Many event organizers spend a lot of time and effort creating their event promotion strategy in order to help sales, but they are overlooking one crucial part of a successful and profitable event…
Setting your ticket prices!
Your ticket pricing strategy is a critical component of your overall event success. It will not only help you drive ticket sales but will be a major source of revenue. By managing costs and protecting your margin with each ticket, your event will be profitable. This means you will be able to make more money or donate more money if you are organizing a fundraising event.
There are a few common ticket pricing strategies out there, but not all of them are as effective as others. Let’s start by outlining some of the more common strategies before recommending and explaining our favorite strategy.
- Cost Plus Pricing – As the name suggests, this strategy consists of identifying and totaling all your event costs and then setting your ticket prices to be slightly above your total costs in order to drive profitability. While this is a straightforward strategy, it neglects your guests’ demand and perceived value for your event.
- Comparative / Competitive Pricing – When using this method, an event sets pricing solely based on the prices of similar events. This strategy can save time and is actually an important part of the our favorite ticketing strategy, but it often results in prices that are not optimized. By only focusing on similar events, you may be overlooking key costs. There might even be elements of your event that make it unique and suggest that your prices should be different.
Now that we’ve covered each ticket pricing strategy that event hosts use, we will dive into our favorite method – perceived value pricing.
The perceived value pricing method incorporates elements of both strategies mentioned above but takes a more analytical approach in order to set your event up for the highest potential profitability.
When employing the perceived value pricing strategy, it is important to concentrate on two factors:
- Perceived value of your event to your potential guests
- Accurate cost assumptions in running your event
Establishing Perceived Value
Let’s start with perceived value. The perceived value for your event is the value that your guests receive by attending your event. Different aspects that will create value for your guests include the feeling of satisfaction when supporting a worthy cause, the amusement guests will enjoy at your event, or just having a fun time with friends and family in a unique social setting. Whatever the reason will be for your guests, it will be of utmost importance that your ticket prices are below your guests’ perceived value – otherwise, selling tickets could become very difficult.
Once you’ve estimated the perceived value your event will create for your guests, it’s time to start making cost assumptions and estimates. The more accurate you can be here, the better your pricing strategy will be. At this point in the planning process, we like to separate costs into two categories:
- Fixed Costs – These are costs that will not change based on the size of your event. They will remain constant and typically include things like:
- Venue cost
- Vendor costs (lighting, sound, etc.)
- Variable Costs – These will change with the size of your event as more resources are used. Examples here include:
- Food costs
- Beverage costs
- Certain staff costs (caterers, bartenders, security) – These will increase as your attendee number increases.
When identifying your venue and holding conversations with your vendors, make sure you ask for detailed quotes/estimates as part of the process. These quotes will allow you to make accurate cost assumptions and will impact the pricing you determine for your event.
Putting It All Together
At this point, you’ve spent time understanding the perceived value of your event for your guests and have also worked on plotting out the costs associated with running your event.
The final piece of this strategy will be to determine the prices of your tickets.
In general, your goal will be to set prices that are below perceived value and above your costs.
By pricing your tickets below perceived value, you are creating value and benefit for your guests when they purchase your tickets and attend your event.
Setting prices above your costs lets you create profitability with each ticket sale, not only contributing to your overall revenue but also growing your bottom line (profit).
Now that you have all the tools necessary to devise your best ticketing pricing strategy ever, it’s time to get started! The more time you spend here, the more effective your prices will be – translating into better ticket sales and higher profitability. Please also keep in mind that this process is not a one-time operation. Instead, you should observe the performance of your ticket sales from year to year – and even within one event period – in order to optimize your prices and make any necessary adjustments.