How Proven Event Pricing Strategies Can Boost Your Bottom Line
Pricing strategy may be as old as currency itself (although not nearly as old as bartering) - which has its origins around 600 B.C. in Turkey and China - but since then it has been refined and researched to the point that it's as much (social) science as it is art. Registration and ticket pricing strategy may not have as much research behind it as retail pricing methods, but the same techniques and strategies that are used effectively in the retail sector still apply to the events industry. This is mainly because the same social psychology principles are at work whether you are shelling out for mousetraps, massages or meeting registrations. But before we dive into 10 proven event pricing strategies, let's first discuss where pricing strategy starts, and that's with determining your total cost for putting on the event. To make sure your registration prices cover your costs, you first must determine the overall total cost and divide it by the number of tickets you plan on selling. For example, if your total costs are $50,000 and you realistically plan on attracting 600 attendees, then your ticket price at a minimum needs to be $83.33 (50,000 / 600 = 83.33) to cover your basic costs. Yes, your price will be more than this, but this is your starting point. From there, you should use the event pricing methods below to begin to set your final prices.
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And if you show the full price in a larger and/or bolder font and the sale price in a smaller font, it aids people in mentally processing the value of the sale price faster.
1. Set your prices so attendees feel an ever-so-slight pinchIf your objective is to maximize the revenues for your event, then you want to push your prices right up to the edge just before your attendees feel the sting of the price. When do they feel this sting? Basically when the pain of the price outweighs the gain they believe they will receive by attending your event. Thus, it behooves you to show lots of value and palpable benefits for attending your event in order to justify what you are charging. Talk about results they will see based on their participation. Talk about the relationships they will develop. Talk about how it will an amazing use of their time (more on this later). Just don't talk about how much of a deal it is compared to other similar events, because your attendees may equate lower cost to lower quality, which will inevitably work against you.
2. Display event benefits before you reveal the priceWhen someone sees a price before they know about the item being sold, they automatically base their decision on economic value and compare the price to information in their head about similar items. Overwhelmingly, they deem the item as overpriced because they have not been immersed in all the wonderful benefits of the item. But when you talk about the great benefits of your event first, people will tend to base their decision on the quality of the event and less about the cost. Because events tend to be more emotional purchases and aren't basic staples or commodities (like eggs or staples), you certainly do not want people basing their buying decision on economic value. You want them basing it on benefits. And yes, even business-related events like seminars, meetings and conventions are emotional purchases because people ultimately base their decision on how they feel about the event and if they feel it will benefit their career, personal life, etc.
3. Create an anchor price that attendees will use for comparisonHuman beings automatically search for context in order to judge situations and make good decisions. So what you need to do regarding event pricing is to create this context so they can justify paying the price you want them to pay. This technique is called "anchoring", and here's a relevant event pricing strategy example regarding this concept. If you really want to sell the majority of your tickets for $150 each, then you need to create another option that is much higher, say a VIP ticket for $500 or even a group ticket for $1,000. You may not even care about how many VIP tickets you sell, but it is vital to have this price higher price displayed next to your target price because, all of a sudden, your $150 looks like a relative value, and more people will be inclined to pay that fee than if there were no higher price placed next to it.
4. Offer a "decoy" price to enhance perceived valueI recently subscribed an online/mobile version of a newspaper, and when I hit the payment page, I noticed they offered the following prices:
- $9.99/month - Online Only
- $29.99/month - Home Delivery Only
- $29.99/month - Online + Home Delivery
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5. Emphasize the concept of time, not moneyResearch has shown that when you present your registrations and tickets in terms of saving money or getting a deal, attendees will immediately look at your event in terms of money. This isn't nearly as favorable than if they view your event as a worthwhile way to spend their time. Framing your event pricing strategy in terms of time is critical because events are experiences, and people value their time more than their money. So when attendees are asked to look at registering for your event in terms of their time, when they learn about the amazing experience they will have, when they understand how it will be a great use of their time, this is a much more personal connection and resonates much more than merely saving money.
6. End all price points with the number 9There's a reason why gas stations always display the price per gallon as $X.X9 and 99/100. And that's because it simply looks less expensive to the human eye, and studies have shown that this strategy of ending prices in 9 still works even though we are all well aware of this ploy. However, there's one more thing to keep in mind. Not only should the final number end in 9, but it should also move the number to the far left down 1. Here's an example. Instead of setting a ticket price at $50, a much more appealing price would be $49.99. You see, not only does it end with the magic number 9 (three of them, in fact) but it also pushes the far left digit down 1, which enhances the effect.
7. Separate out additional fees, add-ons and taxesAirlines use this pricing strategy all the time now that they charge for all the separate items (baggage, meals, premium seating, etc.) they used to include in the total price. They compartmentalize the pricing by creating a base price that is the anchor, and then later on in the ordering process add other features as well as taxes and fees on to the base price. This strategy is called partitioned pricing, and what it does is anchor the base price in a customer's head so that if they compare the price to a competitive product, they use the base price for comparison instead of the total price. Using this tactic with your registration pricing strategy simply means that you first display your base ticket/registration prices, then display add-on options/prices, then finally display payment/services fees and taxes (if applicable).
8. Display a daily equivalence instead of the total amountSome multi-day meetings and conventions have higher price points, and for good reason - a lot of time and expense go into these relatively infrequent events (hence the scarcity rule applies here), and as such there is a relatively high perceived value. However, showing potential attendees a large total price point can be a big shock, even if they have read about the event benefits first. So to lessen the shock, you can break down the cost per day. Here's a great example of this used by the New York Times to frame the cost of subscriptions (they use weekly equivalence for a monthly subscription, but the same concept applies). For example, if the total cost for a 3-day event is $999.99, you can initially display the cost as $333.33 per day, thus showing a lower daily cost upfront that lessens the impact when you eventually see the total cost.
9. Provide visual contrasts when displaying sale pricesThere are strategic occasions when putting tickets "on sale" is beneficial. For example, for most events, attendees wait until the week before the event before registering or buying a ticket. However, as the event organizer, you know it's imperative to get as many people to register as early as possible to ensure your event is in the black long before the week before. This is why early bird pricing strategy is used for all kinds of events, from concerts and festivals to meetings and conventions. However, there are a few tricks to properly displaying sale prices to enhance their effect on your potential attendees. First, displaying the full price as crossed out and positioned to the right of the sale price makes the discount seem larger to attendees. So it would look like this: $79.99
10. Use the Rule of 100 when displaying discountsWhen displaying discounts, size matters, in that the bigger the number, the larger the perceived value. Here are two examples that prove this point. Let's say you are offering a 20% early-bird discount. One ticket is $49.99, and the other ticket is $139.99. Here are the calculations:
- 49.99 x 20% = $9.99
- 139.99 x 20% = $27.99