care? hmmm.

We all run our businesses differently though -- and that's the beauty, but I wanted to see what you guys do and the obstacles you seem to run into.

Thanks,
Jenni

 

[raebates]

I recently sat down and added things up, myself. Here's what I typically spend on a show:

Door prizes (including "Free Shipping") - $7
Host gifts (SBRC & something small) - $5
Recipe ingredients - $5
Shipping of host kit, receipts, etc. - $6

Total: $21 on average

I have a show average of about $575, so I'm making approximately $140 per show. That makes these expenses about 15% of my commission. I consider 15%, all of which is tax-deductible, to be a reasonable cost of doing business.

As far as whether or not the prizes make a difference, I've had more than a few customers who started out as skeptical "this stuff is too expensive" guests; they won a door prize (mine are always PC products or free shipping); took it home; and came back to place a sizeable order. To me, the quality of our little stuff is an indication of the quality of our bigger stuff.

 

[hoosierchef]

Rae, You always know how to bring a positive spin on things!

Jennifer, don't feel bad.....I've often wondered the same thing.

 

[chefjeanine]

Jennifer,

Follow your gut. You can send invitations and have your host pay for postage (lots of people do this). Just tell them to be sure to include postage with their guest list (multiplying the number of guests by the amount you'll need for the type of invitation you send).

At my shows, the only things I give away are a Season's Best to the host and a pick from my P-Chef prizes (cheapest ones) if they bring a guest.

Usually when I'm willing to pick-up the tab on something (groceries, a Monthly Host Special, etc.), I'm looking to meet a certain quota for myself and I try to always make sure that they have to achieve at a certain level so I'm making that money back in my commision.

I had a wonderful consultant quit the business. She was growing a great business. Had good numbers. She told me that she wanted to spend more time with her kids (she is a SAHM). I never thought that could be the real reason. She brought me all her stuff and I recently went through two boxes of paperwork. She was the one who introduced me to this website. In her box I found LOTS of catalogs, stickers, preferred customer/host cards). Now I'm wondering if she was spending too much time and money on the "extras".

Pampered Chef offers wonderful Host benefits and great Guest specials. You don't need to offer anything extra. I encourage you to keep it simple, especially if you are fairly new. Build up list of customers and past hosts. Later, once your business is more established, you may want to invest more money and time.

 

[pamperedgirl3]

I hardly spend any out of pocket for shows. I give my hosts a SB that I get on the supply order, so those are only $.60 a piece. Then I give one door prize drawing prize (again--something off of supply orders) & I also let anyone who brings a friend or outside order get a goodie from my basket too. But I don't have people bring friends too often. So I am spending less than $5 per show & I've never had anyone complain about not getting something. I don't do booking gifts, but I will pay for the ingredients if they have over $200 in outside orders before the show--but I'm still making money on that because the food isn't over $15 & I'm making over $40 on the outside orders alone.

 

[GeorgiaPeach]

I feel like a cheapskate to even say this but hardly spend ANY money on prizes! I give the host a SB and pass it around, having the guests sign the inside cover. I have twixits in the small saucepan....those are my door prizes for DPDS and bring a guest. I always have someone at the show "ooooo" at the twixit clips and they start talking about how great they are.

I've NEVER had anyone complain that my gifts aren't "big" enough. I've been doing this almost 9 years. I do offer free ingredients for express shows, etc when I'm trying to fill open dates.

My suggestion....KEEP IT SIMPLE!! Once you start doing something "big", that's what everyone will start expecting at EVERY show. It can really add up. Our HO offers our hosts GREAT incentives....talk THOSE up!!

I currently have a show average of about $700 so it goes to show....you don't have to invest alot to get alot It is easy to get caught up in all the little things (I did in the beginning...I think I bought every thing I could off the supply list!) and we take our focus off of the greatest gift we can give.....the opportunity to fill their kitchens with quality kitchen tools

 

[pamperedgirl3]

My suggestion....KEEP IT SIMPLE!! Once you start doing something "big", that's what everyone will start expecting at EVERY show. It can really add up. Our HO offers our hosts GREAT incentives....talk THOSE up!!

I currently have a show average of about $700 so it goes to show....you don't have to invest alot to get alot It is easy to get caught up in all the little things (I did in the beginning...I think I bought every thing I could off the supply list!) and we take our focus off of the greatest gift we can give.....the opportunity to fill their kitchens with quality kitchen tools

I agree!! I also gave a lot in the beginning thinking that I needed to for bookings & such. When I started just giving small things (I rarely give away more than 3-5 little prizes a show), everything just got so much easier! I keep my shows short, give lots of tips & try to keep everyone involved & having a good time. Since then, my show average has gone up a lot & I've been getting bookings without trying at shows.

