Aug 192011

Brilliant Pricing Strategy For Events

Developing a pricing strategy for an event often just consists of determining the “Pre-registration price” and the “Day of the event price” (aka “at the door”).  The issue with this approach is that it only provides two options and does not take advantage of consistent, known human psychology as it relates to registering for events.  This psychology can be characterized in one word:  procrastination!

I recently registered for an event and came across a very clever pricing strategy that really takes advantage of natural human tendencies to put off registration for events until the last minute.  The event is called the Tough Mudder (see  It is a 10-12 mile trail run with 20-25 pretty hardcore military style obstacles, designed by British Special Forces.  The pricing schedule for the event I signed up for is in the graphic above.

If you take a look at the pricing schedule, you’ll notice a couple of things.  First, there are two possible days which you can run the race – Saturday or Sunday.  Second, there are several pricing “bands” or date ranges, with prices increasing right up to just before the race.  The race dates for this particular event are December 3rd and 4th and registration, per this schedule at least, ends on December 1st.

The pricing approach used by the organizers of this Tough Mudder event has several advantages over the typical “pre-registration” and “at the door” scenario that you usually see.  First, by offering two days, the organizers can place a premium price on the supposedly more desirable day – Saturday.  A collateral benefit to this approach is that, by earning revenues for two days instead of just one, it allows the organizers to leverage the effort they have to put into negotiating the venue contract and other event related contracts, thus likely making the overall event more profitable.  Second, the additional pricing “bands” are pure genius.  They allow the organizers to extract a premium from those who cannot help but procrastinate, even in the face of continually escalating prices.  Also, since many people probably can overcome the procrastination tendency in order to save some money, they get a bunch of people to register earlier than they would have otherwise.  This allows the organizers to plan better for additional promotion necessary to fill the event and for any other variable (participant-count-related) expenditures.

I understand that this approach, particularly the two-day angle, cannot necessarily be applied to all events, but the pricing “bands” can be applied in most situations.  This is true regardless of whether the events are “virtual” (online) or in-person.  It does not matter whether folks are contemplating registering for an in-person or a virtual event; if procrastination is a possibility and there is no external stimulus or incentive to change it, the vast majority of potential entrants will put off their registration until the very last minute.

Consider how you can apply such a pricing strategy to your upcoming events.

P.S.  Another nuance to notice is the countdown clock at the top of the graphic above.  You cannot see it in a static picture, but on the registration site, this clock is actually counting down the “time remaining before registration fee increases”.  So every time you go to the site and think about registering or procrastinating a bit more, the clock is there to remind you that time is ticking.  Brilliant.

I look forward to your thoughts and comments.  Leave a comment below.


Paul Morin

Jul 292011

Pricing – How Much Should I Charge?

One of the common questions I hear is, “How Much Should I Charge”?  I get this question from startups and existing businesses that are bringing a new product or service to market.

When you’ve been doing it for a while, you realize that deciding how much to charge for a product or service is as much art as science.  However, as with most things, even though there is some art involved, it is not usually the best idea to just “throw the paint against the wall” and hope for the best.

Before you decide on an initial pricing strategy for your product or service, you should gather some key data that will help you make a better pricing decision.  Here are several data points you should obtain before deciding how much to charge:

  • What is the pricing for similar products or services in the market?  The easiest way to track and update this information usually is to create a simple matrix, either in a spreadsheet or word processing table.
  • How segmented is your target market?  Are there several price levels for similar products, depending on the attributes of the products and the characteristics of the segments?
  • How do existing users perceive the current products in the market at various price levels?  Bear in mind that many times you want to be at the higher end of the price range as a small provider.  You typically don’t have the opportunity to sell a huge number of units as a small business, so you want to be able to make a healthy profit on a smaller number of units.
  • What are the product or service attributes that existing users value most?  Often times you’ll be better off including fewer attributes, but making sure that those are the ones that users value most.  You do not want to over-engineer your offering and create the equivalent of what is referred to as “bloatware” in the software industry.  When you are obtaining this data, make sure you are talking to as many real, live people as possible, through whichever medium of communication you can.  Do not guess.  Talk to real potential prospects wherever possible.
  • How much does it cost you to create and deliver the product or service?  Don’t make the common mistake that I have seen over and over again, wherein you don’t have a good understanding of your costs and end up pricing your offering too low, thus losing money unnecessarily on every unit sold.  Note that once you have a good understanding of your costs, you often times have to go back to the drawing board in order to figure out how to produce your offering at a competitive level.
  • How much profit do you want to make?  Once you have gathered the data above and determined the level at which you can realistically price your offering, given the competitive landscape and your production cost realities, you may realize that you’re not going to make much profit.  In that case, you can consider how you may differentiate your offering, so you can price higher, or you can figure out how to reduce your costs, or both.  However, if after doing all that you cannot arrive at a projected profitability of the offering that is acceptable to you, you’ll need to walk away.  That is, unless you have motives other than reasonable immediate profitability for the offering.
  • Do you have motives other than immediate profitability for this product or service?  There are times when even though your pricing analysis tells you the offering is going to be a “dog,” you still decide to move forward with it.  Such motives may include the idea that this offering is going to be a “loss leader”.  In other words, although you know you will lose money on it, it will bring prospects to you, to whom you will sell other more profitable products or services.
  • Do you expect to have “economies of scale” when you get to certain production levels?  Sometimes you start out with a product or service that is not as profitable as you’d like, but you know that as your sales volume grows you will achieve economies of scale and thus have greater profitability.  The idea with economies of scale is that once you are producing or providing a certain number of units, your costs go down for some, if not all, elements of the offering.  This may be due to reduced unit material costs when you buy in certain volumes or to advantageous contracts you’re able to strike with suppliers.

So, in order to intelligently answer the question, “how much should I charge?” you must first arm yourself with several pieces of data.  This data comes from your prospective customers, your competitors, your suppliers, and from your own operation.  Realize as you start this process of determining the right price for your offerings, it is as much art as science.  Not every piece of data that you gather will be “black and white”.  You will need to make a series of assumptions and you will need to test and re-test those assumptions on an ongoing basis.  You will need to be flexible and not believe that there is one “right answer”.  As you go, keep in mind the question, “if I can charge more and the market is willing and perhaps even happy to pay it, why wouldn’t I?”  Also, remind yourself on a regular basis that you’re in business to make money, so if your analysis says otherwise, don’t convince yourself that somehow a particular offering that isn’t profitable in the beginning is somehow going to magically become profitable later on.

I look forward to your thoughts and comments.

Paul Morin