Tuesday, October 17, 2017
How do AMCs charge for their services?

Fee structures vary from AMC to AMC, and indeed from client to client, but here are some typical fee types:

Basic Management Fee

The AMC and association usually agree on a set of tasks or duties to be performed by the AMC, and the association pays a set monthly fee for those services.

Hourly Rates

The association may pay an hourly rate for projects that fall outside of the tasks detailed in the agreement. This is especially true of small projects that do not require much staff time, or projects in which the time required cannot be adequately estimated in advance. A few AMCs charge an hourly rate for all tasks they perform for their clients (instead of a basic management fee).

Project Fees

For large projects that fall outside of the scope of the management agreement, the association and AMC may agree in advance on a set fee to be paid just for that project.

Other Fees

For some tasks or projects, the most fair fee structure may be none of the methods above. For example, you may pay a commission for each new member as an incentive to your AMC to focus on membership development. Or you may share the profits of a seminar or other event to reduce your risk (if it doesn't make money, you don't pay anything). There are many such flexible arrangements.

A Word of Advice

On occasion, some associations have entered into agreements with AMCs that made it extremely difficult to predict the amount that they would actually pay the management firm. And then, when they received the AMC's invoice, were shocked at the total.

Insist on a fee structure that makes it easy (obvious, even) to predict and budget for the bulk of the management fees in advance!

And One More Piece of Advice

If an AMC gives you a quote for unbelievably inexpensive management fee, they may be anticipating earning most of their fee via incentives from hotels, convention centers, and other vendors for steering your organization's business to them. They may not have your organization's best interest in mind when negotiating contracts, so beware.

   

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