I've found that guests are more impressed when they hear from the host how much she is getting for having a show & how easy it is to host. Since February, I've been closing my shows the night of, so the hosts are also working on their orders too. Many of them are talking to guests about it during the show & I've gotten many bookings just from that when the guests find out how much they are getting free.

 

[jenniferknapp]

I do feel that I am spending more than I should as well. I need to reconsider, and my biggest expense is definitely the ingredients. I need to plan for the host to buy the ingredients, and hope that they get everything right!

 

[janetupnorth]

I do feel that I am spending more than I should as well. I need to reconsider, and my biggest expense is definitely the ingredients. I need to plan for the host to buy the ingredients, and hope that they get everything right!

Jennifer - I make it clear that they are paying for the ingredients (I usually try to keep it around $15 so they know they are getting it back - extra $15 for having a cooking show).

I tell them, I am saving them time by getting them on my way to the show (that way they are fresh and correct). I bring them the receipt and they pay me for it as I am setting up.

 

[chefann]

I just got a great tip about ingredients.

Instead of offering to pay for them, tell the host that you'll pick them up so she doesn't have to do the shopping (and you can make sure they're right), but she's expected to reimburse you $15 when you get to her house for them. For every outside order she has WHEN YOU ARRIVE (not at the beginning of the show, because then the count will include orders that guests bring with them), she'll get $1 off the ingredients. So if she has 5 orders already, she only owes you $10. And unless every order she has is for $5 or less, they'll at least cover the $1 per order that you pay.

 

[jenniferknapp]

I just got a great tip about ingredients.

Instead of offering to pay for them, tell the host that you'll pick them up so she doesn't have to do the shopping (and you can make sure they're right), but she's expected to reimburse you $15 when you get to her house for them. For every outside order she has WHEN YOU ARRIVE (not at the beginning of the show, because then the count will include orders that guests bring with them), she'll get $1 off the ingredients. So if she has 5 orders already, she only owes you $10. And unless every order she has is for $5 or less, they'll at least cover the $1 per order that you pay.

I like that idea. I didn't like the idea of asking a host to reimburse, only because some hosts may use knock off brands to try and save some money, etc. But at least this way they have a way to cut down on that cost....and I mean my hosts are so excited when I say that I will bring the ingredients, I bet that they will still be happy if you talk up the "i'll do the shopping, and you just pay me later" idea! Thanks

 

[pamperedgirl3]

That's a nice idea Ann!

Jennifer, I also just tell my host that I'll do the shopping for them. I never charge more than $15 b/c I personally don't want them complaining that they could have gotten it cheaper, etc. So I tell them that it will not be more than $15 & that they'll get that back in free products. I explain it when I go over the host program in the first host coaching call & remind them in each consecutive call. I've always done it that way & I've never had a host complain about it.

 

[hoosierchef]

I just got a great tip about ingredients.

Instead of offering to pay for them, tell the host that you'll pick them up so she doesn't have to do the shopping (and you can make sure they're right), but she's expected to reimburse you $15 when you get to her house for them. For every outside order she has WHEN YOU ARRIVE (not at the beginning of the show, because then the count will include orders that guests bring with them), she'll get $1 off the ingredients. So if she has 5 orders already, she only owes you $10. And unless every order she has is for $5 or less, they'll at least cover the $1 per order that you pay.

Excellent idea Ann! I just would feel bad asking for the $15.

 

[jenniferknapp]

Excellent idea Ann! I just would feel bad asking for the $15.

But I am going to play up that the first $15 that the earn in FPV is to cover the cost for these ingredients! So they will earn it back once they show is a show ($150!)

 

[pchefdonna]

I heard this a few years ago and it has always stuck with me: By offering free shipping you are not really helping yourself, as it does not count towards your sales or points. It definitely made me look at it from another consultant, anytime we give something free it should be a free product. You can place it on the guest's order, or order it with the hostess discount. This will increase your monthly sales total, as well earn points for the trip incentive.

Donna

 

[yummybytes]

Really good point. Maybe I will just have them pick a $5 or under item instead.

 

[Teresa Lynn]

Last week, I had a friend call with outside orders for 11 Mix and chops
one of her friends had attended a show (not mine) and the cons gave away a M & C as the door prize.
The guest was talking it up at work and many people needed one so my friend called me and they ordered.
I was excited but, I would never give away a $9 product in my door prize basket. I always draw 1 more than half of the guests present so I do a variety of cheaper things.

