Event Business – Page 3

Pricing for your event can be a tricky business, but it can be the single thing you need to get right for your event to be a success. It can be the difference between someone deciding to attend your events or tonight and maybe go to competitors. I've priced 1,000s of events during the last 20 years working in venues, so I understand the fine line between getting it right and getting it wrong. This post intends to look at three ways in which events managers can price tickets for their events; cost-based, competitor-based and value-based. Cost-based event ticket pricing Cost-based event ticket pricing is perhaps the purest form of pricing and the one which people would automatically think about first. Essentially you calculate your costs and then decide what margin you wish to make a profit on top of those costs, and that is your ticket price. That margin might be a 5%, 10% or 20% mark up, for example. Be careful to ensure you have taken into account both your fixed costs and variable costs in this process. For example, let's say you are planning to run a live music event. You know that your venue will cost £200, your bands cost £300, your marketing will cost £150, and you have staffing costs of £100. That is a total cost of £750 before any attendees have bought a ticket. Let's assume that your venue has a capacity of 200 people. Divide the total cost of £750 by 200 gives you a per-person cost of £3.75. Assuming you want to make a 20% profit on this event, you can either: add the 20% to the total cost of £750, and divide again by 200 or, add the 20% to the cost per person of £3.75. Looking at the former, adding 20% to our total cost of £750 gives £900 and a profit of £150. If we divide that £900 by the 200 capacity of the venue then we arrive at a ticket price of £4.50. This method does assume that you will sell 100% of your tickets to generate that profit. This strategy is high-risk, and from my time working in venues, I would advise basing ticket price on a break-even of 75% of capacity, not 100%. Pros of Cost-based event ticket pricing The significant advantage of this approach is that it is a simple and straight forward process. As long as you're able to calculate your costs, it doesn't require any research or analysis. You add a percentage profit margin onto your cost calculations. You're also guaranteed to cover your expenses; therefore, you may feel there is a lower risk of running the event. Cons of Cost-based event ticket pricing While a cost-based approach might seem the simplest, there are some downsides. You don't always know all of your costs; events can have hidden expenses on the day, which could ultimately impact on your profit. You need to set your ticket prices at the start of your marketing process; if you find the marketing needs additional boosting (adding cost ) later on, this will impact on your final profit. This approach may work very well with businesses who produce physical products, but can be a challenge in the service industry such as events. Customers have no idea how much it costs you to run the event, and they may not care. What they are bothered about is what value they represent to them. Competitor-based event ticket pricing Let's consider how you might price your ticket based on competitors ticket prices. It would be best if you researched the local area to find events like yours or those that attract the same target audience. This research will give you a good idea of how much people will pay for a similar type of event or experience. Once you've undertaken this research, you then have the choice of pricing at a similar level or attempting to undercut your competitors' prices in the hope that this will sway an attendee to your event. You may decide to position yourself in the middle of the pack, so potential events attendees won't feel that your event is too cheap or too expensive. Pros of Competitor-based event ticket pricing This approach will ensure that your event remains competitive against competitors. Pricing your event the same as your competitors will allow you to offer value in different ways and help set you apart from them. This approach is simple, and a few hours spent researching your competitors will allow you to develop a rapid pricing strategy. If your event is in a highly competitive market environment (such as a city) where there are plenty of alternatives, then the pricing of your event should be close to what the market can reasonably sustain. Cons of Competitor-based event ticket pricing The biggest downside to costing your tickets based on your competitors' price is that you don't have YOUR pricing strategy; you have their pricing strategy. It would help if you considered how your event offers something different to what is already available. As with the approach for cost-based pricing strategy, your event attendees may not care about your competitors; they care about the value extracted from your event. If an attendee researches your event or visits your website is because they are interested in what you have to offer that is different from your competitors. Value-based event ticket pricing This approach is slightly different in that it uses market research of your target audience to dictate your pricing strategy. Value-based pricing means looking outwards at the people who are going to decide to buy a ticket for your event. The goal with this approach is to understand how much attendees are willing to pay to attend the event; this allows you to maximise your revenue and therefore, profit. This market research of potential attendees should help you to understand how much value they would see in your event, and therefore you will gain an understanding of how much they're willing to pay. Pros of Value-based event ticket pricing The first major pro of this approach is that you have an understanding of how much value an attendee season attending your event. You could argue that this is very similar to competitor-based pricing as if they will pay £200 for a competitors' event, then they are likely to pay £200 for your event. However, it would help if you looked to vary your offer to be different from your competitors which may then allow you to charge a higher price given you are providing more value to the attendee. Also, with this approach, you get to know your consumers well, which can be great at developing your event in the future. and it allows you to focus on attendee needs and how your event can satisfy and provide value to them. Finally, remember that pricing isn't just about the number on the page; a value-based approach will help you to understand what your attendees want and how you can develop better events for them in the future, which can only be a good thing! Over time you can use this information to create more value and therefore, revenue from all of your events without necessarily increasing the amounts of cost, meaning higher profits. Cons of Value-based event ticket pricing Of course, you can appreciate that this information comes at the cost of time and money. This process requires you to fully understand who your target audience profile is, including attendee buying power. It is also challenging to be 100% reliable with such research if you only as a small group of people. Remember that a small sample of your audience base may not necessarily translate to every attendee interested. You will, however, get an approximation of what is the right price and package for your attendee. Conclusion So that is a short overview of three ways in which you can price your event. It is certainly not an easy process and can take some practice to find what works best for your events and your audience. Best of luck!