Determining the Perfect Price for Your Event
Establishing the value of your event can be a tricky process. If you set your ticket prices too low you may send the message that your event doesn’t have much to offer – plus you run the very real risk of losing money on the event. Set your prices too high and you could scare off attendees – plus you run the very real risk of losing money on the event.
Setting the right ticket price is essential because it sets the tone and can encourage ticket sales. The truth is that your event is not sustainable if you don’t make enough to cover your costs. With some forethought and a bit of work, you can uncover your event’s ideal pricing and set yourself up for success.
Who is Your Audience?
Establishing the proper price for your event requires that you ask a lot of questions – and you cannot proceed until you are sure of the answers. Who is your audience for the event? What does your audience want? How can you give this to them? What are you trying to achieve with the event? How can you meet your audience’s goals without compromising your own? What makes your event special? How is it similar to and different from other events in your industry? Are there aspects to your event that could place it in high demand?
The reason you need to know the answers to these questions (and others) is that they are essential in determining your budget, which is how much you will spend on the entire event. Understanding the needs and wants of your attendees and how to appeal to them are essential aspects of setting your prices. So, too, is knowing what elements you are offering that will place your event in demand.
This all leads to one of the most important questions:
What Do You Need to Break Even?
Once you know your overall costs, you will have a good idea of how to successfully price your individual tickets by using a technique known as cost-plus pricing.
The formula for cost-plus pricing is relatively simple. First, you add up all of your expenses. You will need to include both direct costs (things like renting the venue, travel, entertainment, food and beverage, local and state taxes, marketing, printing costs, equipment rental, etc.) and indirect costs (such as you and your employees’ salaries, professional services utilized, etc.). It is critical to keep a detailed record of all the expenses that relate to your event. If you are trying to set ticket prices before all of your costs are in, you can use historical event budget data to fill in any blanks.
Next, take the number you just calculated and divide it by your target audience size. The result is your break-even ticket price. Forecasting the number of people who will attend your event is critical to this equation. To make this determination, you can reference attendance at events similar to yours (or past attendance figures, if this is a recurring event). You may also need to perform some market research and surveying of potential attendees. This will help you get a grip on your possible attendance and your ideal ticket price. The lower you estimate the possible audience; the higher the cost for each ticket. Ideally, you want to have a low starting price (i.e., high attendance) because any buffer you include will become profit.
Total costs (direct & indirect) ÷ target audience size = break-even price of one ticket
Now, what the above formula assumes is that you will sell every single ticket, which isn’t a safe assumption. So, to counter this, you will need to add some mark-up. How much to mark-up the ticket is an inexact science, but you must remember that if you miss the mark and go either too high or too low, you run the risk of losing money.
When considering this mark-up, it can be helpful to try to see your event from an attendee’s point of view. How much value are they receiving from the event? Are you offering something that they cannot get anywhere else?
Think of a comic book convention where a popular creator is giving a presentation in a limited-availability venue for an additional cost. For fans of that person’s work, the opportunity to see and possibly interact with him or her is worth the extra cost. However, for people who are not fans, the added cost seems extravagant.
This is a significant consideration when contemplating your ticket’s cost. The value you provide to your specific audience may bump up your asking price.
Tiered Ticketing Options
Now that you know the break-even price for your tickets, you can think of ways to play around with pricing. One option is to offer ticket tiers where the break-even (plus mark-up) price is the base, no-frills ticket. Subsequent tiers will include perks (such as a meet and greet with a speaker, access to a VIP only area, etc.).
One benefit to tiered prices is that they help to assuage fears that your tickets are not priced right. Having various options allows you to have a general admission price and then options for the audience that is willing to pay more for specialized possibilities.
Additional Revenue Streams
Are you working with sponsors, charging vendors for space, or selling merchandise? All of these additional streams of income can impact your ticket’s price.
In general, it is beneficial to have more than one revenue stream for your event. Relying solely on ticket sales can be unpredictable (although there are techniques you can use to boost lagging sales, such as early bird discounts and flash sales). By working with sponsors and vendors – or if you intend to convert attendees into clients – you have more leeway in your pricing. Ideally, you want all of your costs covered by your ticket sales (converting all additional revenue stream into profit), but additional revenue streams help to ensure that your event has the potential to turn a profit even if you miss your ticket sales goals.
Supply and Demand
How niche is your audience? How often are they presented with events (or opportunities) that are similar to yours?
More often than not, people are willing to pay more for an experience that cannot get anywhere else. Conversely, if the competition for your event is steep, you will need to keep your ticket prices reasonable to encourage sales. When conducting your market research, be very honest about whether your event is giving your intended audience something they cannot get anywhere else – then price your event accordingly.
Many factors can affect ticket sales – and the price is a big one (as is marketing – get out on social media and make sure people know about your event).
If you notice sales are lagging, you may have set the bar too high. Offer special promotions and flash sales to boost buying. If that doesn’t work, you should consider cutting your prices.
Conversely, if tickets are flying out the door, you may have set your price too low. It’s ok to bump up your ticket prices if you didn’t get it right the first time. However, don’t get greedy. Raise the rates slowly, so you don’t shock (and, likely, anger) potential attendees.
Finding the ideal cost for your event may be tricky, but the effort is worthwhile because getting it right can actually encourage sales and boost attendance.