Setting ticket prices for a conference can be a daunting task. Price too high and you risk turning off prospective attendees. Price too low and you eat into your profit margin. Add in all of the price expectations of not only past attendees, sponsors, vendors, and speakers but also the value assumptions of new and prospective audience members. It’s a tricky business.
Basic Pricing Pathways
There are several pricing pathways a conference planner could take. The decision on which way to go should be based both on the long term strategic plan for your brand as well as the short term financial plans for your event. It’s essential to seriously evaluate and rank both in terms of importance. For example, if it is determined that profit is more important than a profit margin pricing strategy would be your better option. If maintaining a hard-won event brand image of exclusivity and individuality is critical, an incentive-based approach is better. The decision will also depend on your intended audience. Some conference attendees respect value over exclusivity and others will have the opposite opinion. Which is true of your guests? Have these key conversations before setting any ticket prices.
No matter what strategy you choose, it’s critical to know what your break-even point is. This is the dollar amount of event revenue you need to earn in order to cover all expenses. The basic calculation for this as a ticket price is:
Break-even Ticket Price = Total planning and promotion expenses/Expected number of attendees
This calculation is one of the most important KPIs you need to determine conference success. Make sure you are confident in this calculation before deciding your pricing strategy.
It doesn’t make any sense to plan a conference that doesn’t at least cover your costs. No matter how you decide to set your ticket prices, always plan to keep above your break-even point.
Profit Margin Strategy
Setting a basic profit margin pricing strategy is similar to pricing clothes or food at a retail store. It is calculated as the break-even point plus a profit margin. For example, if your break-even point is $25 per person and you decide you need a profit margin of 50%, your basic ticket price would be $50 ($25/.5=$50)
Ticket Price based on Profit Margin = Break-even ticket price/(100 – profit margin %)
All things being equal, in the end, you’ll earn a total profit of 50% of your upfront event costs. Of course, all things are never equal so be aware that unexpected expenses, free ticket giveaways, or ticket discounts will eat into that profit quickly.
Incentive Pricing Strategy
Setting up a pricing strategy based on exclusivity and incentives can be a little more complicated. This strategy is more about building or preserving an image than offering value and success will depend on the mindset of your attendees. There are several tactics to use as an incentive pricing strategy. These tactics are based on who your intended audience is and how you will promote your event to them.
The most basic incentive pricing tactic is establishing tickets tiers. Ticket tiers offer a layered approach for your guests. They can decide just how much or how little of your event benefits they are willing to pay for. The more benefits added to the ticket package, the higher your price. An example would be to offer a basic ticket, a VIP access ticket, a VIP access ticket plus an extra social event and a VIP access ticket plus the social event and an extra day of workshops. An interesting new pricing strategy is to offer a virtual online event ticket, which we’ve recently covered in a blog post.
Another tactic is to offer ticket prices based on time or groups. Early bird pricing is the most common way to offer this incentive. For late ticket buyers, you could charge a premium. You could also break up a multi-day event into individual days at lower ticket prices or add extra days for higher prices. Team or group pricing is also common where you offer a small discount if more than five people register together.
Aside from tiering tickets or pricing tickets by time or group, offering packages or bundles of tickets and other incentives is an effective incentive pricing tactic. Ask speakers, vendors, or sponsors to contribute added experiences for your ticket buyers such as signed copies of presented books, downloadable whitepapers, videos and eBooks, access to new technology, or free services. There are even more ideas at this recent blog post on the Eventzilla resource page.
If your conference appeals to separate audiences, you may be able to use a few of these tactics in order to entice all of your guests. In all cases, start at your break-even point when establishing incentive ticket prices but make sure that your break-even point includes the cost of the extras you are offering.
No matter what pricing pathway you take, a smart strategy can guarantee that your conference guests will return year after year without damaging your bottom line. Take the time to think about both your short term and long term goals before deciding on what’s best for your event.