 

[yummybytes]

Just wanted to say -- You guys are such a wealth of advice and info. I really need to start posting/becoming more active here

 

[GeorgiaPeach]

Last week, I had a friend call with outside orders for 11 Mix and chops
one of her friends had attended a show (not mine) and the cons gave away a M & C as the door prize. The guest was talking it up at work and many people needed one so my friend called me and they ordered.
I was excited but, I would never give away a $9 product in my door prize basket. I always draw 1 more than half of the guests present so I do a variety of cheaper things.

My guess is that the consultant probably earned the M&C free and had a duplicate. I would definitely not give something like that away as a DOOR PRIZE!!! I use "extra" new season products as incentives for my consultants and "rewards" to my family for supporting my business with those little "I need just one more order" kind of things

 

[raebates]

Excellent idea Ann! I just would feel bad asking for the $15.

I have a clustermate who phrases the invitation postage reimbursement request this way:

"Would you like to send me a check for $xx, or would you rather I just add that to your total at the end of your show?"

I think it would work well for the ingredient cost, too.

 

[pchefkristin]

I give my host the option of picking up the ingredients herself, or having me pick them up and then reimbursing me. I have never had anyone scoff at me about it at all.

I did recently start sending out my invites for my host, as I had noticed many of them would forget one simple thing, .... And Guest. Makes a big difference! Also, it gives instructions to order online, and tells what we are making. I let my hosts know that if they get me a list of at least 40, I will pay postage. Anything less than 40 and they will have to pay me for the postage.

As for giveaways, I just give one SB to my host (passed around and signed by her friends) and one for the door prize. I order several hundred at a time, and put some through on my host orders, so I can earn a bit of commission for essentially the same price as the supply order. Those are also what I give to anyone who brings a guest or order with them. If they are going to bring 2 people, who wouldnt have come anyway, I will pay shipping without a worry.

Also, just as a tip, let people know about payment options. When people are encouraged to pay by credit card, not only does the transaction go faster, but people tend to spend more if they know they arent really "paying" for it right now.

 

[ivykeep]

I don't buy ingredients -- my hosts all provide and no one has ever complained (may be a regional thing -- but I've never been to a PC show in almost 8 years that the host didn't provide the ingredients). I will offer to bring something from my pantry if the guest indicates that they don't have any. I also offer my guests a choice of a bunch of recipes and they choose which ones we are making. I do usually do two (one entree, one dessert) but always let the host make that decision. We do the dessert while the entree is cooking (or vice versa). Some of my most popular shows have been the Harvest Chicken Salad with the Pecan Lattice Tart (demo tart first and then make salad), recently I've been doing lots of rings/wreaths and then an apple dish (and sell at least one peeler/slicer/corer at every show). The ring/wreath/braid always helps sell stoneware. I offer, on my list of recipe choices, the current "recipe" but so far haven't had a single person want a taste of the tropics recipe (none of them appeal to me either, so it again could be a regional thing).

As for prizes, I have everyone introduce themselves, tell me if they have ever been to a show or not (give a twixit to the newbies), and tell me their favorite PC product (no repeats allowed). I do a little bit on each product that the guest mentions and they are reinforcing how great it is to the other guests.

I do a door prize drawing later in the show -- usually give a Season's best or bamboo tongs.

So far for host gifts I've been going through my extras from my kit or stuff I was able to order (Did Celebrate cookbooks off the supply order for the first bunch of shows -- gave a measure all cup to the host at last week's show). I was a VERY loyal customer for more than 7 years before I became a consultant so I have a LOT of PC stuff in my kitchen already and didn't need the duplicates on things like the cheese grater, food chopper, measure all cup -- I already own 1 or 2 (or 3!) of each of them.

Since I will be running out of those freebie products in the next few months, I have started to do the booking gift (wrap a gift and if they get 2-3 bookings depending on the value of the gift, they get the wrapped present), I started on my last show, but she only had 1 guest show up (but it still ended up as a $500 show with outside orders) -- I have several Cutting boards with measure cups for that (I had a few hosts that got multiple bookings from their shows that didn't want the booking benefit and also did a couple of phone shows where I could get the host bonus myself).

I always bring extra small things with me and will pass them out if I need to. I will bring cake mix/icing to my next few shows to demo the rice cooker plus lava cake -- my host three shows ago ended up demoing it herself because she loved it so much (while i was making dessert) and we sold 5 Rice cookers that show. I brought the ingredients to the next show and sold 3 more. My local grocery store just had a sale on Duncan Hines cake mix and icing for 10 for $10 and I had a bunch of $.25 coupons that got doubled so I got a bunch of mixes for $.50 each.

