A solid registration pricing strategy is one of the most critical aspects of a successful conference. Charge too little, and you leave money on the table.
Charge too much, and event-goers may think twice about attending. But price your registrations correctly, and they’ll throw down their credit card without hesitation.
If you’re unsure how to find the sweet spot in your registration fees, don’t panic. Pricing can be one of the more stressful parts of organising your event. There are several different strategies for pricing your event — and it’s not always clear which is the best for your unique needs.
Let’s walk through each and help you determine the best approach for you and your event.
Cost-plus (or cost-based) pricing
Cost-based pricing is the most basic method for determining your registration fee. Essentially, you charge enough for registration to break even on your costs — and walk away with a set profit. To calculate your cost-based price, take the costs of your event, add an acceptable profit margin, and then divide by the lowest estimate of attendance.
This strategy can work if you have a guaranteed attendee base or no competition in your market, but it’s risky. Your variable costs (like catering and staff) can minimise your profit margin unexpectedly. And if a competing event matches or beats your prices, you risk losing attendees — and the revenue that come with them.
Which brings us to the second method for pricing your event: competitive pricing.
On top of making sure your registration sales can cover your costs, you can also look at competing events and charge a similar registration fee.
This strategy can be especially effective if you want to compete with a widely popular event in the same area. After all, you’re hoping to convince their customers to attend your event instead — and matching or beating their registration price could do just that. But before you match a competitor’s registration fee or attempt to undercut it, you may want to give it a second thought.
As with cost-plus pricing, there are risks associated with this approach to pricing. It’s important to know what similar events charge their attendees, but without intimate knowledge about their budget and expenses, you’re assuming too much.
For example, many successful events use sponsorship to help them offer high value at a low price. If you match their prices without the same income from sponsors, you could end up losing money.
So where, exactly, is the registration pricing “sweet spot”? To find the answer, let’s look to the critical element missing from both of these strategies: the attendee.
With a value-based pricing model, you maximise your revenue by asking the most important question about your registration fee: how much are people willing to pay for your event?
There are three key components to value-based pricing: perceived value, the actual price, and the cost per registration for your event.
- Perceived value is what the customer thinks your event is worth. Here it is perception, as much as reality, that drives the transaction.
- Next comes the actual price of your ticket. The actual price — which can be greater or less than the perceived value — is what the customer actually pays. Ideally, the actual price is as close as possible to the perceived value (without going over). When the actual cost is above the perceived value, it will be hard for you to convince people to spend their cash on your conference. When the actual price is below the perceived value, it will be easier to sell registrations, but you’ve created what is known as “consumer surplus” — excess value the consumer gets above the actual cost of the good.
- Finally, there is the per registration cost to you for putting on the event. This completes the triad of value-based pricing. Taken together, these three components give you a full picture of the underlying economics of your event.
In the value-based pricing model, your customer is comparing perceived value and price — and you’re using your cost per ticket to determine the baseline price for breaking even.
Applying value-based pricing
While more complex than cost-based pricing or competition-based pricing strategies, a value-based pricing model allows you to design the best long-run economic model for your event. When you focus on value-based pricing, your goal shifts.
You are now delivering an event at a price that allows you to earn a return, but still gives customers meaningful “surplus” value above the ticket price. By hitting the value-based pricing sweet spot, you get both a profitable business and happy customers.
To learn more about how you can apply value-based pricing to your event, grab a copy of Your Value-Based Pricing Strategy: How to Price Your Event.