How to Price Your Conference or Exhibition
Conferences, exhibitions, and events were the original forms of social media. In recent years attendees have been more difficult to attract, due to the rise of the Internet, the increased hassle of travel, and an economic recession. But even as event producers have struggled against these forces to maintain or grow attendance levels, they have in many cases ambitiously attempted to increase revenue by increasing prices to attend their events. And as the recent experience at a number of events demonstrates, this can be a formula for failure.
One of the most forthright and savvy publishing operations on the Web, Mequoda Daily, recently discovered that price increases can backfire. In their own words:
Mequoda Summit: Rolling Back Prices to 2009
A 3-day program for the price of 2-days
After a multi-month test we have decided to reduce the price of the Seventh Mequoda Summit. We originally tested a theory explained in today’s Mequoda Daily post. It basically consisted of our desire to add more content to this year’s Mequoda Summit, to further enhance the experience for our attendees.
So we went forth with the test. This included increasing the content of the Summit by 25%. To be able to support the time and resources spent on this additional content, we decided to increase the price by 14%.
As a result we concluded that a 25% increase in content and a 14% increase in price yielded a 38% decrease in attendance.
In turn we have ended our test, and have shared our results with all of our loyal readers. We hope that you consider our findings when planning live events in the future. We are also offering admittance to the Summit for last year’s price, which is $200 cheaper than our original offer for 2010.
This decision by Mequoda Daily is at once smart and courageous. I’m sure they saw registrations and revenue increase immediately.
Test Multiple Price Points to Determine the Best Price
The best way to determine the appropriate price for an event is by testing several different price points at the start of your marketing campaign. The graph below displays the results of a price test I recently conducted for a client at conference fees that ranged from from $1,395 to $1,995. The test enabled us to determine that the best price was $1,595, which provided a projected incremental $60,000 in revenue over the next best price of $1,395, and more than $130,000 of incremental revenue over the worst outcome at $1,995.
Pricing is often a seat of the pants decision for an event producer. There are many methods that can be employed to determine the price for your conference – what your competitors charge, how many days it lasts, or how much content you have. Testing provides a way to find out directly from your customers what value they place on your product. The best strategy, and the one that will generate the most revenue, is to set your pricing through testing.
The Revenue Implications of Charging for Exhibit Attendance
Many conferences have an exhibit area that also provides a significant revenue stream. In order to maximize traffic on the exhibit floor, event management usually offers free passes to individuals who would like to visit the exhibits, but not attend conference sessions.
In some cases an event producer may decide to charge a nominal fee for passes to visit the exhibits to generate some additional revenue. This can be a major mistake.
Let’s take a look at some actual data and the revenue implications of charging for admission. In this case, the event producer decided to offer free admission to the exhibits if the attendee pre-registered, and charge a $50 fee if the attendee registered on site. This was a change in policy from the previous year, when admission was free regardless of when the attendee registered. The change in policy permits a year to year comparison that provides a dramatic illustration of what can happen when a fee is charged for exhibit attendance.
The first thing to note about the data is the significant drop in on site registrations, which declined from 397 to 103, a drop of 74%, in contrast to an increase of 81% in pre-registrations. One could assume that if the $50 fee had not been applied for on site registrations, they would also have grown by 81%. So attendance grew by 39% (to 2,067), when it should have grown by 81% (to 2,680). Actual attendance was 23% lower than it should have been.
The effect of this shortfall in attendance had a major, negative impact on the exhibit sales. Since the size of the exhibit floor grew by 50% (from $342,000 to $521,000), but attendance grew by only 39%, the density of attendees on the exhibit floor decreased by 11%. For an event, the size of attendance is perceived by the density of attendees on the exhibit floor – how crowded it looks. Even though actual attendance grew by 39%, because the size of the exhibit floor grew by 50%, it looked like there were actually fewer visitors in attendance.
The effect on exhibit sales and revenue was immediate. The percentage of exhibitors who signed contracts on site to exhibit at the next conference dropped from 79% to 59%, resulting in a revenue level that was $104,200 lower than it should have been. This revenue loss far exceeded the $5,150 in revenue realized from charging a $50 on site fee for exhibits passes.
This whole scenario could have been avoided by a simple price test on the exhibit pass at the start of the attendee marketing campaign. Event management would than have known the effect of the increase on price on overall attendance, and could have made the pricing decision accordingly.
It never pays to set prices first and react later. Always be testing!