Proper pricing is one of the secrets to success in any kind of business. It can build up the sales of your products or services and create a strong foundation for your business. On the other hand, wrong and unfit pricing strategies may cause issues that can potentially ruin an otherwise good business.
In the world of live concerts and parties, ticket pricing is one of the many dilemmas that event promoters are facing on an every day basis. For this reason, we took years of experience as festival, club and warehouse party promoters to give you some effective tips on how to price your event tickets correctly:
Set Goals and Know Your Market
First and foremost, you have to set realistic goals on what you’d like to achieve with your pricing strategy. Of course, you aim to earn money and generate enough profit from your capital right? You did not plan an event and waste tons of stressful hours scheming and marketing for it just for fun. Even though passion is a great part of making it in the music event industry, business is business and should be run and considered as such. You have to shy away from underpricing and produce a revenue that can cover all your costs and expenses without overpricing. While you have to bear in mind that your first event, or first few events even, may not generate profits, it’s still key to budget everything accurately so you’re set for profit from the get-go.
Underpricing your tickets can cause a disastrous impact not just on your bank account but on your career as a promoter as well. It is true that most people would opt to attend concerts with lower ticket prices but it all depends on your ability to sell. Do not lower your ticket prices just because you’re afraid that people won’t pay for it.
Similarly, overpricing your tickets can be just as damaging. Take note that it can cause a huge decline on your ticket sales when you are pricing beyond the ability and desire of your target attendees to pay. That is why it is crucial that you constantly take into consideration your target market when setting ticket prices. Ask yourself, “would I buy a ticket for my event at this price?” and “Are my potential guests getting their money’s worth?”
When looking at your market you will want to consider how pricing for similar events that have been held recently, and how they performed. Line-up, venue and any add-ons to the experience your patrons will witness are all elements to bear in mind when determining the price that is correct for your audience.
There are two types of pricing techniques that business people follow: cost-plus and value-based. One of the best tips on how to price your event tickets correctly is to decide which of the two works best for you.
Either you add a mark-up to your costs or find out how much value your potential customers have for your line-up.
Sum Up Your Costs
Consistently list down all your expenses. Include both direct and indirect costs: money spent planning the event and actually putting it together, your staff salaries, if you hired any, your overhead expenses like the rent of the venue, etcetera. Then add all of these costs and divide by a certain target volume to come up with a break-even figure. This is where your cost-plus technique of pricing comes in: after acquiring the break-even figure, add a mark-up. Again, don’t underprice and overprice and ALWAYS REMEMBER that cost-plus works on the assumption that you will sell ALL ticket volumes. If you do not, then your profit is lower.
After summing up your costs and producing a break-even price for your event tickets, you could also add value by knowing your market. Ask yourself: do your headliners have a lot of fans? If yes, how much are they willing to pay to see them?
In addition, be sure to remember that in most cases you need to consider taxes on top all this. Depending on the country you’re in, taxes can play a huge role in how to price your tickets.
Depending on the type of event, it is likely that you will be adopting a price tier system to sell your tickets. This adds a sense of urgency and allows loyal customers that trust in you and your event to purchase at a lower price if they commit early. Regardless it’s important that you do your math accordingly so that you price and allot the right amount of tickets for each tier so that you provide the correct incentive for buyers to purchase before your event sells out.
No two attendees are exactly alike, which is why many events offer multiple price tiers. Some people want to get the most for their money, others want the best ticket money can buy. You might offer discounted tiers based on time (discounts for the first X number of buyers), quantity (discounts for people who buy X number of tickets), or loyalty (discounts for members or previous attendees). Again, reference your data: if your discounts moved mountains last time, consider offering more.
On the other end of the spectrum, you could offer a VIP tier — for a higher price, you might offer a “premium” experience that includes behind-the-scenes access or a cocktail hour with talent. If your ticketing partner offers reserved seating, try creating different ticket types based on how close the seats are to the action.
Pre-sell and Promote
Use social media to your advantage and sell your tickets online. You can run promos and urge people to buy tickets earlier. You can ask your friends and followers to promote your event as well, especially when first starting a new event brand. Let people share your links on the Internet, and come up with ways to encourage them to do so, perhaps with giveaways or contests. This will garner more audiences and sales for your event.
You should also consider redirecting buyers to a feedback page after they have experienced your event, and ask for comments and suggestions regarding your ticket prices.
Planning an event, especially your first one, takes a lot of work. Add business-talk to that and it’s a great recipe for headache and stress. But no matter how tough everything may seem, it’s important to always take a breather and enjoy. Don’t worry too much, you’ll soon get a hang of things.
The more events you handle, the easier pricing tickets becomes. You will learn from your mistakes as well as from the positive experiences as both a ticket buyer and promoter. In the meantime, make sure you use these tips on how to price your event tickets correctly as a guide. Do not forget that you, the promoter, are the one that provides value with your event, based on line-up and overall experience. It is up to you to determine that value correctly for your target demographic.
If you found this article useful, sign up for our newsletter to learn more and to stay up to date with 6AM’s news and features on the world of electronic music.