Crafting the Perfect Pricing Strategy for Events: Tips to Help Event Organisers Increase Profits
As an event organiser, pricing is one of the most important elements in creating a successful event. Pricing decisions are complex and often require carefully considered analysis to ensure profit margins remain optimal. From understanding different types of pricing models to providing discounts for loyalty programs and special offers, there are a number of techniques that can help improve your bottom line. In this blog post, we’ll offer up our best tips on crafting the perfect pricing strategy for events so you can maximise profitability with every upcoming occasion.
Find your Break-Even and use Cost-Based Pricing
This will be second nature to seasoned event organisers but it bares repeating for everyone else. Before setting your pricing strategy, plan out your budget, taking into account all the costs of putting on your event. You can now total up how much you need to spend to determine your Break-Even point - the amount of revenue you need to bring in for the event to pay for itself. Any revenue made after that point would be profit.
This is the core of any pricing strategy and it should be used as a starting point for setting prices - as it lets you know how much money your tickets need to bring in. You can take your target revenue and divide it by your desired attendee numbers to find a target average ticket price which you could use as a set ticket price. This is the simplest form of pricing strategy and is known as cost-based pricing.
If you want to make a profit, ensure your total target revenue is greater than your budget. If you are relying on some revenue to come in at your event (e.g. drinks sales), take into account that not everyone with a ticket will come. Take a look at your previous no-show rates if possible to help inform this.
Understand your Target Audience and use Value-Based Pricing
An effective pricing strategy should always be informed by an understanding of your target audience. Take the time to research what is being charged for events in your industry/sector, and your local market. Depending on the location, demographics, and other factors, the pricing for otherwise similar events can vary significantly.
(check out this blog post about recession proofing)
If you have past events to draw on, analyse your previous sales and see if particular price points saw greater uptake. Likewise, consider sending surveys to previous customers and get your information directly from them.
We can now use this knowledge to inform a more advanced pricing strategy, value-based pricing. There are three components to this:
- Perceived value - what the customer thinks they will get out of your event and approximately how much they price it - we have learnt this from the research on your audience.
- Actual price - The price you will charge the customer for a ticket.
- Per-ticket cost - The cost of putting on the event for you, per-ticket. This is your total spend divided by the number of attendees.
The customers will be comparing perceived value with actual price. If the perceived value is greater than the actual price, they will book tickets. And if the actual price is greater than the per-ticket cost, you will make money on each sale.
This type of pricing shifts the goal from simply earning a return on your event tickets to delivering customers with a “surplus” value above the ticket price. By focusing on value-based pricing you can create an event that is both profitable and enjoyable for your customers.
Research Other Events and use Competitive Pricing
Competitive Pricing is a method of setting prices that involves researching the prices of competitors and using this data as a guide. By understanding what other event organisers are charging, you can identify areas where you can improve your value proposition and make adjustments to your prices that reflect this.
For example, you may choose to sell tickets below the cost of the competition, either by having a cheaper ticket or through the slick use of discounts and special offers. It's also perfectly viable to charge more than your competitors to create an impression of quality and exclusivity - although you must ensure you fulfil your promises as letting customers down means it will have been for nought! Either way, ensure you build your approach into your marketing plans to make sure your benefits over the competition are clearly understood by your customers.
Set Up a Tiered Pricing Model
You probably already plan to offer an Earlybird discount as an incentive for people to book early, but this basic concept can be expanded on. A great extra step to create a proper tiered pricing model would be adding a Final Release ticket price to switch to as the event approaches, or as your event approaches selling out. It drives demand by creating urgency and emphasising that the tickets are likely to sell out soon, the end result being that people will be likelier and quicker to book for fear of missing out. Likewise, if you make your Final Release tickets more expensive it can also net you a nice boost in revenue, as people will be more likely to pay over the odds closer to the event when tickets are scarcer. You can use that extra revenue to increase profit or to offset the cost of making earlier ticket tiers cheaper.
Larger events can take this tiered system further and have several ticket tiers, and use each one selling out as a marketing bullet to deploy when they need to increase demand. It is important to not take it too far (e.g. don't take the mick out of customers, ensure your Final Release is actually final) as the effectiveness of these warnings can diminish rapidly once people see through them.
Another consideration is offering different types of tickets, with variations on what they offer/permit. This can go both ways such as charging extra for a VIP ticket which offers additional perks, or a cheaper ticket that has limitations in some form, such as requiring early entry to the event. By making an offering at these different price points you can broaden your appeal to customers looking for a more premium experience, and those seeking a bargain, at the same time.
Utilise Special Offers
Special offers and discounts can be a great way to boost sales for event organisers, and a sophisticated pricing strategy will have these planned out in advance to ensure that the final revenue from tickets matches what the budget necessitates.
We've already covered how Earlybirds can be used to entice early bookings, but discounts and special offers can also be used to attract new customers or reward loyal customers. By offering a discount to first-time buyers, event organisers can encourage new people to try their event. Similarly, by offering a loyalty discount to returning customers, you can show appreciation for their business and further build their appreciation for your brand.
As well, you can encourage big bookings by offering a group discount. If you set up a package deal along the lines of "buy 5, get the 6th free", this can convince a group of 4 or 5 people already attending to find additional people to come along so that they can redeem the offer. Likewise it would help convince a group of that size deciding which events to go to that yours is the one worth picking. If you use LIVE IT's group ticketing system, you can also collect marketing data from each individual attendee, further increasing your potential customer base for your next event.
Monitor Results and Refine your Strategy
It is important to monitor the results of pricing models and special offers and to respond accordingly to maximise profits. The most obvious and basic metric is by looking at how quickly tickets are selling. Before the event goes on sale, create a timeline of when you would expect a certain amount of tickets to have been sold. For instance, selling 20% on the first day of sales, and 5% every week thereafter. You can then review this at regular intervals and if tickets are selling slower than expected, it may be time to consider offering discounts or special offers. Likewise, if tickets are selling faster than expected, then take a look at adding more tiers or options to maximise profits. You should also pay close attention to customer feedback, particularly if trialling a new approach.
You can also use analytics tools such as Google Analytics to gain insights into the behaviour of your customer base. Google Analytics provides demographic data about who is visiting the event website, as well as how customers interact with it. This includes which pages customers visit and how long they stay on each page, as well as other relevant interactions such as whether they clicked a buy button or added items to their basket. This data allows organisers to identify who their customers are, what they are responding positively to, and which elements of their events need improvement. For example, if customers don't convert on a specific page or after viewing a certain piece of content they may benefit from discounts or freebies as part of special offers to incentivise them further along the sales funnel.
Overall, pricing strategy for event organisers can be a complicated process. However, with the right tactics and tools in place, you can make sure that your events are successful and profitable. By using LIVE IT's powerful ticketing system to create tiered ticketing offers, discounts and group packages, you will have all the tools necessary to craft a smart pricing strategy tailored towards your target audience while collecting valuable customer data at the same time. So what are you waiting for? Get started today!