Pricing is the most important part of the festival from a business standpoint, but also whom you chose to be your partner in crime (ticketing/marketing/support) is crucial
1. Pricing can be one of the more stressful parts of organizing an event.
A smart ticket pricing strategy is essential to driving a profit, but it’s not always easy to determine which approach is right. Many organizers simply price their event somewhere above their costs (cost-plus pricing). Others look at similar events and default to that price (competitive pricing). Both costs and competitive prices are important inputs.
Unfortunately, there is a critical element missing in both of these frameworks, your customer.
Ultimately, there’s only one way to get customers to put down their credit cards, price your event at the level they’re willing to pay. This is called value-based pricing, and it’s this framework that allows you to maximize your revenues, and if you manage your costs appropriately - You will profit.
2. Talking about, putting the customer experience first, we have to dive into perceived value.
Perceived value is what the attendee thinks your event is worth, what they think they will get out of your event, what they are willing to pay for a ticket. (Here it´s perception, as much as the reality that drives the transaction). The per-ticket cost is what you pay for putting on the event, all your total costs for such as food, venue, entertainment etc, and then dividing that by the number of tickets on sale.
3. Hand in hand with perceived value is the Value-Based Pricing model. One of the best things about value-based pricing is that it always leads to the development of a better product unless you´ve created one already
You cannot apply value-based pricing without offering ”value” to the customers.
The value element is what makes your product better.
Value-based pricing doesn’t ignore competition in the market. You must offer something better than your competitors. This involves market research and competitor analysis. Imagine all the wealth of information that you get from the competitor analysis?
4. 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 price is below the perceived value, you’ve created what is known as “consumer surplus,” or the excess value the consumer gets above the actual cost.
5. Finally, there is the per-ticket cost to you for putting on the 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. Put simply, if the customer’s perceived value is higher than your ticket price, then your customer will decide to purchase. And if your cost per ticket is lower than that price, you will make money.
6. The most successful event directors include two important steps in their pricing strategy:
a) Determine the value of your offerings for your customers
b) Measure that value against your competitors
If you use value, instead of per ticket cost, as a starting place, you'll be miles ahead of your competitors.
There’s no one-size-fits-all way to price events. That´s why you should look into revenue management and different ticket types, but that will be another story to tell.
Comment from a member in the United Through Music group* "- Great post and great subject regarding ”How to set the price” I have seen too many make mistakes when it comes to how to price their tickets. This is something everyone should read and practice"
* United Through Music Group on LinkedIn. To share experiences, news, ideas, tips, and mistakes. In a friendly, respectful way, with the best interest for everybody in mind Welcome - https://www.linkedin.com/groups/12308434/