Picking the right ticket price is one of the most important parts of designing a successful event. It seems simple enough, but carelessly throwing out a number can harm your sales more than you’d think. If the price is too high you can scare off your target market. If it’s too low then you damage the profitability of your event. To avoid making a mistake, follow these four steps for setting the perfect ticket price!
Step 1: Break Even Point
Of course, to find a good ticket price we have to do just a little bit of accounting. As a very first move, add up all the expenses associated with the event. Include fees from the venue, wages, marketing budget, catering, and any other costs you can reasonably expect. The number you get is your break even point, the minimum amount of money you have to earn before you start making a profit.
This number is crucial to setting a ticket price for obvious reasons. Your tickets are your source of revenue, and you need revenue to exceed the break even point. This makes the break even point the foundation for your ticket price.
Step 2: How big is your audience?
Be honest with yourself, how many tickets are you going to be able to sell? It’s important to estimate as best as you can. You want to set your ticket price to align with a profitable model based on how frequently you’ll be earning that price. This is why honesty is important. It is always good to be optimistic and hope for a sold out event. Yet setting your expectations too high can lead to under priced tickets and damaged profits in the end.
When trying to determine a good audience size to expect, the best go by is ticket sales from the previous year. Assuming you’ve done your marketing right,you should reasonably expect to at least match your previous numbers. If you have concerns about your marketing, check out this article for some ideas that could help you out.
You can also predict audience size by analyzing the market your event is in. The popularity of similar events in the community will often be a good indicator of how much interest you will get.
Once you’ve determined a good and realistic audience size, divide that number by your break even point. The resulting value is the cheapest price you can sell your tickets at and break even.
Step 3: Profits
You don’t want to only break even on your event, you want to make money! When thinking up your ticket price, you need to account for how much profit you need to realistically ask for. Add this profit amount to your break even point before you divide the target ticket sales by it. The resulting number will be the exact ticket price you should charge. But then, how much should that profit number be?
You want as much as you can get, but if you ask for too much than you may out price your target market. It’s also worth noting that asking for too little will make your event appear “cheap” and can also restrict your ticket sales. The trick is to find the perfect sweet spot in the middle.
The easiest way to figure this out will be looking at how much similar events in the area have sold tickets for. Even more importantly, look at how much competing events on the same night are selling tickets for. This should give you a good idea of how much above the break even price you can go on your tickets. If you find that competing events are selling at lower than your break even price, then you may want to reconsider some larger facets to your event.
Step 4: Pricing Options
Offering different ticketing prices is one of the best way to ensure that your tickets sell. For example, you can charge more for tickets closer to the stage. This diversifies who can come to your event, and thus encourages more people to come. Offering cheaper tickets will bring in a crowd who might not have had enough interest to pay full price. Meanwhile those who did pay full price will get a more complete and compelling experience. If you’ve put together a great event, those who went for discounted tickets will be considering paying for the complete experience next time around.
Alternatively, you can set your pricing options based on how soon a customer buys tickets. Giving discounts for early purchasing adds a sense of urgency to the purchasing decision. This encourages your event to sell out faster, which can’t be anything but a good thing. For more detail on how you can do this, check out this article on early ticket pricing models.
Pricing options help eliminate the issue of out pricing your audience while still avoiding the perception of being a “cheap” event. Though this isn’t an option for every event, especially smaller ones, it’s certainly an idea to consider when creating a ticket price.
Step 5: Step back and think about it
Using some simple accounting in the previous steps, you should have an idea of how to mathematically set an ideal ticket price. This math is not the only thing to take into account, however. You need to take a few steps back, look at your event, and ask yourself how much it is worth. Are you offering something unique and compelling? You can charge more than your competition if you are offering more than they have. Does you’re event have a lot of similar competition? Then you may want to consider a lower ticket price.
More than anything, you need your ticket price to be fair, while still making the profit you deserve. Ask yourself, would you pay that much to go to your event? If you can honestly answer yes, you’ve found the right price.