Maximising revenue from existing channels, such as registrations, is a task race organisers spend surprisingly little time on. Most instead find it easier to focus on reducing costs or adding new revenue streams to their events.
Although any effort that improves the overall economics of a race is worth considering, optimising what’s already there should be the first concern for any event organiser. So in this feature we will look at responsive pricing and how to implement a pricing strategy to maximise your registrations revenue.
What is responsive pricing?
Responsive pricing is any flexible pricing strategy that aims to jointly optimise revenue (the total amount of money you collect) and cashflow (when you collect it) subject to a number of constraints. These constraints might be your maximum participant number, existing participant interest, the registration market rate for your race etc.
Let’s say you have 500 places to fill in your Half Marathon, 6 months to do it in and you already have 150 keen prospects in your mailing list. How do you go about setting your registration price (and adjusting it as you go along) to keep everyone happy and make the most you can as early as you can?
That’s what we’re here to find out. Read on.
Components of a responsive pricing strategy
Any responsive pricing strategy relies on three key components:
- A solid understanding of fair market price. This is the starting point – the anchor. You want to understand what most people are willing to pay for a race like yours.
- An ability to hike prices in response to increased demand.
- An ability to lower prices in response to reduced demand.
Between them, these three components should provide all the necessary flex to get the most out of your registrations revenue. Fair price provides the overall pacing, whereas hiking and lowering allow you to manage demand as it evolves over time.
Implementation of a responsive pricing strategy
Ok, this is all a little bit too theoretical. Let’s return to our Half Marathon example: 500 places to fill over the next 6 months of registrations. What do you do?
Establish fair price
First, you look at other Half Marathons to determine a market price for your registration fee. From the many Half Marathons you find, you should focus on peers: races of similar overall desirability, level of organisation, pedigree and reach. You will know who your peers are, if you’re honest and realistic in assessing your own race.
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Now let’s assume that after performing this exercise you deduce that people are generally prepared to pay around $100 to enter a race like yours. Great – that is your starting point. We shall now deduce a strategy to manage demand that will hopefully – on average – yield more than $100 per participant in registration revenue.
Fix your late bird
Because no-one has so far successfully pulled off a race registration price hike mid-registration (let us know if you have, we’d love to speak to you!), we will have to work the hike a different way. What we will do is set the most expensive tier for your registration price at above the fair market price, say $140, and make that the standard full price.
The $140 is the price someone will have to pay to enter at the last minute: the late-bird price, so to speak. Not many people will register at this price, but many will.
The late-bird is there for two reasons:
- Provide you with compensation for receiving your funds later. By that point you’ve already paid plenty of bills and are managing a tighter ship, in terms of you supplies and provisions. So if you’re going to take registrations at this stage you are happy to charge a higher price.
- Provide a great anchor for your early bird and your late-stage discounting offers. People love to feel like they’re getting a bargain and comparisons are the main mechanism by which most evaluate them (you know when someone tells you they had to buy something because it was 30% off?…) The higher the starting point, the more attractive the early-bird and other discounts will appear.
With your late-bird set, you now need to sell the bulk of our tickets.
Set your early birds
Your early-bird period is the earliest, and often longest, stage in your registrations process. This is where you offer incentives for people to register early at a reduced price.
Early signups offer a number of benefits, such as:
- Early gauging of interest, so that any necessary adjustments are made in a timely manner
- Early receipt of cash, so you can meet working capital requirements without borrowing from yourself or others
- Better project planning, as you get a better idea of resource requirements early
- Help create urgency in participants around potentially missing out on the early-bird offer
Depending on the type of event you run, registration window and existing interest (from repeat participants, the number of existing prospects etc) you will be hoping to sell between 30%-60% of your total available number of places during your early bird period. The stronger the interest for the race the fewer early bird places you’d like to make available, carrying more interest into the higher pricing tiers.
A successful early-bird strategy opens with a significant discount early on and gradually increases price every couple of months or so towards the standard (late-bird) full price. For our example, consider opening at something like $90 and increasing from there (e.g. to $110, then $125, then full price).
Since gauging the optimal later-bird/early-bird price structure is not an exact science, be clear that the number of early-bird places are limited. You can then manage high demand generated by a low initial early-bird price by bumping people up to the next early-bird tier. You may lose some interest along the way, but overall you will increase your revenue without upsetting anyone.
Push/pull at full price with selective discounts
Once you have entered the late early-bird (e.g. $125) and late-bird ($140) stages, you should ideally have sold the bulk of your places but still have several more to go. This last stage of registrations takes a bit more active management.
During this phase, you are running the following two sales channels (push/pull) in parallel:
- Full price sales to those you think will take them. For example, people that have shown strong interest in the race and have not yet registered, subscribers to your mailing list etc.
- Targeted discounted price sales to select audiences. These are people who want to feel like they’re getting a bargain. You will need these guys to shift all your remaining places.
It goes without saying that incentives and discounts should never bring your price below cost – unless you have a strong reason to want to present to the world a full race.
So, how much money are you dropping from discounts? As it happens, not all that much. You should aim to go as low as your early bird, but no lower. That would already make the discount quite generous.
Even better, to prevent long-lasting damage to your pricing strategy, try offering discounts through smart incentives or as prizes rather than outright price discounts. Consider one of the following:
- Buy 1 get 1 Half Price (or similar) deals. That is an effective 25% discount per entry, gets you two places sold instead of one and sounds great to people wanting to race with a buddy.
- 25%-30% discount codes for existing registrants. Similar to the above but aimed at people who have registered already.
- Set up a competition and give away 50%+ discounts or 1-2 free places as prizes. This is a very effective strategy that can generate a ton of interest online, if properly implemented, as well as shift race places. More on this to follow in a future feature on RaceDirectorsHQ.
Adding it all up
When all’s said and done, you should have made more than the $100 you were aiming to make through flat pricing and kept everyone happy: people happy to pay a bit more did, others looking for a bargain got one.
As a last comment, we should note that you are likely not going to get this stuff 100% right the first time around. In fact, it’s debatable whether there is an absolute ‘right’ about this to being with. However, you should keep an open mind and approach this problem afresh every year, re-examining your starting point and overall strategy, as well as how your race develops relative to peers.
Did you find this post helpful? Having something to add? We’d love to hear your thoughts in the comments section below
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