 

[almondfarm]

Purchasing Ingredients for the ShowI started bringing the ingredients for my show in November after 4 years in business and I have the hostess reimburse me $10 for the cost of the ingredients.

It has been a great choice, I get to work with the RIGHT ingredients for the recipe and the host doesn't have to hunt for something special they aren't familiar with. Also I usually do the same recipe all month so can buy in bulk and share between shows making the ingredients for 2 recipes come in at around $10.

I have not had any hosts complain about the reimbursement and they are actually about frantic reminding me they owe me $10 when we are closing the show.

 

[swhitton]

I started offering to bring the ingredients for my hosts last year as well as sending out the invitations. This has been a big boost in my show average. What I do require is that the host send me a check for $15 with her guest list. I explain that this is the amount that PC gives them for having a cooking show and all of my hosts have been thrilled with this service. I also put in my host packet that the $15 is non-refundable and has drastically cut down on my cancellations, sometimes my hosts will reschedule, but I rarely get a complete cancellation. Since I do the same recipe for all shows in the month, it is really easy to keep the expenses down as buy those ingredients I can in bulk for the month, depending on the # of shows I have and then just package for each individual show - this makes it easier for me as well.

This has been a win win situation for both my hosts and myself. Most of my hosts brag about this service at their shows which has helped to increase my bookings at shows as well.

As with anything in our businesses, this is completely a choice you need to make for yourself. When I first started doing this, I told myself I would try it for 3 months and then evaluate if it improved my business or not. Since my show average and show bookings increased, I have continued with it.

Sharon

 

[GeorgiaPeach]

I started offering to bring the ingredients for my hosts last year as well as sending out the invitations. This has been a big boost in my show average. What I do require is that the host send me a check for $15 with her guest list. I explain that this is the amount that PC gives them for having a cooking show and all of my hosts have been thrilled with this service. I also put in my host packet that the $15 is non-refundable and has drastically cut down on my cancellations, sometimes my hosts will reschedule, but I rarely get a complete cancellation. Since I do the same recipe for all shows in the month, it is really easy to keep the expenses down as buy those ingredients I can in bulk for the month, depending on the # of shows I have and then just package for each individual show - this makes it easier for me as well.

This has been a win win situation for both my hosts and myself. Most of my hosts brag about this service at their shows which has helped to increase my bookings at shows as well.

As with anything in our businesses, this is completely a choice you need to make for yourself. When I first started doing this, I told myself I would try it for 3 months and then evaluate if it improved my business or not. Since my show average and show bookings increased, I have continued with it.

Sharon

So if the ingredients you purchase cost less than the $15 they have sent you, do you reimburse them? Or keep the extra money?

I do like the "non-refundable" part...great idea.

 

[swhitton]

I don't usually reimburse the hosts if the ingredients are less. Since I also mail the invitations it usually balances out or is not a large amount less. As I explain to them about the $15 credit from the company, I have never had the hosts even ask about the ingredient amount. They are usually thankful that they don't have to do the invitations and shopping that they don't ask or care.

Sharon

 

[GourmetGirl]

I started offering to bring the ingredients for my hosts last year as well as sending out the invitations. This has been a big boost in my show average. What I do require is that the host send me a check for $15 with her guest list. I explain that this is the amount that PC gives them for having a cooking show and all of my hosts have been thrilled with this service. I also put in my host packet that the $15 is non-refundable and has drastically cut down on my cancellations, sometimes my hosts will reschedule, but I rarely get a complete cancellation. Since I do the same recipe for all shows in the month, it is really easy to keep the expenses down as buy those ingredients I can in bulk for the month, depending on the # of shows I have and then just package for each individual show - this makes it easier for me as well.

This has been a win win situation for both my hosts and myself. Most of my hosts brag about this service at their shows which has helped to increase my bookings at shows as well.

As with anything in our businesses, this is completely a choice you need to make for yourself. When I first started doing this, I told myself I would try it for 3 months and then evaluate if it improved my business or not. Since my show average and show bookings increased, I have continued with it.

Sharon

Sharon that is an awesome way of doing it! I love the way you phrase it, and I like the general $15. It's a nice even number and works with the host benefits. Especially if I was to do a recipe like Turtle Fudge Skillet cake it would about equal out, and I can write off the excess! I was wanting to start doing this, but didn't want to lose my butt in expenses, this way I get to prep at home, take the work from the hostess and hopefully get more bookings because of how easy it is to host a show! Thanks so much for the way to phrase it!