Event Ticket Pricing Guide
Posted in Spotlights on April 6, 2018
Have you ever felt that the amount you’re charging for tickets is lacking structure and foundation? Are you struggling to break even, or even become profitable with your events? Part of having a profitable event is having one that people are willing to pay money to go to. And not just willing to pay, but willing to pay the correct amount for the value your event will provide. In this post, I’m going to show you how to create a solid foundational ticket price, how to create different types of tickets to increase your revenue and drive more attendees, and how to effectively market your prices.
Part 1: Determining Cost Structure
There are a lot of factors that go into cost structure. First of all, calculate all expenses that are involved in your event. This can also be helpful when it comes to calculating tax obligations. Remember that there are two types of costs that you need to consider: fixed and variable. Fixed costs are items like the cost for the venue. Variable costs are costs that can change depending on the number of attendees or other factors. For example, you might need to pay for each attendee’s meal. Get to each total separately.
Now you have 2 totals: total fixed costs, and total variable costs. If you have variable costs for the attendee, you’ll know at the very least to price your ticket well above the variable-per-attendee portion. Once you have your total expenses set, now you need to figure out how to make your event profitable. It’s time to do some research on what similar events are using for pricing. Also, consider the target market for your event and how you can best serve them.
Look at the competition, and do some research. Events have become more and more popular to go to as a way to escape from the “real world”. If you’re planning an event, chances are that someone in your area has already done an event like yours. And this is not an attempt to discourage you - this is an attempt to get you to get down and dirty, and do some research. Find out how many attendees they brought in, or even an estimate. Find out how much tickets sold for. With information like this at your disposal, you’ll have a much better idea of what you need to price your tickets at. The other benefit of doing research is that you might be able to find out how to make your event even better, and therefore be able to command a better price or bring in more attendees due to the fact that your event has been optimized.
Now, if you’ve run events like this before, then you have a much better handle on how many attendees to expect, and how they respond to pricing. On the other hand, if you have found that there aren’t a lot of events like yours (or even none at all!) then pricing is much more under your control. If you are planning a luxury-focused event, then the price is much more within your control.
The target market or audience for your event should also inform your pricing decisions. You’re not going to be likely to attract families to an event wherein ticket prices are $20 per person. At the same time, you might find that a luxury event might not attract your target audience if you’re selling tickets at $10 per attendee. We’ve seen events selling $10,000 tickets that sold out - of course, you got to meet with Sir Richard Branson on his private island for that price!
Determining Base Price: There are formulas surrounding “how many tickets you think you are going to sell”. This is a flawed methodology because event organizers almost always inflate the number of tickets that they think they are going to sell. It’s much better to work backward. You know your costs, and after doing some research, you should be able to arrive at a strong base price. From there, you will know how many people you need to acquire to break even and then hit profitability. If the number you arrive at seems unrealistic, then it probably is. Again, you should have an idea of how similar events perform.
Pro Tip: Did you know that depending on ticket sales volume in dollars, you are liable to be taxed? That’s one expense that some organizers are not prepared for! Generally, if you plan on accruing more than several thousand dollars in revenue, you are going to need to pay taxes. Consider adding this as a variable cost. As always, speak with an accountant experienced in these matters.
Part 2: Variant Ticket Pricing
Now that you have a base ticket price, it’s time to start looking at the biggest driver of profitability of events: ticket variants. Ticket variants are tickets like Early Bird, VIP, and Group Packages. There are also ticket variants that increase in price as the event date gets nearer, encourage people to buy early. You could also set ticket packages, each with increasingly higher prices.
Variant Pricing Strategy: Like I mentioned earlier, you need to do research. Don’t just set random tickets hoping you are going to get sales. Not every event needs an Early Bird, nor does it need a VIP. However, you should aim to have at least one variant price. This variant ticket should command a higher price than the “base” variant. Secondly, any variant ticket should have a limited quantity available. Part of the demand for higher priced tickets, or discounted tickets, will come from the scarcity of them. Study after study on human psychology shows that scarcity is one of the greatest drivers of human desire. You won’t capture full profitability unless you use this knowledge to your advantage.
Types of Variants:
Early Bird Tickets: Great for family events and concerts. Also ideal for newer events that attendees may not be familiar with. Helps to gauge demand.
