Adapted from the blog by Jeff Kear of PlanningPod.com
In an extremely useful blog posting by Jeff Kear, he discusses pricing strategies for events, which we have drawn upon for how to also set pricing for online events such as Live Webcasts. As Jeff has stated, pricing strategy for your online events is as much science as it is art and whether it is an event at a physical location or an online webcast, the same principles apply.
Pricing strategy starts at setting the ticket price for your event, which is naturally based on the cost involved in putting on the event (ie. videographers, streaming charges, etc.) and of course any profit you intend to make. So, overall total cost divided it by the number of tickets you plan on selling would be your cut-off ticket price.
For example, if your total costs are $2500 for hiring the videocast team and paying for the streaming charges, plus say another $250 for various venue costs like mics, Internet connection, etc. totaling $2750 – and you realistically (this is important because most managers vastly overestimate their audience size) plan on attracting 200 online viewers, then your single ticket price at a minimum needs to be $13.75 to cover your basic streaming costs. Of course you will definitely set your price higher than this, but this would be your starting point.
An important factor to consider is that the pricing for online tickets should not be too much lower than the price for actual attendees since you do not want to discourage people from attending physically. Also, think of setting up an online event as a favor you are doing to those who cannot attend due to travel or scheduling restrictions.
Now we can use the event pricing methods below to begin to set your final price.
1. Do not set your prices too low – viewers should not undervalue your event:
If 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, you need to show lots of value and tangible benefits for viewing your event in order to justify what you are charging.
- Talk about results they will see based on their participation.
- Talk about the savings on time and travel costs.
- Talk about the convenience of ‘participating’ from the comfort of their home, office or mobile phone.
- Do NOT however, compare it to other similar events, because your viewers may equate lower cost to lower quality, which will always work against you.
2. List the event benefits before you reveal the price
When someone sees a price before they know about what they are being sold, they automatically base their decision on economic value and compare the price to information in their head about similar items. More often than not, they deem the item as overpriced because they have not yet considered all the benefits.
But when you talk about the great benefits of your event first, people will tend to base their decision more on value and less on cost.
Because events tend to be viewed more as emotional purchases rather than commodities from a supermarket, you certainly do not want people to base their buying decision on cost factors. You want them basing it on actual value.
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 for registrants to use as a comparison:
Human beings automatically search for context in order to judge situations and make good decisions. So what you need to do regarding event pricing is create that context…
In a technique called “anchoring”, you need to create a context which leads your prospects to mentally justify paying the price you want them to pay – and here’s an example illustrating this concept…
If you want to sell your tickets for $250 each, then you need to create another option that is substantially higher, e.g. a ‘Season Ticket’ for $750 which offers them a say 10% discount on the ticket price of the next 2 events.
I really doesn’t matter if you don’t sell any season tickets – the objective here is to simply display a higher priced item next to your actual target price because, all of a sudden, your $250 looks like a relatively good deal.
4. Offer a “decoy” price to enhance perceived value:
Offering a decoy price that nobody will buy, enhances the value of the actual item price and makes this higher price point seem appealing to buyers.
As an example…
- $199.00 – One-time access to the recorded event video only (no live viewing)
- $249.90 – Registered to view the event Live only.
- $249.99 – Registered to view the event Live + access to view the recorded video + an emailed copy of the presenter’s materials
So why would I not pay the $249 for getting all that extra value?
5. Emphasize the concept of time & value – not money:
Framing your event pricing strategy in terms of time is critical because events are experiences, and people value their time more than their money.
Research 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.
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 9
There’s a reason why retailers use this strategy and that’s because it is known to fool the human mind by making it look less expensive to the eye. Studies have shown that this ploy still works even though we are all well aware of it.
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 $250, a much more attractive price would be $249.99. Not only does it end with the magic number 9 but it also pushes the far left digit down 1, from 50 to 49, which further multiplies the effect.
7. Use Partitioned Pricing:
If there are any additional fees, add-ons and taxes, list them separately so that the viewer is not distracted from your base price of 249.99 – this anchors the base price in a customer’s head so that if they compare the price to a competing event, they use your base price for comparison instead of the total price.
8. Display a daily breakdown instead of the total amount
Some multi-day events like conferences, workshops and conventions have higher price points, and with 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 registrants a large total price point can lead to sticker shock, even if they have read about the event benefits first. So to lessen the shock, break the pricing down to the cost per day.
For example, if the total cost for a 3-day online event is $749.99, you should initially display the cost as $249.99 per day, thus lessening the impact when they eventually consider the total cost.
9. Provide visual contrasts when displaying sale prices
There are strategic occasions when putting tickets “on sale” is beneficial. Most attendees will 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:
$249.99 $229.99
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.
10. When displaying discounts use the Rule of 100
When 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 15% early-bird discount on the base ticket price of $249.99, here is the calculations: $249.99 x 15% = $37.49
- For any ticket price under 100, you must display the percentage as larger – ie. the 15%.
- For any ticket price over 100, display the absolute discount as larger, which in this case is $37.49.
By displaying the larger discount number next to each price, the perceived discount is larger.
But whatever strategy you utilize in pricing your tickets keep one very important thing in mind – it is vital to start promoting your event well in advance to ensure that enough people see it and have enough time to plan for it. Leaving it till a couple of weeks before the event is an invitation to failure.