VIP Tickets: Great for festivals and “luxury” events. Can also be used for meet-and-greets. Just make sure that the perks are worth the increased cost. You can even have multiple “tiers” of VIP - with a basic VIP, and then an even more expensive one that really makes the attendee feel special. Helps to increase your revenue and profit.
Group/Bulk Discount Packages: Great for family events, sightseeing tours, and any other event where you want to get spots filled. Helps to bring in larger amounts of people due to discounts.
Time-Delay Pricing: Great for festivals and concerts. As time goes by, ticket prices increase. Accurately employing this technique will require skill on your part, and I do not recommend that newer event organizers attempt this. Once you have a few years of an event under your belt, you’ll be able to use time-delay pricing to really boost your revenue numbers and handle demand.
Demographic Based Discounts: This includes child/student/senior/teacher pricing, in addition to any other type of discount based on the type of person. These discounts are easy to abuse. The main goal of these discounts is to encourage people of this type who otherwise might not go, or might not be able to afford it. Child discounts make sense if you want to encourage families, but student based discounts for a music festival don’t.
The second part of any variant pricing strategy is to keep it simple. Only have a few variant tickets besides the base ticket. Otherwise, you’ll run into a marketing problem called analysis paralysis. Ever been to a restaurant where there were 400 items on the menu and you weren’t sure what to pick? Your attendees might be driven away by the fact that you have 10 different ticket types. Most events only really need 3: the early bird, the general admission, and the VIP.
Part 3: The Ticket Sales “Bathtub”
Most tickets get sold at the start of the promotion, and then in the next 2 weeks leading up the event. This creates a “bathtub” type curve: lots of sales at the beginning, and at the end. Ticket sales tend to go “flat” in the middle of the event selling process. This can be a scary time for organizers, but don’t worry because that’s normal. At Ticketbud we have seen this time and time again - it doesn’t matter if it is a huge event for 10,000 attendees or if it is an event targeted towards 100 attendees. The sales always act the same.
The trick is to keep ticket sales going strongly for as long as possible so that you get the best idea of your event’s demand. This can help you better determine your variable and per-head costs per attendee. You can do this by having promotions halfway through your event, or by using the time-delay pricing model as mentioned in the last section. You can also avoid the “end” part of the curve by having a bigger emphasis on early bird tickets and limited group packages.
Another strategy that organizers will use is by having a higher “at the door” price compared to online pricing. There’s nothing wrong with selling tickets at the door, but it’s hard to gauge demand and it can be stressful if you think that you are currently in the red. Having higher physical ticket prices will certainly convince people to “save” money by purchasing earlier.
Part 4: Marketing Your Prices Effectively
Once you’ve determined your base price and any variants, it’s time to start creating marketing campaigns to help create buzz and sales surrounding your event. In this particular case, we’ll look at how to best market your event’s pricing. Part of marketing prices dials down to emphasizing your event’s value propositions. The better you can tell potential customers about the benefits of your ticket pricing variants and what your event will do for them, the more revenue you’ll bring in.
Email: If you have an email database, you should be sending emails out before the event letting people know to be ready. One strategy is to send out a first awareness email several days before payday (the 1st and 15th in the US), and then officially open up sales on payday or the day after. This will enhance your chances of helping people set aside and pay for your tickets. If you have previous attendees, you might even offer discount codes to encourage them to return. Remember, it’s always cheaper to maintain a customer than it is to acquire a new one.
Retargeting: No matter what kind of event you’re running, retargeting should always be in your toolset. Retargeting is a way of re-engaging people who have visited your event site. Retargeting is great if you’re doing Early Bird tickets, as well Time Delay pricing. It can also be effective for marketing time-sensitive special deals.
If you want to have a successful, profitable event, you need to really dig deep and consider how you are pricing your event. When it comes to properly pricing your event, you have to consider the cost structure of the event, and look at what similar events are doing. You also need to include several ticket variants to help increase revenue while also helping set a scarcity mindset for those more important tickets. A big part of ticket selling is keeping sales strong during the lull period of your event. Finally, you need to market your prices effectively with email lists and by retargeting potential attendees that visit your site.